Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University Lamb, Hair, McDaniel Retailing 13 CHAPTER

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 2 Learning Outcomes Discuss the importance of retailing in the U.S. economy Explain the dimensions by which retailers can be classified Describe the major types of retail operations LO 1 LO 2 LO 3

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 3 Learning Outcomes Discuss nonstore retailing techniques Define franchising and describe its two basic forms List the major tasks involved in developing a retail marketing strategy Describe new developments in retailing LO 4 LO 5 LO 6 LO 7

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 4 LO 1 Retailing All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use. Retailing

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 5 LO 1 The Role of Retailing  Over 1 million U.S. retailers employ more than 15 million people  Retailers account for 11.6 percent of U.S. employment  Retailing accounts for 13 percent of U.S. businesses  Retailers ring up almost $4 trillion in sales — nearly 40 percent of the U.S. GDP  Industry is dominated by a few giant organizations, such as Wal-Mart

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 6 REVIEW LEARNING OUTCOME LO 1 The Importance of Retailing 11.6% 13% 40% Retailing as a % of U.S. employment Retailing as a % of U.S. businesses Retailing as a % of GDP

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 7 LO 2 Classification of Retail Operations Ownership Level of Service Product Assortment Price

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 8 LO 2 Classification of Ownership 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 sell a product The right to operate a business or sell a product

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 9 LO 2 Level of Service Full Service Self Service Discount storesExclusive storesFactory outlets Warehouse clubs

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 10 LO 2 Types of Stores and Their Characteristics Assort-mentPrice 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 ServiceLevel Mod Hi-High High Low Low-Mod Mod-Low Low Low-High Department Store

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 11 LO 2 Price The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted. Gross Margin Gross Margin

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 12 Major Types of Retail Operations LO 3 Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants Online

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 13 Categories of Discount Stores LO 3 Full-Line Discounters Specialty Discount Stores Warehouse Clubs Off-Price Discount Retailers

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 14 Discount Stores LO 3 Mass Merchandising Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products.

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 15 Discount Stores LO 3 Supercenter Retail store combining groceries and general merchandise goods with a wide range of services. Full-line discounter Retailer offering consumers very limited service and carrying a broad assortment of well-known, nationally branded “hard goods”.

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 16 Specialty Discount Stores LO 3 Category Killers Specialty discount stores that heavily dominate their narrow merchandise segment.

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 17 REVIEW LEARNING OUTCOME LO 3 Types of Retail Operations Department Stores Specialty Stores Supermarket Drugstores Convenience Stores Discount Stores Restaurants Scrambled Merchandising Full-line Specialty Warehouse Off-price supercenter extreme- value category killer factory outlet

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 18 LO 4 Nonstore Retailing Automatic Vending Direct Retailing Direct Marketing Electronic Retailing

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 19 LO 4 Direct Retailing Door-to-Door Office-to-Office Home Sales Parties Online

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 20 LO 4 Types of Direct Marketing Telemarketing Catalogs & Mail Order Direct Mail Electronic Retailing Shop-at-home networks Online retailing

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 21 REVIEW LEARNING OUTCOME LO 4 Nonstore Retailing Techniques Vending Direct retailing Direct marketing Electronic retailing direct mail catalogs telemarketing online shop at home Nonstore Retailing

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 22 Basic Forms of Franchising LO 5 Business Format Franchising Product and Trade Name Franchising Product and Trade Name Franchising

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 23 Franchising LO 5 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.

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 24 Retail Marketing Strategy LO 6 Develop the “Six Ps” Define & Select a Target Market

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 25 Defining a Target Market LO 6 STEP 1: Segment the Market STEP 1: Segment the Market Demographics Geographics Psychographics

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 26 Choosing the Retailing Mix LO 6 STEP 2: Choose the Retailing Mix STEP 2: Choose the Retailing Mix Product Price Promotion Place Personnel Presentation Online

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 27 The Retailing Mix LO 6 Target Market Product Price Place Promotion Personnel Presentation

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 28 Choosing the Retailing Mix LO 6 Product Offering Product Offering The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix.

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 29 Retail Promotion Strategy LO 6 Advertising Public Relations Publicity Sales Promotion

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 30 The Proper Location LO 6 Economic growth potential Competition Geography Choosing a Community Choosing a Site Freestanding Store Shopping Center Mall

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 31 Important Factors for Site Choice LO 6  Neighborhood socioeconomics  Traffic flows  Land costs  Zoning regulations  Public transportation  Site’s visibility, parking, entrances and exits, accessibility, and safety  Fit with other stores

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 32 Shopping Center and Mall Locations LO 6  Design attracts shoppers  Activities and anchor stores draw customers  Ample parking  Unified image  Sharing of common area expenses  Expensive leases  Failure of common promotion efforts  Lease restrictions  Hours of operation  Anchor store domination  Direct competitors  Consumer time limits AdvantagesDisadvantages

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 33 Retail Prices LO 6 Quality Image High Price Low Price Good Value Single Price Point EDLP

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 34 Presentation of the Retail Store LO 6 Atmosphere The overall impression conveyed by a store’s physical layout, décor, and surroundings

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 35 Presentation of the Retail Store LO 6 Employee type and density Merchandise type and density Fixture type and density Sound Odors Visual factors Online

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 36 Personnel and Customer Service LO 6 Suggestion Selling Trading Up Two Common Selling Techniques

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 37 Customer Service for On-Line Retailers LO 6 Easy-to-use Web site Product availability Simple returns

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 38 REVIEW LEARNING OUTCOME LO 6 Developing a Retail Marketing Strategy

Chapter 13Copyright ©2009 Cengage Learning Inc. All rights reserved 39 LO 7 New Developments in Retailing Interactivity Consumers are involved in the retail experience. Consumers are involved in the retail experience. M-commerce Purchasing goods through mobile devices.