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DC Supplementary Slides on Retailing Concepts

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  • 1. Supplementary Slides (optional reading) Retailing Concepts © G da Silva 1
  • 2. Supplementary Slides on Retailing Concepts • The next set of slides are from my own general marketing course notes. • You can have a quick overview of what retailing is all about, what are the key concepts and classification of retailing and what trends are happening in the world of retailing. • Understand the changes taking place in the world of retailing © G da Silva 2
  • 3. Types of Retailers © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 1-3 8-3
  • 4. There shouldn’t be a standard interpretation o of retailing: it can come in many forms © G da Silva 4
  • 5. © G da Silva 5
  • 6. Types of Retailers Retailers are classified based on: Amount of Service They Offer Breadth & Depth of Product Lines Relative Prices Charged How They Are Organized © G da Silva 6
  • 7. Amount of Service • Self-Service Retailers: – Serve customers who are willing to perform their own “locate-compare- select” process to save money. • Limited-Service Retailers: – Provide more sales assistance because they carry more shopping goods about which customers need information. • Full-Service Retailers: – Usually carry more specialty goods for which customers like to be “waited on.” © G da Silva 7
  • 8. Product Line Classification Specialty Stores: Carry narrow product lines with deep assortments within those lines. Department Stores: Carry a wide variety of product lines—typically clothing, home furnishings, and household goods. Each line is operated as a separate department managed by specialist buyers or merchandisers. © G da Silva 8
  • 9. Product Line Classification Supermarket: Large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of food, laundry, and household products. Convenience Stores: Small stores located near residential areas that are open long hours 7 days a week and carry a limited line of high-turnover convenience goods. © G da Silva 9
  • 10. Product Line Classification Superstores: Much larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services. Category Killers: Giant specialty stores that carry a very deep assortment of a particular line and is staffed by knowledgeable employees. © G da Silva 10
  • 11. © G da Silva 11
  • 12. Relative Prices Classification Discount Store: A retail institution that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume. Off-Price Retailer: Retailer that buys at less-than-regular wholesale prices and sells at less than retail. Examples are factory outlets, independents, and warehouse clubs. © G da Silva 12
  • 13. Relative Prices Classification Factory Outlet: Off-price retailing operation that is owned and operated by a manufacturer and that normally carries the manufacturer’s surplus, discontinued, or irregular goods. Independent Off-Price Retailer: Off-price retailer that is either owned and run by entrepreneurs or is a division of a larger retail operation. © G da Silva 13
  • 14. Relative Prices Classification Warehouse Club: Off-price retailer that sells a limited selection of brand-name grocery items, appliances, clothing, and a hodgepodge of other goods at deep discounts to members who pay annual membership fees. © G da Silva 14
  • 15. Organizational Classification Chain Stores: Two or more outlets that are owned and controlled, have central buying and merchandising, and sell similar lines of merchandise. Voluntary Chain: A wholesaler-sponsored group of independent retailers that engages in bulk buying and common merchandising. © G da Silva 15
  • 16. Watson is part of a chain of stores © G da Silva 16
  • 17. Organizational Classification Retailer Cooperative: A group of independent retailers that bands together to set up a jointly owned, central wholesale operation and conducts joint merchandising and promotion efforts. Franchise: A contractual association between a manufacturer, wholesaler, or service organization (a franchiser) and independent businesspeople (franchisees) who buy the right to own and operate one or more units in the franchise system. © G da Silva 17
  • 18. Examples of Franchise Operations: © G da Silva 18
  • 19. © G da Silva 19
  • 20. 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 Mustafa Store 24/7 Wide merchandise Competitive prices Mustafa Store Singapore 1-20
  • 21. Using the Four P’s to Create Value in Retailing Product, price, promotion, place $$ 1-21
  • 22. Retailer Marketing Decisions Figure 11.1 © G da Silva 22
  • 23. Assortment and Services Decisions Product Assortment: Brand of merchandise Merchandising events Services Mix: Different numbers and types of services are key to non-price store differentiation Store Atmosphere: Physical layout and “feel” of the store © G da Silva 23
  • 24. Price, Promotion, & Place Decisions Price strategy must fit its target market and positioning, product and service assortment, and competition Can use any or all of the promotion tools—advertising, personal selling, sales promotion, public relations, and direct marketing—to reach consumers Retailers can locate in CBDs, various types of shopping centers, malls or in the heartland location © G da Silva 24
  • 25. Product Providing the right mix of merchandise and services 1-25
  • 26. Harvey Norman and Audio House both carry wide ranges of consumer electronics- they compete both on the product lines and prices © G da Silva 26
  • 27. Retail stores communicate the brand’s positioning strategy. Here we see examples of the entrances to a Louis Vuitton store exuding every bit of opulence to complement the prestige of the product © G da Silva 27
  • 28. Store presentation communicates the brand Size of displays “creating anticipation” © G da Silva 28
  • 29. How does the Apple Store layout and presentation communicate the brand? © G da Silva 29
  • 30. Price Price defines the value of both the merchandise and the service provided 1-30
  • 31. Retailers compete on many different aspects other than just price © G da Silva 31
  • 32. 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 1-32
  • 33. Promotions used by local retailers © G da Silva 33
  • 34. Place (location) Convenience is a key ingredient to success 1-34
  • 35. Changes in retailing trends 1. New Retail Forms and Shortening Retail Life Cycles 2. Growth of Non-store Retailing 3. Retail Convergence 4. Rise of the Mega-retailers 5. Growing Importance of Retail Technology 6. Global Expansion of Major Retailers 7. Retail Stores as “Communities” or “Hangouts © G da Silva 35
  • 36. New retailing forms • As a result of changes in consumer shopping patterns, new types of retail formats will arise • And some will diminish because retail types do have life cycles • Specialty stores appear to favor certain consumer segments • Think of the following – Popularity of small stores in Orchard CineLeisure – Phenomenal growth of the Petrol Station as a major retailing point – Decline in popularity of the traditional department store © G da Silva 36
  • 37. Petrol Station Retailing © G da Silva 37
  • 38. Decline in department store popularity Straits Times 9/May/2009 © G da Silva 38
  • 39. Growth in non-store retailing • Products and services available without the need for a store – Internet – Kiosks – Catalogue Marketing © G da Silva 39
  • 40. Retail Convergence • Retail convergence is when many retailers of the same products coexist within a convenient location of the consumer without much differentiation in price. • One example of retail convergence would be a shopping mall where consumers can compare pricing and models at different locations less than a quarter mile from another store. • The world's largest retail convergence has already begun, it is called the Internet. © G da Silva 40
  • 41. Examples of retail convergence Queensway Shopping Centre Sim Lim Square © G da Silva 41
  • 42. The Changing Retail Landscape The Big Middle: Part of the market where most firms compete © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 42
  • 43. Mega-Retailers • Have tremendous economic power • Brand name attracts large number of shoppers • Sales volume enables the mega-retailer to buy in bulk • Stronger bargaining power with suppliers • An example where the retailer (instead of the manufacturer can exercise ‘channel power’ © G da Silva 43
  • 44. Large retailers often compete with the manufacturer by introducing their own brands • Private label brands • The manufacturer will need to compete with the private brand in the stores • Battle for shelf space • Private label brands may be lower in quality but more attractive in price • Value brands © G da Silva 44
  • 45. Growing importance of Retail Technology • Using technology for all aspects of distribution • Supply chain: using IT to help plan for inventory levels and deliveries • RFID (radio frequency identification) on packages • Using the internet to access customers on-line © G da Silva 45
  • 46. RFID in retailing and supply chain • Tracking items in the store • See this YouTube example of how HP uses RFID technology for buyers and for connecting to its supply chain http://www.youtube.com/watch?v=1EfMdD2eIgs © G da Silva 46
  • 47. Global Expansion of Retailers • Many retailers from the US and Europe has expanded overseas and have become household brand names RMT students will do an advanced subject in year 3 on International Marketing and Retailing © G da Silva 47
  • 48. Retailing as a ‘customer experience’ • The store is not just a place to display merchandise • It is where customers come into contact with the brands and the store staff • Customer interface and interaction helps to bring about a good or bad customer experiences • Customers want something more than just the product – Information – Sampling the product – Feeling good – Remember the ‘augmented product?’ © G da Silva 48
  • 49. Apple stores provide positive customer experiences “high-tech and high-touch experiences” The store environment, visual merchandising and customer service all contribute towards creating an exciting and engaging customer experience © G da Silva 49
  • 50. Creating experiences in the store : Build-a-Bear example 50
  • 51. Many retail outlets such as Starbucks have become places for customer hangouts © G da Silva 51
  • 52. Internet and Electronic Retailing Bricks and mortar Many retailers use the internet to complement the traditional store retailing Multichannel retailers 52
  • 53. Entrepreneurial Marketing : Jeff 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.” 53
  • 54. What are the benefits of the Internet in Retailing? 54
  • 55. But there are also obstacles to internet retailing 55