2. Chapter 17 Retailing And Direct Marketing

3. 17 | 3Copyright © Houghton Mifflin Company. All rights reserved. Objectives Understand purpose and function of retailers in the marketing channel Identify major types of retailers Understand direct marketing and two other forms of nonstore retailing Examine major types of franchising and benefits and weaknesses of franchising Explore strategic issues in retailing

4. 17 | 4Copyright © Houghton Mifflin Company. All rights reserved. Retailing All transactions in which the buyer intends to consume the product through personal, family, or household use

5. 17 | 5Copyright © Houghton Mifflin Company. All rights reserved. Retailer An organization that purchases products for the purpose of reselling them to ultimate consumers

6. 17 | 6Copyright © Houghton Mifflin Company. All rights reserved. Importance Of Retailing In The U.S. Economy

7. 17 | 7Copyright © Houghton Mifflin Company. All rights reserved. Retailers Enhance Value Provide services Assist in product selection Make shopping experience more convenient Location facilitates comparison shopping Demonstrate product

8. 17 | 8Copyright © Houghton Mifflin Company. All rights reserved. Retailers Create Utility Time Place Possession Form

9. 17 | 9Copyright © Houghton Mifflin Company. All rights reserved. Keys To Retailing Success a strong customer focus a retail strategy that provides the level of service, product quality, and innovation that consumers desire © Microsoft Power Point Clip Art

10. 17 | 10Copyright © Houghton Mifflin Company. All rights reserved. General-Merchandise Retailers A retail establishment that offers a variety of product lines that are stocked in considerable depth

11. 17 | 11Copyright © Houghton Mifflin Company. All rights reserved. General-Merchandise Retailers

12. 17 | 12Copyright © Houghton Mifflin Company. All rights reserved. Department Store A large retail organization characterized by a wide product mix and organized into separate departments to facilitate marketing efforts and internal management

13. 17 | 13Copyright © Houghton Mifflin Company. All rights reserved. Department Store’s Total Product Could Include: Credit Delivery Personal Assistance Merchandise Returns Pleasant Atmosphere

14. 17 | 14Copyright © Houghton Mifflin Company. All rights reserved. Convenience Store Characteristics Less than 5,000 sq. ft. Open 24 hours 7 days/week Stock about 500 items © Microsoft Power Point Clip Art

15. 17 | 15Copyright © Houghton Mifflin Company. All rights reserved. Supermarket A large, self-service store that carries a complete line of food products, along with some nonfood products

16. 17 | 16Copyright © Houghton Mifflin Company. All rights reserved. Superstore A giant retail outlet that carries food and nonfood products found in supermarkets, as well as most routinely purchased consumer products

17. 17 | 17Copyright © Houghton Mifflin Company. All rights reserved. Warehouse Clubs A large-scale, members-only establishment that combines features of cash-and-carry wholesaling with discount retailing

18. 17 | 18Copyright © Houghton Mifflin Company. All rights reserved. Warehouse Showroom A retail facility in a large, low-cost building with large on-premise inventories and minimal services

19. 17 | 19Copyright © Houghton Mifflin Company. All rights reserved. Characteristics Of Warehouse Showroom Large, low-cost building Warehouse materials handling technology Vertical merchandise displays Large on-premises inventories Minimal services

20. 17 | 20Copyright © Houghton Mifflin Company. All rights reserved. Catalog Showroom A warehouse showroom in which customers use catalogs to place orders for products, which are then filled directly in the warehouse area and picked up by buyers in the showroom

21. 17 | 21Copyright © Houghton Mifflin Company. All rights reserved. Direct Marketing The use of the telephone, Internet, and nonpersonal media to communicate product and organizational information to customers, who can then purchase products via mail, telephone, or the Internet

22. 17 | 22Copyright © Houghton Mifflin Company. All rights reserved. Nonstore Retailing The selling of products outside the confines of a retail facility

23. 17 | 23Copyright © Houghton Mifflin Company. All rights reserved. Catalog Marketing The type of marketing in which an organization provides a catalog from which customers make selections and place orders by mail, telephone, or the Internet

24. 17 | 24Copyright © Houghton Mifflin Company. All rights reserved. Advantages Of Catalog Retailing Customer –Efficiency –Customer convenience Retailer –Remote, low-cost location –Save on store fixtures –Reduce Personal Selling Store operating expense

25. 17 | 25Copyright © Houghton Mifflin Company. All rights reserved. Direct-Response Marketing A type of marketing in which a retailer advertises a product and makes it available through mail or telephone orders

26. 17 | 26Copyright © Houghton Mifflin Company. All rights reserved. Telemarketing The performance of marketing-related activities by telephone.

27. 17 | 27Copyright © Houghton Mifflin Company. All rights reserved. Television Home Shopping A form of selling in which products are presented to television viewers, who can buy them by calling a toll-free number and paying with a credit card

28. 17 | 28Copyright © Houghton Mifflin Company. All rights reserved. Benefits Of TV Home Shopping Product easily demonstrated Adequate time to show product Customer shop in convenience of home

29. 17 | 29Copyright © Houghton Mifflin Company. All rights reserved. Online Retailing Retailing that makes products available to buyers through computer connections

30. 17 | 30Copyright © Houghton Mifflin Company. All rights reserved. Other Types Of Nonstore Retailing Direct Selling- marketing products to consumer through face-to-face sales presentations Automatic vending- use of machines to dispense products

31. 17 | 31Copyright © Houghton Mifflin Company. All rights reserved. Franchising An arrangement in which a supplier (franchiser) grants a dealer (franchisee) the right to sell products in exchange for some type of consideration

32. 17 | 32Copyright © Houghton Mifflin Company. All rights reserved. Top 20 U.S. Franchises And Their Startup Costs

33. 17 | 33Copyright © Houghton Mifflin Company. All rights reserved. Top 20 U.S. Franchises And Their Startup Costs (contd.)

34. 17 | 34Copyright © Houghton Mifflin Company. All rights reserved. Advantages Of Franchising (Franchisee) Start business with limited capital Benefit from others’ business experience Often assured customers at opening Guidance/advice Generally more successful

35. 17 | 35Copyright © Houghton Mifflin Company. All rights reserved. Advantages Of Franchising (Franchisor) Fast/selective product distribution No major financial outlay Capital devoted to production and advertising Franchisee held to standards Franchisee highly motivated

36. 17 | 36Copyright © Houghton Mifflin Company. All rights reserved. Drawbacks To Franchising Franchiser controls many aspects of business Franchisee must pay –Franchise fee –Royalty Uneven franchise agreements

37. 17 | 37Copyright © Houghton Mifflin Company. All rights reserved. Location Of Retailing Stores Freestanding Traditional business districts Shopping centers

38. 17 | 38Copyright © Houghton Mifflin Company. All rights reserved. Types And Characteristics Of Shopping Centers

39. 17 | 39Copyright © Houghton Mifflin Company. All rights reserved. Neighborhood Shopping Center A shopping center usually consisting of several small convenience and specialty stores

40. 17 | 40Copyright © Houghton Mifflin Company. All rights reserved. Community Shopping Center A shopping center with one or two department stores, some specialty stores, and convenience stores

41. 17 | 41Copyright © Houghton Mifflin Company. All rights reserved. Regional Shopping Center A type of shopping center with large department stores, a wide product mix, and deep product lines

42. 17 | 42Copyright © Houghton Mifflin Company. All rights reserved. Superregional Shopping Center A type of shopping center with the largest department stores, the widest product mix, and the deepest product lines of all shopping centers

43. 17 | 43Copyright © Houghton Mifflin Company. All rights reserved. Lifestyle Shopping Center A type of shopping center that is typically open-air and features upscale specialty, dining, and entertainment stores

44. 17 | 44Copyright © Houghton Mifflin Company. All rights reserved. Outlet Shopping Centers A type of shopping center that features discount and factory outlet stores carrying manufacturer brands

45. 17 | 45Copyright © Houghton Mifflin Company. All rights reserved. Retail Positioning Identifying an unserved or underserved market segment and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment

46. 17 | 46Copyright © Houghton Mifflin Company. All rights reserved. Store Image Key Determinants Store environment - atmospherics Category management Merchandise quality Service quality - reputation for integrity

47. 17 | 47Copyright © Houghton Mifflin Company. All rights reserved. Atmospherics The physical elements in a store’s design that appeal to consumers’ emotions and encourage buying.

48. 17 | 48Copyright © Houghton Mifflin Company. All rights reserved. Category Management A retail strategy of managing groups of similar, often substitutable products produced by different manufacturers

49. 17 | 49Copyright © Houghton Mifflin Company. All rights reserved. Scrambled Merchandising The addition of unrelated products and product lines to an existing product mix, particularly fast-moving items that can be sold in volume

50. 17 | 50Copyright © Houghton Mifflin Company. All rights reserved. Strategy Of Scrambled Merchandisers Convert stores into one-stop shopping centers Generate more traffic Realize higher profit margins Increase impulse purchases

51. 17 | 51Copyright © Houghton Mifflin Company. All rights reserved. Wheel Of Retailing A hypothesis holding that new retailers usually enter the market as low-status, low- margin, low-price operators but eventually evolve into high cost, high price merchants