Chapter 13 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1
MKTG
Designed byAmy McGuire, B-books, Ltd.
Prepared byDeborah Baker, Texas Christian University
Lamb, Hair, McDaniel 2007-2008
Retailing
13
CHAPTER
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LO1
Retailing
All the activities directly
related to the sale of goods
and services to the ultimate
consumer for personal,
non-business use.
RetailingRetailing
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LO1
The Role of Retailing
Over 1 million U.S. retailers employ more than 15 million people
Retailers account for 11.6 percent of U.S. employment
Retailing accounts for 13 percent of U.S. businesses
Retailers ring up almost $4 trillion in sales—nearly 40 percent of the U.S. GDP
Industry is dominated by a few giant organizations, such as Wal-Mart
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REVIEW LEARNING OUTCOMELO1
The Importance of Retailing
11.6% 13%
40%
Retailing as a %of U.S. employment
Retailing as a %of U.S. businesses
Retailing as a %of GDP
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LO2
Classification of Retail Operations
OwnershipOwnership
Level of ServiceLevel of Service
Product AssortmentProduct Assortment
PricePrice
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LO2
Classification of Ownership
IndependentRetailers
IndependentRetailers
Chain StoresChain Stores
FranchisesFranchises
Owned by a single person or partnership and not part of a larger retail institution
Owned by a single person or partnership and not part of a larger retail institution
Owned and operated as a group by a single organizationOwned and operated as a group by a single organization
The right to operate a business or sell a productThe right to operate a business or sell a product
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LO2
Level of Service
Full Service Self Service
Discount stores Exclusive storesFactory outlets Warehouse clubs
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LO2
Types of Stores and Their Characteristics
Assort-Assort-mentment PricePrice GrossGross
MarginMargin
Broad
Narrow
Broad
Med-Narrow
Medium
Med-Broad
Med-Broad
Broad
Med-Narrow
Narrow
Mod-High
Mod-High
Moderate
Mod High
Moderate
Mod Low
Mod Lo-low
Low-very low
Low
Low-High
Mod High
High
Low
Mod High
Low
Mod Low
Mod Low
Low
Low
Low-High
Type of RetailerType of Retailer
Specialty Store
Supermarket
Convenience Store
Drugstore
Full-line Discounter
Specialty Discounter
Warehouse Clubs
Off-price Retailer
Restaurant
Service Service LevelLevel
Mod Hi-High
High
Low
Low
Low-Mod
Mod-Low
Mod-Low
Low
Low
Low-High
Department Store
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LO2
Price
The amount of money
the retailer makes as a
percentage of sales after
the cost of goods sold is
subtracted.
GrossMargin
GrossMargin
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Major Types of Retail OperationsLO3
Department StoresDepartment Stores
Specialty StoresSpecialty Stores
SupermarketsSupermarkets
DrugstoresDrugstores
Convenience StoresConvenience Stores
Discount StoresDiscount Stores
RestaurantsRestaurants Online
http://www.walgreens.com
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Categories of Discount StoresLO3
Full-LineDiscounters
Specialty Discount Stores
WarehouseClubs
Off-PriceDiscount Retailers
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Discount StoresLO3
MassMerchandising
MassMerchandising
Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products.
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Discount StoresLO3
SupercenterSupercenter
Retail store combining groceries and general merchandise goods with a wide range of services.
Retail store combining groceries and general merchandise goods with a wide range of services.
Full-line discounterFull-line discounter
Retailer offering consumers very limited service and carrying a broad assortment of well-known, nationally branded “hard goods”.
Retailer offering consumers very limited service and carrying a broad assortment of well-known, nationally branded “hard goods”.
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Specialty Discount StoresLO3
CategoryKillers
CategoryKillers
Specialty discount stores that heavily dominate their narrow merchandise segment.
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REVIEW LEARNING OUTCOMELO3
Types of Retail OperationsDepartment
Stores
Department Stores
Specialty Stores
Specialty Stores SupermarketSupermarket DrugstoresDrugstores Convenience
Stores
Convenience Stores
Discount Stores
Discount Stores RestaurantsRestaurants
ScrambledMerchandising
ScrambledMerchandising
Full-line
Specialty
Warehouse
Off-price
supercenter
extreme- value
categorykiller
factoryoutlet
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LO4
Nonstore Retailing
Automatic VendingAutomatic Vending
Direct RetailingDirect Retailing
Direct MarketingDirect Marketing
Electronic RetailingElectronic Retailing
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LO4
Direct Retailing
Door-to-DoorDoor-to-Door
Office-to-OfficeOffice-to-Office
Home Sales PartiesHome Sales Parties
Online
http://www.avon.com
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LO4
Types of Direct Marketing
TelemarketingTelemarketing
Catalogs & Mail OrderCatalogs & Mail Order
Direct MailDirect Mail
Electronic RetailingElectronic Retailing
Shop-at-home networksOn-line retailing
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REVIEW LEARNING OUTCOMELO4
Nonstore Retailing Techniques
Vending
Direct retailing
Direct marketing
Electronic retailing
direct mailcatalogstelemarketing
onlineshop at home
Nonstore RetailingNonstore Retailing
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Basic Forms of FranchisingLO5
Business FormatFranchising
Business FormatFranchising
Product and Trade Name Franchising
Product and Trade Name Franchising
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FranchisingLO5
Product and Trade Name Franchising
Product and Trade Name Franchising
Dealer agrees to sell in products provided by a manufacturer or wholesaler.
Dealer agrees to sell in products provided by a manufacturer or wholesaler.
BusinessFormat
Franchising
BusinessFormat
Franchising
An ongoing business relationship between a franchiser and a franchisee.
An ongoing business relationship between a franchiser and a franchisee.
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Largest U.S. FranchisorsLO5
McDonald’s
Southland
Subway
Burger King
KFC
Pizza Hut
RadioShack
Taco Bell
Dairy Queen
Hooter’s
Jason’s Deli
Marble Slab
Quiznos Sub
SOURCE: http://www.franchise.org, January 2006.
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Retail Marketing Strategy
LO6
Develop the “Six Ps”
Define & Select a Target Market
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Defining a Target Market
LO6
STEP 1:Segment the Market
STEP 1:Segment the Market
DemographicsDemographics
GeographicsGeographics
PsychographicsPsychographics
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Biz Flix
LO6Man’s Favorite Sport
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Choosing the Retailing Mix
LO6
STEP 2:Choose the Retailing Mix
STEP 2:Choose the Retailing Mix
ProductProduct
PricePrice
PromotionPromotion
PlacePlace
PersonnelPersonnel
PresentationPresentation
Online
http://www.publix.com
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The Retailing Mix
LO6
TargetTargetMarketMarket
ProductProduct
PricePrice
PlacePlace
PromotionPromotion
PersonnelPersonnel
PresentationPresentation
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Choosing the Retailing Mix
LO6
ProductOffering
ProductOffering
The mix of products offered to
the consumer by the retailer;
also called the product
assortment or merchandise
mix.
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Retail Promotion Strategy
LO6
AdvertisingAdvertising
Public RelationsPublic Relations
PublicityPublicity
Sales PromotionSales Promotion
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The Proper Location
LO6
Economic growth potential
Economic growth potential
CompetitionCompetition
GeographyGeography
Choosing a Community Choosing a Site
Freestanding StoreFreestanding Store
Shopping CenterShopping Center
MallMall
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Important Factors for Site Choice
LO6
Neighborhood socioeconomics
Traffic flows
Land costs
Zoning regulations
Public transportation
Site’s visibility, parking, entrances and exits,accessibility, and safety
Fit with other stores
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Shopping Center and Mall Locations
LO6
Design attracts shoppers
Activities and anchor stores draw customers
Ample parking Unified image Sharing of common
area expenses
Expensive leases
Failure of common promotion efforts
Lease restrictions
Hours of operation
Anchor store domination
Direct competitors
Consumer time limits
Advantages Disadvantages
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Retail Prices
LO6
QualityImage
High PriceHigh Price Low Price Low Price
Good ValueSingle Price Point
EDLP
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Presentation of the Retail Store
LO6
AtmosphereAtmosphere The overall impression
conveyed by a store’s
physical layout, décor, and
surroundings
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Presentation of the Retail Store
LO6
Employee type and densityEmployee type and density
Merchandise type and densityMerchandise type and density
Fixture type and densityFixture type and density
SoundSound
OdorsOdors
Visual factorsVisual factorsOnline
http://www.apple.com
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Personnel and Customer Service
LO6
Suggestion SellingSuggestion Selling
Trading UpTrading Up
Two Common Two Common SellingSelling
TechniquesTechniques
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Customer Service for On-Line Retailers
LO6
Easy-to-use Web site Easy-to-use Web site
Product availabilityProduct availability
Simple returnsSimple returns
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REVIEW LEARNING OUTCOMELO6
Developing a Retail Marketing Strategy
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LO7
New Developments in Retailing
InteractivityInteractivityConsumers areinvolved in the retail experience.
Consumers areinvolved in the retail experience.
M-commerceM-commercePurchasing goods through mobile devices.
Purchasing goods through mobile devices.