retailing and multichannel marketing
TRANSCRIPT
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Retailing and Multichannel
Marketing
Chapter 16
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Supply chain (simplified)
Make Move/store SellSome of the activities include:• Making the actual product• Research & Development• Supply chain management
(efficiency, savings)
This level in the supply chain may (or may not) include a wholesaler like Costco
Retailers, distributors, and manufacturers will often work closely with one another to create a more efficient supply chain, which can improve sales and profitability. It can even result in savings for the consumer.
If the consumer is not happy, no one along the supply chain is happy!
Consumers
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Supply chain (simplified)
Make Move/store SellSome of the activities include:• Making the actual product• Research & Development• Supply chain management
(efficiency, savings)
This level in the supply chain may (or may not) include a wholesaler like Costco
Retailers, distributors, and manufacturers will often work closely with one another to create a more efficient supply chain, which can improve sales and profitability. It can even result in savings for the consumer.
If the consumer is not happy, no one along the supply chain is happy!
Consumers
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Retailers
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Definition: Set of business activities that add value to products and services sold to consumers for their personal of family use
Retailing
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Definition: Set of business activities that add value to products and services sold to consumers• Location à bring product/service closer to consumers• Wide selection of products• Salespersons can help in final choice/fit a product, e.g.:
– Clothes à tailor to fit perfectly– Bike à bike fitting and sizing
Retailing
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Manufacturer – retailers relationship
?Which factors do manufacturers consider to establish
relationship with retailers?
• Who fits your image best?• What type of retailer should you pursue?• What is your retail strategy?• Multichannel presence – Online, brick & mortar
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Manufacturer – retailers relationship
Factors manufacturers should consider when it comes to choose with which retailer(s) to partner
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1. Channel structure is important
Choosing Retail Partners
Manufacturer
Distributor
Retailer
Consumer
Manufacturer
Distributor
Retailer
Consumer
Every entity has its own goals
Entities act as unified system
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2. Customer expectation– Does Chanel sell perfumes at CVS?
Choosing Retail Partners
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2. Customer expectation– Does Chanel sell perfumes at CVS?
Choosing Retail Partners
Doesn't allow any online sales except from specialized.com, where everything is sold at MSRP• Brand will look less valuable• Don’t upset “local bike shops”
PROTECT BRAND &
THEIR (OFFLINE) RETAILERS
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3. Channel members characteristics
Choosing Retail Partners
Larger firms
Less likely to use supply chain
intermediaries
Can gain more control, be more
efficient, and save money.
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4. Type of distribution
– Intensive distribution à Place product everywhere possible
– Exclusive/Selective distribution• Luxury goods use only one or very few high-end retailers! (Recall brand
value)• Control inventory easily• Less competition
Choosing Retail Partners
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Identify types of retailers
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Food retailers
Supermarkets Supercenters Warehouse clubs Convenience stores
Online grocery retailers
Limited nonfood
Supermarket combined with
a full-line discount store
Limited assortment and little service,
low prices
Limited varietySpeedy check
out
Customers willing to pay more to order
online and have groceries delivered
Differentiated by number of SKUs (Whole Foods, Trader
Joe’s)
Walmart, Meijer, K-Mart, Target
Costco, Sams, BJ’s 7-elevn
Instacart, Amazon Prime
Fresh
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• Department stores: broad variety and deep assortment
• Full-line discounts: Broad variety at low prices• Specialty: Limited merchandise with service in small
stores• Drugstores: Specialty for pharmaceutical and health• Category specialists: Big-box or category killers with
narrow but deep assortment• Extreme-value: Full line, limited, very low prices• Off-price: Inconsistent assortment of brand-name
merchandise at low prices
General merchandise retailers
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Firms that primarily sell services rather than merchandise are a large and growing part of the retail industry.
Service retailers
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Retailers add value using the four Ps
1. Product: Home Depot Case– Provides customers better access to product they want!– Provides right assortment
– Online store to match consumer needs • Easier to locate items• No need to have physical product in stores
– Online we can find low selling items
Retail strategy: Product
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Retailers add value using the four Ps
2. Price– It sets the image and perception of consumers
Retail strategy: Price
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Retailers add value using the four Ps
3. Promotion– Facilitate sales– Affect firm image– Different forms
• Offline/online• Coupon• Credit cards• Social media• Mobile• Etc.
Retail strategy: Promotion
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Retailers add value using the four Ps
4. Location, location, location– Being in a good location gives competitive advantage
• If Starbucks is in a very good location, how can competitors find a competitive place where to open their stores?
Retail strategy: Place
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Retail strategy: Place
How would you choose a good location if you have to open a business?
Brand Image - Is the location consistent with the image you want to maintain?Competition - Are the businesses around you complementary or competing?Local Labor Market - Does the area have potential employees? What will their commute be like?Plan for Future Growth - If you anticipate further growth, look for a building that has extra space should you need it.Proximity to Suppliers - They need to be able to find you easily as well.Safety - Consider the crime rate. Will employees feel safe alone in the building or walking to their vehicles?
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Retail strategy: Place
How would you choose a good location if you have to open a business?
Brand Image - Is the location consistent with the image you want to maintain?Competition - Are the businesses around you complementary or competing?Local Labor Market - Does the area have potential employees? What will their commute be like?Plan for Future Growth - If you anticipate further growth, look for a building that has extra space should you need it.Proximity to Suppliers - They need to be able to find you easily as well.Safety - Consider the crime rate. Will employees feel safe alone in the building or walking to their vehicles?
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How do you think Starbucks finds good locations?
Retail strategy: Place
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How do you think Starbucks findsgood locations?
– (Big) Data analysis, e.g., using ArcGIS Online, a technology platform for visualizing data in the form of maps
• How far from home are customers willing to travel to get to a coffee?• Risks associated with building new stores
Retail strategy: Place
“Retailers not only need to know where their potential customers are, they need to know where they will be over the 10-to-25 year lifetime of the investment they make in physical space.” Jack Kilmartin, CEO
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Retail strategy: Place
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Retail strategy: Place
Full article available at: http://qz.com/334269/what-starbucks-has-done-to-american-home-values/
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• Retailer physical appearance and atmosphere
Retail strategy: Presentation
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Retail strategy: Personnel
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• Today it is more common than ever• Retailers use multiple channels to reach customers
– At least two: online and offline• Can you think about other channels?
Multichannel retailing
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• Today it is more common than ever• Retailers use multiple channels to reach customers
– At least two: Online and offline• Can you think about other channels?
Multichannel retailing
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What are the challenges associated with having multiple retail channels?
– Consumers desire a seamless experience when interacting with multichannel retailers
Multichannel retailing
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What are the challenges associated with having multiple retail channels?
– Consumers desire a seamless experience when interacting with multichannel retailers1. Integrated Customer Relationship Management (CRM)
Multichannel retailing
Data will help better handling• Complains• Returns• Targeting• Sales
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What are the challenges associated with having multiple retail channels?
– Consumers desire a seamless experience when interacting with multichannel retailers2. Brand image
– Must be consistent across the different channels!
Multichannel retailing
http://blog.hubspot.com/blog/tabid/6307/bid/34227/15-Businesses-to-Admire-for-Consistent-Stellar-Branding.aspx#sm.0001v6vjhu8bzcnuqbx2ni2fgmlh4
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What are the challenges associated with having multiple retail channels?
– Consumers desire a seamless experience when interacting with multichannel retailers3. Pricing (it’s complicated)
– Should be consistent across channel…but competition can be different, e.g., online vs offline
Multichannel retailing
VS
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What are the challenges associated with having multiple retail channels?
– Consumers desire a seamless experience when interacting with multichannel retailers4. Supply chain
– Different channels require different organizations at each level à Difficult to provide seamless experience
– Today retailers try to integrate all operations under the same organization, e.g., same distribution center for online and offline
Multichannel retailing
GOAL: Unified commercemultiple retail channels will work with each other to provide users a seamless, friction-proof shopping
experience.
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Almost all shoppers will channel-hop– 86% of shoppers around the world
shopping on at least two channels now
Multichannel trends
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Online platforms and social networks will influence offline sales even more
– Ads should mirror your product catalog, which should reflect the actual inventory your stores carry
– In other words, consistent, clean, and updated product data is a necessity
Multichannel trends
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Shipping Innovations– Same day delivery (Amazon now)– Drone delivery– Distributing inventory geographically
(Amazon anticipatory shipping)
Multichannel trends
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• Mobile traffic is booming– More conversions from mobile commerce
• Apple/Samsung/Google pay• Paypal• Etc.
Multichannel trends
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• Social commerce and search commerce take off– Online shopping no longer restricted to
retailers’ websites or marketplaces– Social networks like Pinterest, Facebook,
search engines like Google are getting in on the retail action
Multichannel trends
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• Offline– Personal service– Can use cash– Immediate gratification– Touching/feeling– Risks reductions (test/try)
Online vs offline retailing
• Online– Wider selection– Easier search– Personalization
• Offering• Discounts/promotions• Customer service
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Retail strategy: eBay case
https://www.wsj.com/video/digits-ebay-to-buy-gsi-commerce/EDAD494D-8293-4E0C-B796-45C82E144066.html
GSI Commerce is a technology and services company that provides e-commerce, multichannel, and interactive marketing solutions to hundreds of brands and retailers in the U.S. and internationally.
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Retail strategy: eBay case
https://www.wsj.com/video/digits-ebay-to-buy-gsi-commerce/EDAD494D-8293-4E0C-B796-45C82E144066.html
Why did eBay acquire GSI Commerce?
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Retail strategy: eBay case
https://www.wsj.com/video/digits-ebay-to-buy-gsi-commerce/EDAD494D-8293-4E0C-B796-45C82E144066.html
Why did eBay acquire GSI Commerce?
It will help eBay compete better with Amazon.• Improve shipping• More products/selection• Improve/revamp image• Better payment service
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Recap
We classified this strategies into the four Ps + 2 additional Ps: product, price, promotion, place, presentati, and personnel
Manufacturers must look at the1. Channel structure2. Customers expectations3. Channel member characteristics4. Type of distribution
Consumers desire a seamless experience when interacting with multichannel retailers. Four factors to control/manage channels are CRM, Brand Image, Pricing, Supply chain
Choosing retail partners
Retail strategy
Managing multichannel
strategy