McGraw-Hill/Irwin Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Marketing Dhruv Grewal Michael Levy Chapter 16 Retailing

16-2 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Urban Outfitters Uses its three brands: Urban Outfitters, Anthropologie, and Free People All three have been successful serving very different audiences Multichannel: stores, internet and catalog

16-3 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Retailing Virtually every penny you spend, except for taxes, goes to retailers Wholesalers

16-4 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Changing Retail Landscape The Big Middle: Part of the market where most firms compete

16-5 Test Your Knowledge After a retail firm makes it to the Big Middle, they should _______________. A)relax – they have made it B)lower their prices C)evaluate their marketing plan D)audit, fine tune, or change their innovative or operational skills

16-6 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin How Do Retailers Create Value? Consumers have changed their preference for price and quality Lifestyles have become more casual Retailers must go beyond low price to create value

16-7 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Using the Four P’s to Create Value in Retailing Product, price, promotion, place

16-8 Product Providing the right mix of merchandise and services © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

16-9 Price Price defines the value of both the merchandise and the service provided

16-10 Promotion Retailers use a wide variety of promotions, both within their retail environment and through mass media © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

16-11 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Place Convenience is a key ingredient to success

16-12 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Internet and Electronic Retailing Bricks and mortar Trade area Multichannel retailers

16-13 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Internet Helpers

16-14 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Internet Hinderers

16-15 Test Your Knowledge Consumers who shop at _______________ typically buy more than those who shop at other retailers. A)brick and mortar retailers B)multichannel retailers C)Internet retailers D)specialty stores

16-16 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Entrepreneurial Marketing 16.1: Bezos Building Amazon.com Plan for an extensive, on- stop Internet catalog for books Wanted to create the “world’s most customer centric company. The place where people come to find and discover anything they might want to buy online.”

16-17 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Types of Retailers

16-18 Test Your Knowledge What type of retailer concentrates on a limited number of complementary merchandise categories in relatively small stores? A)discount stores B)department stores C)specialty stores D)category specialists

16-19 Food Retailers © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

16-20 Food Retailers © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

16-21 Food Retailers © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

16-22 Breaking the Mold in Food Retailing © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin How do you generate excitement for grocery shopping in consumers?

16-23 Case in Point: H.E.B.’s Central MarketCentral Market Challenge Answer Results To excite consumers about grocery shopping. New high end concept, focusing on creating a “theater of food” with demonstrations throughout the store. Providing variety, quality and depth of products not found in other grocery stores. H.E.B is a private company that does not divulge sales figures for Central Market but keeps expanding the chain and claims they “meet expectations”.

16-24 General Merchandise Retailers © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin General Merchandise Retailers Discount Stores Specialty Stores Category Specialists Department StoresDrugstores Off-Price Retailers

16-25 Test Your Knowledge What type of retailer offers an inconsistent assortment of merchandise at relatively low prices? A)off-price retailer B)specialty store C)discount store D)department store

16-26 Finding the Right Niche © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Specialty stores need to serve the segment of consumer beyond what bigger retailers provide. How do you fill that niche?

16-27 Case in Point: One Hot MamaHot Mama Challenge Answer Results To offer upscale Mom’s, and Mom’s to be, a place to shop with their kids. Hot Mama offers limited edition designer, regular and maternity t- shirts and casual wear. The store also is child friendly and allows women to shop with their children. Opening in 2004, Hot Mama predicts sales of $4M in 2006.

16-28 Chapter 16 Glossary © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Bricks-and-mortar retailer: A traditional, physical store. Multichannel retailers: Retailers that sell merchandise in more than one retail channel (e.g., store, catalog, and Internet). Retailing: The set of business activities that add value to products and services sold to consumers for their personal or family use; includes products bought at stores, through catalogs, and over the Internet, as well as services like fast-food restaurants, airlines, and hotels. Trade area: The geographical area that contains the potential customers of a particular retailer or shopping center. Wholesalers: Those firms engaged in buying, taking title to, often storing, and physically handling goods in large quantities, then reselling the goods (usually in smaller quantities) to retailers or industrial or business users.