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Lamb, Hair, McDaniel Chapter 14 Marketing Channels and Retailing 2013-2014.

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Presentation on theme: "Lamb, Hair, McDaniel Chapter 14 Marketing Channels and Retailing 2013-2014."— Presentation transcript:

1 Lamb, Hair, McDaniel Chapter 14 Marketing Channels and Retailing

2 © 2013 by Cengage Learning Inc. All rights reserved 2 Explain what marketing channels and channel intermediaries are describe their functions and activities Describe common channel and strategies, and the factors that influence their choice Describe channel relationship types and roles, and their unique benefits and drawbacks Explain the importance of the retailer within in the channel and within the national economy 1 234

3 List and understand the different classifications and types of retailers, as well as their different operational models Explain the major tasks involved in developing a retail marketing strategy Discuss the roles of CRM and customer data in retailer decision making Describe trends in retail and channel management © 2013 by Cengage Learning Inc. All rights reserved

4 Explain what marketing channels and channel intermediaries are, and describe their functions and activities © 2013 by Cengage Learning Inc. All rights reserved 4 Marketing Channels 1

5 Marketing Channel a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer. Channel Members negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller in the course of moving the product from the manufacturer into the hands of the final consumer © 2013 by Cengage Learning Inc. All rights reserved 5 1

6 6 Marketing Channel Functions Specialization and division of labor Overcoming discrepancies Providing contact efficiency 1

7 © 2013 by Cengage Learning Inc. All rights reserved 7 Specialization and Division of Labor  Creates greater efficiency  Provides lower production costs  Create time, place, form, and exchange utility 1

8 Contact Efficiency Retailer Firms in the channel that sell directly to customers Retailers simplify distribution by cutting the number of transactions required by consumers, making an assortment of goods available in one location © 2013 by Cengage Learning Inc. All rights reserved 8 1

9 9 Exhibit 14.1 How Marketing Channels Reduce the Number of Required Transactions

10 © 2013 by Cengage Learning Inc. All rights reserved 10 Channel Intermediaries Merchant Wholesaler Merchant Wholesaler An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them. Agents and Brokers Agents and Brokers Wholesaling intermediaries who facilitate the sale of a product by representing channel members. 1

11 © 2013 by Cengage Learning Inc. All rights reserved 11 Channel Intermediaries Merchant Wholesalers Merchant Wholesalers Agents and Brokers Agents and Brokers Take Title to Goods Do NOT Take Title to Goods 1

12 © 2013 by Cengage Learning Inc. All rights reserved 12 Factors Suggesting Type of Wholesaling Intermediary to Use Product characteristics Buyer considerations Market characteristics 1

13 © 2013 by Cengage Learning Inc. All rights reserved 13 Channel Functions Performed by Intermediaries Contacting/Promotion Negotiating Risk Taking Researching Financing Physically distributing Storing Sorting Facilitating Functions Transactional Functions Logistical Functions Logistical Functions 1

14 Describe common channel and strategies, and the factors that influence their choice © 2013 by Cengage Learning Inc. All rights reserved14 Channel Structures 2

15 Exhibit 14.2 Marketing Channels for Consumer Products © 2013 by Cengage Learning Inc. All rights reserved 15

16 Exhibit 14.3 Channels for Business and Industrial Products © 2013 by Cengage Learning Inc. All rights reserved 16

17 © 2013 by Cengage Learning Inc. All rights reserved 17 Alternative Channel Arrangements Multiple or dual distribution Strategic channel alliances Nontraditional channels 2

18 © 2013 by Cengage Learning Inc. All rights reserved 18 Factors Affecting Channel Choice Producer Factors Product Factors Market Factors 2

19 © 2013 by Cengage Learning Inc. All rights reserved 19 Market Factors Market Factors That Affect Channel Choices Market Factors That Affect Channel Choices Customer profiles Consumer or Industrial Customer Consumer or Industrial Customer Size of market Geographic location 2

20 © 2013 by Cengage Learning Inc. All rights reserved 20 Product Factors Product Factors That Affect Channel Choices Product Factors That Affect Channel Choices Product Complexity Product Standardization Product Life Cycle Product Delicacy Product Price 2

21 © 2013 by Cengage Learning Inc. All rights reserved 21 Producer Factors Producer Factors That Affect Channel Choices Producer Factors That Affect Channel Choices Producer Resources Number of Product Lines Desire for Channel Control Desire for Channel Control 2

22 © 2013 by Cengage Learning Inc. All rights reserved 22 Levels of Distribution Intensity Intensive A form of distribution aimed at having a product available in every outlet A form of distribution aimed at having a product available in every outlet Selective A form of distribution achieved by screening dealers to eliminate all but a few in any single area A form of distribution achieved by screening dealers to eliminate all but a few in any single area Exclusive A form of distribution that established one or a few dealers within a given area A form of distribution that established one or a few dealers within a given area 2

23 © 2013 by Cengage Learning Inc. All rights reserved 23 Levels of Distribution Intensity Intensive Achieve mass market selling. Convenience goods. Many Selective Exclusive Work with selected intermediaries. Shopping and some specialty goods. Work with single intermediary. Specialty goods and industrial equipment. Several One Intensity Level Objective Number of Intermediaries

24 © 2013 by Cengage Learning Inc. All rights reserved24 Describe channel relationship types and roles, and their unique benefits and drawbacks Types of Channel Relationships 3

25 © 2013 by Cengage Learning Inc. All rights reserved 25 BenefitsHazards Arm’s Length Relationship Fulfills a one time or unique need; low involvement/risk Parties unable to develop relationship; low trust level Cooperative Relationship Formal contract without capital investment/long-term commitment; “happy medium” Some parties may need more relationship definition Integrated Relationship Closely bonded relationship; explicitly defined relationships High capital investment; any failure could affect every channel member Types of Channel Relationships

26 Global Channel Relationships 3 Global Channel Development Global Channel Development Channel policies differ Channel policies differ Gray marketing channels Gray marketing channels © 2013 by Cengage Learning Inc. All rights reserved

27 27 Social Influences in Channels Partnering Conflict Leadership Control Power 3

28 © 2013 by Cengage Learning Inc. All rights reserved 28 Channel Power, Control, and Leadership Channel Power Channel Power A channel member’s capacity to control or influence the behavior of other channel members A channel member’s capacity to control or influence the behavior of other channel members Channel Control Channel Control A situation that occurs when one marketing channel member intentionally affects another member’s behavior A situation that occurs when one marketing channel member intentionally affects another member’s behavior Channel Leader A member of a marketing channel that exercises authority/power over the activities of other members A member of a marketing channel that exercises authority/power over the activities of other members 3

29 © 2013 by Cengage Learning Inc. All rights reserved 29 Channel Conflict Conflicts may occur if channel members:  Have conflicting goals  Fail to fulfill expectations of other channel members  Have ideological differences  Have different perceptions of reality 3

30 By COOPERATING, channel members can speed up inventory replenishment, improve customer service, and reduce the total costs of the marketing channel. Channel Partnering © 2013 by Cengage Learning Inc. All rights reserved 30 the joint effort of all channel members to create a channel that serves customers and creates a competitive advantage. 3

31 Explain the importance of the retailer within in the channel and within the national economy © 2013 by Cengage Learning Inc. All rights reserved 31 The Role of Retailing 4

32 © 2013 by Cengage Learning Inc. All rights reserved 32 Retailing All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non- business use. 4

33 © 2013 by Cengage Learning Inc. All rights reserved 33 The Role of Retailing  U.S. retailers employ nearly 15 million people  Retailers account for 10.8 percent of U.S. employment  Retailing accounts for 10 percent of U.S. businesses  Retailers account for two-thirds of the U.S. GDP  Industry is dominated by a few giant organizations, such as Walmart 4

34 List and understand the different classifications and types of retailers, as well as their different operational models Classification of Retail Operations © 2013 by Cengage Learning Inc. All rights reserved34 5

35 © 2013 by Cengage Learning Inc. All rights reserved 35 Classification of Retail Operations Ownership Level of Service Product Assortment Price 5

36 Exhibit 14.4 Types of Stores and Their Characteristics © 2013 by Cengage Learning Inc. All rights reserved Assort- ment Price Gross Margin Broad Narrow Broad Med-Narrow Medium Med-Broad Broad Med-Narrow Narrow 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 Low Low-High Type of Retailer Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant Service Level Mod Hi-High High Low Low-Mod Mod-Low Low Low-High Department Store Broad Medium Mod-High Moderate Mod High Low Supermarket Drugstore Mod Hi-High Low Low-Mod Department Store

37 Independent Retailers Independent Retailers Chain Stores Franchises Owned by a single person or partnership and not part of a larger retail institution Owned and operated as a group by a single organization The right to operate a business or to sell a product The right to operate a business or to sell a product © 2013 by Cengage Learning Inc. All rights reserved 37 Classification of Ownership 5

38 © 2013 by Cengage Learning Inc. All rights reserved38 Level of Service Full Service Self Service 5

39 © 2013 by Cengage Learning Inc. All rights reserved 39 Product Assortment BREADTHDEPTH Classification based on BREADTH and DEPTH of product lines. 5

40 © 2013 by Cengage Learning Inc. All rights reserved 40 Price Gross Margin The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted. 5

41 © 2013 by Cengage Learning Inc. All rights reserved 41 Major Types of Retail Operations Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants 5

42 © 2013 by Cengage Learning Inc. All rights reserved 42 Types of Retail Operations Department Store Department Store A store housing several departments under one roof. Each department is headed by a buyer, or department head who selects merchandise. A store housing several departments under one roof. Each department is headed by a buyer, or department head who selects merchandise. Specialty Store Specialty Store A retail store specializing in a given type of merchandise. 5

43 © 2013 by Cengage Learning Inc. All rights reserved 43 Types of Retail Operations Supermarket Large, departmentalized, self- service retailer. Specializes in food. Some use scrambled merchandising. Drugstore A retail store that stocks pharmacy-related products and services as its main draw. Convenience Store Convenience Store A miniature supermarket, carrying only a limited line of high-turnover convenience goods. 5

44 © 2013 by Cengage Learning Inc. All rights reserved 44 Categories of Discount Stores Full-Line Discounters Specialty Discount Stores Warehouse Clubs Off-Price Retailers 5

45 © 2013 by Cengage Learning Inc. All rights reserved 45 Restaurants Straddle the line between retail and service establishments Sell tangible products (food, drink) but also services (food prep, food service) Many could be considered specialty retailers 5

46 © 2013 by Cengage Learning Inc. All rights reserved 46 Nonstore Retailing Automatic Vending Direct Retailing Direct Marketing Electronic Retailing 5

47 Automatic Vending Is the use of machines to offer goods for sale. Vending is the most pervasive retail business in the United States, with 11.5 MILLION vending machines selling billions or dollars worth of goods annually. © 2013 by Cengage Learning Inc. All rights reserved 47 5

48 © 2013 by Cengage Learning Inc. All rights reserved 48 Direct Retailing Door-to-Door Office-to-Office Home Sales Parties 5

49 © 2013 by Cengage Learning Inc. All rights reserved 49 Types of Direct Marketing Catalogs and Mail Order Direct Mail Telemarketing Electronic Retailing Shop-at-Home Networks 5

50 Top E-Tailers by Sales Volume 50 America's Top Ten Retail Businesses RankCompanyWeb Sales Volume (in billions) 1Amazon.com Inc.$ Staples Inc.$10.6 3Apple Inc.$6.66 4Walmart.com$4.9 5Dell Inc.$4.6 6Office Depot Inc.$4.1 7Liberty Media (owns QVC)$3.76 8Sears$3.6 9Netflix Inc.$3.2 10CDW$3.0 Beyond the Book

51 © 2013 by Cengage Learning Inc. All rights reserved 51 The Basic Forms of Franchising Product and Trade Name Franchising Dealer agrees to sell in products provided by a manufacturer or wholesaler. Business Format Franchising Business Format Franchising An ongoing business relationship between a franchiser and a franchisee. 5

52 52 Top 10 Franchisors 1. Hampton Hotels 2. Subway 3. 7-Eleven 4. ServPro 5. Days Inn 6. McDonald’s 7. Denny’s 8. H&R Block 9. Pizza Hut 10. Dunkin Donuts 5

53 List the major tasks involved in developing a retail marketing strategy Retail Marketing Strategy © 2013 by Cengage Learning Inc. All rights reserved53 6

54 © 2013 by Cengage Learning Inc. All rights reserved 54 Retail Marketing Strategy Develop a Retailing Mix Define & Select a Target Market 6

55 © 2013 by Cengage Learning Inc. All rights reserved 55 Defining a Target Market STEP 1: Segment the Market STEP 1: Segment the Market Demographics Geographics Psychographics 6

56 © 2013 by Cengage Learning Inc. All rights reserved 56 Choosing the Retailing Mix STEP 2: Choose the Retailing Mix STEP 2: Choose the Retailing Mix Product Promotion Personnel Place Price Presentation 6

57 Exhibit 14.6 The Retailing Mix © 2013 by Cengage Learning Inc. All rights reserved 57

58 © 2013 by Cengage Learning Inc. All rights reserved 58 Choosing the Retailing Mix Product Offering The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. 6

59 © 2013 by Cengage Learning Inc. All rights reserved 59 Retail Promotion Strategy Public Relations Publicity Sales Promotion Advertising 6

60 © 2013 by Cengage Learning Inc. All rights reserved 60 The Proper Location Economic growth potential Competition Geography Choosing a Community 6

61 The Proper Location Land costs Zoning Regulations Public Transportation Mall © 2013 by Cengage Learning Inc. All rights reserved 61 Socioeconomic characteristics Traffic flows Choosing a Specific Site Choosing the Type of Site Freestanding Store Shopping Center 6

62 © 2013 by Cengage Learning Inc. All rights reserved62 Retail Prices Quality Image High Price Low Price Good Value Single Price Point 6

63 © 2013 by Cengage Learning Inc. All rights reserved 63 Presentation of the Retail Store Employee type and density Fixture type and density Sound Odors Visual factors Merchandise type and density 6

64 © 2013 by Cengage Learning Inc. All rights reserved 64 Personnel Suggestion Selling Trading Up Two Common Selling Techniques 6

65 Channel and Retailing Decisions for Services Prioritize customer service by focusing on four areas: Minimizing wait times Managing service capacity Improving service delivery Establishing channel-wide network coherence © 2013 by Cengage Learning Inc. All rights reserved 65 6

66 The Relationship between Retailer Decision Making and Customer Data © 2013 by Cengage Learning Inc. All Rights Reserved.66 Discuss the roles of CRM and customer data in retailer decision making 7

67 Retailing and CRM © 2013 by Cengage Learning Inc. All Rights Reserved. 67 Data Retailers gain insight to who purchases product Build stronger relationships with customers CRM Database 7

68 Describe trends in retail and channel management New Developments in Retailing © 2013 by Cengage Learning Inc. All rights reserved68 8

69 New Developments in Retailing M-commerce Purchasing goods through mobile devices. © 2013 by Cengage Learning Inc. All rights reserved 69 8 Online retailers offer greater variety of options for delivery, including one-use package delivery boxes.

70 Chapter 14 Video New Balance Hubway New Balance Hubway is a bike sharing system in the Boston area that uses automated stations to provide a bike service to people looking to go short distances. In this clip, employees discuss how the retailing model works for Hubway, and how the difference between brick and mortar and e- business models allowed them to succeed in the Boston area. CLICK TO PLAY VIDEO © 2013 by Cengage Learning Inc. All rights reserved 70

71 Part 4 Video Scripps Networks Interactive Distribution Decisions Scripps Networks Interactive owns the content on popular networks such as Food Network, DIY, and the Cooking Channel. Deciding how to best get their content (both digital and solid products) into different locations takes some careful thought, and various decision makers discuss the process in this video clip. CLICK TO PLAY VIDEO © 2013 by Cengage Learning Inc. All rights reserved 71


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