What major types of marketing intermediaries occupy this sector? What marketing decisions do these marketing intermediaries make? What are major trends with marketing intermediaries?
Types of Retailers Service levels Wheel-of retailing Retail life cycle Corporate retailing Non-store retailing Retail positioning strategies Retail-store types pass through the retail life cycle. Four broad retail positioning strategies include: Bloomingdale’s Tiffany Sunglass Hut Wal-Mart The wheel-of-retailing describes how new store types emerge. Non-store retailing has been growing faster than store retailing. Retailers can offer one of four levels of service; Self- service, self-selection, limited service, and full service These organizations achieve economies of scale, greater purchasing power, wider brand recognation & better trained employees than independent stores can usually gain alone.
Retailing includes all the activities in selling goods or service directly to final consumers for personal, non-business use. Major Retailer Types: Specialty store Narrow product line. Example; Department store Several product line. Example; Supermarket Large, low-cost, low-margin, high volume, self service store designed to meet total needs for food and household products. Example;
Convenience store Small store in residential area, often open 24/7, limited line of high-turnover convenience products plus takeout. Example; Discount store Standard or specialty merchandise; low-price, low-margin, high-volume stores. Example; Off-price retailer Leftover goods, overruns, irregular merchandise sold at less than retail. Example ;
Superstore Huge selling space, routinely purchased food and household items, plus services. Category killer (deep assortment in one category), example; combination store, example; hypermarket (huge stores that combine supermarket, discount, and warehouse retailing), example; Catalog Showroom Broad selection of high-markup, fast moving, brand-name goods sold by catalog at discount. Customer pick up merchandise at the store. Example;
Bloomingdale’sWal-Mart Tiffany Sunglass Hut Breadth of Product Line Broad Narrow Value Added Retail Positioning Map Source: William T. Gregor and Eileen M. Friars, Money Merchandising: Retail Revolution in Consumer Financial Service (Cambridge, MA: The MAC Group, 1982). Retail Positioning Map Source: William T. Gregor and Eileen M. Friars, Money Merchandising: Retail Revolution in Consumer Financial Service (Cambridge, MA: The MAC Group, 1982).
Levels of Retail Service Self-service Self service is the cornerstone of all discount operations. Self-selection Customers find their own goods, although they can ask for assistance. Limited service These retailers carry more shopping goods & services such as credit & merchandise-return privileges. Full service Sales people are ready to assist in every phase of the locate-compare-select process.
Non-store Retailing Direct selling Is a multibillion-dollar industry, with hundreds of companies selling door to door or at home sales parties. Direct marketing Has roots in direct-mail & catalog marketing; it includes telemarketing, television direct- response marketing, & electronic shopping. Automatic vending Offers a variety of merchandise, including impulse goods such as soft drinks, coffee & newspapers Buying service Is a store less retailer serving a specific Clientele, usually employees of large Organizations, who are entitled to buy From a list of retailers that have agreed To give discounts in return for membership
The franchisor owns a trade or service mark and licenses it to franchisees in return for royalty payments. The franchisee pays for the right to be part of the system. The franchisor provides its franchisees with a system for doing business.
Target market Until it defines & profiles the target market, the retailer cannot make consistent decisions about product assortment, store decor, advertising messages & media, price and service levels. Product assortment and placement The retailer’s product assortment must match the target market’s shopping expectations. The retailer must decide on product-assortment breadth and depth. Procurement After deciding on the product-assortment strategy, the retailer must establish merchandise sources, policies and practices.
Services mix and store atmosphere The service mix is a key tool for differentiating one store from another. retailers must decide on the service mix to offer customers. Pre-purchase services include accepting telephone & mail orders, Post-purchase service include shipping & delivery, Ancillary services include general information, check cashing & parking. Atmosphere is another element in the store arsenal. Every store has a look and a physical layout that makes it hard or easy to move around. Price Price is the key positioning factor & must be decided in relation to the target market, the product-and-service assortment mix, and the competition. Retailers must also pay attention to pricing tactics. Most retailers will put low prices on some items to serve as traffic builders or loss leaders or to signal their pricing policies. Store activities and experiences Victoria’s Secret, retailer of lingerie, other women’s clothing, and beauty products, works on the concept of “retail theater”: customers feel they are in a romance novel, with lush music & faint floral scents in the background.
Communications Retailers use a wide range of communication tools to generate traffic and purchases. Location Decision The three keys to retail success are “location, location, location”. Retails can place their stores in the following locations: 1. Central business districts. 1. Central business districts. Downtown. 2.Regional shopping centers 2. Regional shopping centers. Large suburban malls containing 40 to 200 stores, typically featuring one or two nationally known anchor stores & a great number of smaller stores, many under franchise operation. 3.Community shopping centers 3. Community shopping centers. Smaller malls with one anchor store and between 20 and 40 smaller stores. 4. Shopping strips. 4. Shopping strips. A cluster of stores, usually housed in one long building, serving a neighborhood’s needs for groceries, hardware, laundry, shoe repair & dry cleaning. 5.A location within a large store. 5. A location within a large store. Certain well-known retailers locate new, smaller units as concession space within larger stores such as airports.
Wholesaling excludes manufacturers, farmers, and retailers. Wholesalers differ from retailers in three key ways. Wholesalers handle many functions more efficiently than do manufacturers. Wholesaling Basics
Wholesaling Functions Selling and promoting Buying and assortment building Bulk breaking Warehousing Transportation Financing Risk bearing Market information Management services and counseling
Major Wholesaler Types Merchant. Independently owned businesses that take title to the merchandise they handle. Full-service. Carry stock, maintain a sales force, offer credit, make deliveries, provide management assistance. Limited-service. Cash & carry wholesalers sell a limited line of fast-moving goods to small retailers for cash. Brokers & agents. Facilitate buying & selling, on commission of 2% to 6% of the selling price; limited functions; specialize by product line. Manufacturers. Wholesaling operations conducted by sellers or buyers themselves rather than through independent wholesalers. Specialized. Agricultural assemblers, petroleum bulk plants&terminals, auction companies.
Wholesaling Trends Direct buying trends initially threatened wholesalers. Wholesalers have adapted by: Adding value Reducing costs Strengthening relationships with manufacturers
Deciding on the company’s value proposition to its customers. Deciding on the best channel design and network strategy. Developing operational excellence. Implementing the solution. Market Logistics Planning
Market Logistics Sales forecasting Distribution scheduling Production plans Finished-goods inventory decisions Packaging In-plant warehousing Shipping-room processing Outbound transportation Field warehousing Customer delivery and servicing
Market-Logistics Decisions How should orders be handled? Where should stock be located? How much stock should be held? How should goods be shipped? Order processing Order processing Warehousing Warehousing Storage, distribution, automated warehouses. Inventory Inventory Determine reorder point, relevant cost comparison, optimal order quantity. Transportation Transportation Containerization & private vs. contract carriers.
Calculating the Cost of Market-Logistics Systems M = T + FW + VW + S Where... M = total market-logistics cost of proposed system; T = total freight cost of proposed system; FW = total fixed warehouse cost of proposed system; VW = total variable warehouse cost of proposed system S = total cost of lost sales due to average delivery delay