2 Introduction Employs 15 million people in the U.S. RetailerAn intermediary involved in selling goods and services to ultimate consumers (examples?)WholesalerAn intermediary that takes title to the goods it handles and redistributes them to retailers, other distributors, and sometimes end consumersEmploys 15 million people in the U.S.Accounts for $4.5 trillion to the U.S. economy
3 STRATEGIC IMPLICATIONS: RETAIL MARKETING STRATEGY A retailer develops a marketing strategy based on the firm’s goals and strategic plansTwo fundamental steps:Picking a target market: size and profit potential. POSITION.Developing a retailing mix to satisfy the chosen target market4Ps + Personnel & Presentation used to create a retail image
4 The Retailing Mix Target Market Product Price Place Promotion PersonnelPresentation
5 Choosing the Merchandising Mix The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix.
6 Merchandising (Product) Strategy Category management: Retailing strategy which views each product category as an individual profit center.Slotting Allowances: lump-sum payments by manufacturers for stocking new products.Scrambled Merchandising: Combining dissimilar product lines to boost sales volume.Growth of Store brands – Battle for shelf space
7 Presentation of the Retail Store - Atmosphere The overall impression conveyed by a store’s physical layout, décor, and surroundings.Five Senses.
8 Personnel and Customer Service Suggestion SellingTrading UpTwo CommonSelling Techniques
9 Price and payment options : how important? The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.Price and payment options : how important?
10 Classification of Retail by Ownership (independent, franchise chain)Service level (Nordstrom vs. Wal-mart)Assortment (CVS vs. Smith’s)Price (Tiffany vs. jewelry kiosk)
11 Department Stores (1) General Merchandise retailer: Variety of product lines with considerable depth.Dept stores:mid 1800sWide lines -- at least 25 people.Product lines organized into separate departments.Service-orientedServiceLevelAssort-mentPriceGross MarginHighBroadHighHigh
12 Specialty Stores (2) Specialty Stores Assort- ment Price Gross Margin NarrowHighType of RetailerSpecialty StoreServiceLevel
13 Specialty Discount Stores (3) OR Category Killers Assort-mentPriceGross MarginNarrowLowType of RetailerSpecialty Discount StoreServiceLevelDeepAssortment
14 Discount Stores (4) Shallow Assortment Discount stores: Self-service. Brands and store brands at low prices.DiscountLow ServiceBroadAssortmentLow priceLow marginShallowAssortment
15 Off-Price Retailer (5) Low margins Off-price Retailer Low service Less wide; but deep.Low marginsOff-price RetailerLow serviceNarrow Line PricesLow prices
17 Supermarkets Large, self-service retailer with grocery specialty Self-scanning trend: what is your take?Competition: fierce, 1% profit on many items
18 Warehouse Clubs Warehouse club / wholesale club (Sam’s, Costco) No frills, members only (why?)Bulk purchases: price competition, homogeneous shopping goods
19 Convenience Stores Convenience products Often with gas stations Convenience stores: fill-in your “regular” shoppingCompetition (fast food also)24/7 is more importantWe pay for the convenience
20 Non-Store Retailing Vending: hi costs; hi prices (flat sales) Vending is a $40 billion U.S. marketCashless vending=wave of futureDirect Marketing (Mail, Catalog, Telemarketing)E-tailing (TV shopping, online)M-commerce: buy from mobile devices(e.g., cell phones)
21 Comparison between Discount, Specialty and Specialty Discount AttributeSpecialtySpecialty DiscountDiscountExampleTCBY YogurtToys R usWal-MartServiceHighLowPriceAssortmentNarrowBroad
22 Comparison between Discount, Specialty and Specialty Discount AttributeSpecialtySpecialty DiscountDiscountMarginHighLow
23 Wheel of RetailingNewer, low-price types of retailing arise to challenge older established “bigger” retailers.
24 Wheel of Retailing 3 4 2 1 Motel Motel New Entrant Motel + Free Breakfast + HBOMotel+ Free Breakfast + HBO+ Happy Hour42New EntrantMotel+ Free Breakfast1No Frills Motela theory to explain the institutional changes
25 eTailing and DTC eTail= electronic retail DTC= Direct to consumer Shrinking use of wholesalers? (bypassing wholesalers more and more)eBay: hybrid etailer/online auction siteEven sells services online(examples of serviceson ebay?)
26 eTail More innovative e-tail sites Printing onlineNike IDZappos