2011.2.15 marketing
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2011.2.15 marketing

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  • Chapter 15 Retailing Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization.
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing Notes: Retailing has enhanced the quality of our daily lives, with the millions of goods and services provided mirroring the needs and styles of U.S. society. Retailing affects all of us directly or indirectly. The retailing industry is one of the largest employers, as shown on the next slide. Discussion/Team Activity: Poll the class to see how many of the students have worked in the retail industry. How many are pursuing careers in the retail industry?
  • Chapter 15 Retailing Notes: Retailers ring up almost $4 trillion in sales annually, about 40 percent of the U.S. gross domestic product. Retail counts for 11.6 percent of U.S. employment, and nearly 13 percent of all business are considered retail under NAICS. Although most retailers are small, a few giants dominate the industry. Wal-Mart annual sales are greater than the next five U.S. retail giants' sales combined. Refer to “Hot Stores” box on page 196 for a list of the ten largest U.S. retailers.
  • Chapter 15 Retailing Notes: [The numbers in this table come from a biannual study conducted by ForeSee Results and FGI Research, using the methodology of the University of Michigan’s American Customer Satisfaction Index.] You can see by studying the table that successful online retailers don’t follow a single model to achieve that success. For instance, LLBean is primarily a catalog company, zappos.com is strictly online, and victoriassecret.com is principally bricks-and-mortar. Retailers with freestanding stores, Web sites, and catalogs have successfully implemented a multichannel solution, where customers can shop the catalog or site, and go to the store to try the product on before purchasing it. The number one challenge e-tailers have to meet is keeping the shopping experience consistent across channels.
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing Notes: A retail establishment can be classified according to its ownership, level of service, product assortment, and price. Retailers use the latter three variables to position themselves in the competitive marketplace. These variables can be combined in several ways to create distinctly different retail operations.
  • Chapter 15 Retailing Notes: Retailers can be broadly classified by form of ownership. Independent retailers are retailers owned by a single person or partnership. Around the world, most retailers are independent, operating one or a few stores in their community. Chain stores are owned and operated as a group by a single organization, with many administrative tasks being handled by the home office for the entire chain. Franchises are owned and operated by individuals, but are licensed by a larger supporting organization. With franchising, the advantages of both independent ownership and the chain store organization are combined.
  • Chapter 15 Retailing Notes: The level of service that retailers provide can be classified along a continuum, from full-service to self-service. Discussion Activity: Many students will not realize that gas stations used to offer full- and self-service pumps. As students to consider whether full-service gasoline is a retailing option that can be successfully revived. You may need to give a detailed description of the elements included in full-service gas pumping (pumping, windshield washing, fluid check, payment from car).
  • Chapter 15 Retailing Notes: Exhibit 13.1 lists the major types of retail stores and classifies them by level of service, product assortment, price, and gross margin.
  • Chapter 15 Retailing Notes: Price is a fourth way to position retail stores. Traditional department stores and specialty stores usually charge the suggested retail price. In contrast, discounters, factory outlets, and off-price retailers use low prices as a lure for shoppers. Refer to the last column of Exhibit 13.1 to see how gross margin and price levels correlate to the various types of stores.
  • Chapter 15 Retailing
  • Chapter 15 Retailing Online: Walgreen’s Do you think drugstore Web sites add value for the consumer? What services on the Walgreens’ site would you be most likely to use? Would Internet selling be a factor in your choice of a pharmacy? To what group of consumers might selling items over the Internet be the most appealing? Why? Notes: With the experimentation with alternative formats of retail stores, classification has become more difficult. Department stores: carries a wide variety of shopping and specialty goods. Purchases are made within each department. Specialty stores: merchandise is tailored to specific target markets. Price is a secondary consideration to consumers. These stores provide a low-risk testing ground for many new products. Supermarkets: U.S. consumers spend about a tenth of their disposable income in supermarkets. Drugstores: stock pharmacy-related products and services. Convenience stores: defined as a miniature supermarket, carrying only a limited line of convenience goods. Discount stores: a retailer that competes on the basis of low prices, high turnover, and high volume. Restaurants: straddle the line between retailing establishments and service establishments.
  • Chapter 15 Retailing Notes: Full-line discount stores offer very limited service and a broad assortment of well-known, nationally branded goods. Wal-Mart is the largest full-line discount store in terms of sales. Supercenters combine groceries and general merchandise with a wide range of services in one location. Specialty discount stores offer a nearly complete selection of single-line merchandise and are often termed category killers because they dominate their merchandise segment. Warehouse clubs sell a limited selection of appliances, household items, and groceries, usually in bulk and to members only. Off-price retailers sells at prices 25 percent or more below traditional department stores. Discussion/Team Activity: List discount stores in each of the above categories.
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing Notes: Nonstore retailing is shopping without visiting a store. The major forms are shown here. Because consumers demand convenience, nonstore retailing is growing faster than in-store retailing.
  • Chapter 15 Retailing Online Avon What advantages to you think the Avon site has over a visit from an Avon representative? Can you get the same amount of product information from each? Does Avon offer any products that you would prefer to order from a representative? Notes: The sales of direct retailers, such as Avon and Tupperware, have suffered as more women have entered the workforce. Direct retailers are turning to direct mail, telephone, traditional retailing venues, and the Internet to reach more buyers. Direct retailers are also exploring opportunities in other countries.
  • Chapter 15 Retailing Notes: Direct marketing refers to the techniques used to get consumers to make a purchase from home, office, or other non-retail setting. These include direct mail, catalogs and mail order, telemarketing, and electronic retailing. Examples of electronic retailing include shop-at-home networks and on-line retailing. Shop-at-home networks include the Home Shopping Network and the QVC Network. This industry has grown into a multibillion-dollar business with a loyal customer following. The use of on-line retailing has exploded in the last several years due to the convenience and cost savings to consumers. In 2005, e-retailers’ online sales surpassed $140 billion, by 2006, sales were $300 billion. Online auctions run by Internet companies such as eBay and Amazon.com have enjoyed phenomenal success. As the popularity of online retailing grows, it is becoming critical that retailers be online and that their stores, Web sites, and catalogs be integrated.
  • Chapter 15 Retailing Notes: [The numbers in this table come from a biannual study conducted by ForeSee Results and FGI Research, using the methodology of the University of Michigan’s American Customer Satisfaction Index.] You can see by studying the table that successful online retailers don’t follow a single model to achieve that success. For instance, LLBean is primarily a catalog company, zappos.com is strictly online, and victoriassecret.com is principally bricks-and-mortar. Retailers with freestanding stores, Web sites, and catalogs have successfully implemented a multichannel solution, where customers can shop the catalog or site, and go to the store to try the product on before purchasing it. The number one challenge e-tailers have to meet is keeping the shopping experience consistent across channels.
  • Chapter 15 Retailing Notes: [The numbers in this table come from a biannual study conducted by ForeSee Results and FGI Research, using the methodology of the University of Michigan’s American Customer Satisfaction Index.] You can see by studying the table that successful online retailers don’t follow a single model to achieve that success. For instance, LLBean is primarily a catalog company, zappos.com is strictly online, and victoriassecret.com is principally bricks-and-mortar. Retailers with freestanding stores, Web sites, and catalogs have successfully implemented a multichannel solution, where customers can shop the catalog or site, and go to the store to try the product on before purchasing it. The number one challenge e-tailers have to meet is keeping the shopping experience consistent across channels.
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing Notes: A franchise is a continuing relationship in which a franchiser grants to a franchisee the business rights to operate or sell a product. The franchiser originates the trade name, product, operation methods, etc. The franchisee pays the franchiser for the right to use its name, product, or methods. The initial franchise fee generally ranges from $50,000 to $250,000 and higher, and royalty fees paid weekly/monthly are in the range of 3 to 7 percent of gross revenues. For example, a McDonald’s franchise costs an initial $45,000 per store plus a monthly fee. Start-up costs for equipment and expenses range from $511,000 to over $1 million.
  • Chapter 15 Retailing
  • Chapter 15 Retailing Notes: Box on page 205 features information on the largest U.S. franchisors.
  • Chapter 15 Retailing
  • Chapter 15 Retailing Notes: Retailers develop marketing strategies based on overall goals and strategic plans. The key tasks in strategic retailing are defining and selecting a target marketing and developing the retailing mix to meet the needs of the chosen target market. The key tasks in strategic retailing are defining and selecting a target market and developing the retailing mix to meet the needs of the chosen market.
  • Chapter 15 Retailing Notes: The first task in developing a retail strategy is to define the target market. Defining the target market begins with market segmentation. Successful retailing is based on knowing the customer. Target markets are defined by demographics, geographics, and psychographics.
  • Chapter 15 Retailing Notes: The retailing mix consists of six P’s: the four P’s of the marketing mix (product, price, promotion, and place), plus presentation and personnel. The combination of the 6 P’s projects a store image, which influences perceptions. Retail stores can be positioned on the three dimensions: service, product assortment, and price. Everything else—place, presentation, and promotion-- can be used to fine-tune the basic positioning.
  • Chapter 15 Retailing Notes: Exhibit 13.2 shows the retailing mix.
  • Chapter 15 Retailing
  • Chapter 15 Retailing Notes: The goal of retail promotion strategy is to position the store in consumers’ minds. Ads, special events, promotions, even grand openings are an orchestrated blend of advertising, merchandising, goodwill, and glitter. Retailers’ advertising is carried out mostly at the local level, providing store information, hours, prices, and sales. In contrast, national retail advertising focuses on image. Many retailers these days favor direct mail or frequent shopper programs as a cost-effective means of increasing brand loyalty and spending by core customers.
  • Chapter 15 Retailing Notes: The retailing axiom “location, location, location” has long emphasized the importance of place to the retail mix. The retailer is making a large commitment of resources that reduces future flexibility, and the location will affect the store’s future growth and profitability. Factors to consider in site selection are the area’s economic growth potential, the amount of competition, and geography. One final decision about location is whether to have a freestanding unit or to become a tenant in a shopping center or mall.
  • Chapter 15 Retailing Notes: Specific site considerations are the neighborhood socioeconomic characteristics, traffic flows, land costs, zoning regulations, and public transportation. Additional variables are the site’s visibility, parking, entrance and exit locations, accessibility, and safety/security issues. It is also important to ensure that the store fits with its surrounding environment. A Dollar General store would probably not be wanted next to a Neiman Marcus department store.
  • Chapter 15 Retailing
  • Chapter 15 Retailing Notes: The retailer’s ultimate goal is to sell products to consumers at a price that ensures profits. Price is a key element in a store’s positioning strategy and classification. Higher prices often indicate quality and prestige, while discounters and off-price retailers offer a good value for the money. A pricing trend is everyday low pricing, or EDLP.
  • Chapter 15 Retailing
  • Chapter 15 Retailing Online: Apple Stores Apple Computer’s retail stores are set up to accommodate visitors who wish to experiment with and learn about Apple’s products. Visit Apple’s Web site and use the store locator to find a store near you and then report on the presentations and workshops scheduled at that location for the week. Compare the schedule to a store from another area. Do the schedules differ? If so, how? Could apple find a way to tie its in-store programs to its Web site? How? Notes: The presentation of a retail store helps determine the store’s image and positioning in consumers’ minds. For example, positioning as an upscale store would use a lavish or sophisticated presentation. The main element of presentation is atmosphere, with the most influential factors shown on this slide. Employee type and density: an employee’s general characteristics such as friendly and knowledgeable, and the number of employees in the selling space. Merchandise type and density: the type of merchandise carried and how it is displayed. Fixture type and density: elegant, trendy, uncluttered. Technology may be added as a fixture. Sound: music at a restaurant or store. Odors: smells of pastries in bakeries, fragrances as a key design element. Visual factors: colors can create a mood or focus attention.
  • Chapter 15 Retailing Notes: Retail salespeople persuade shoppers to buy. They are trained in two common selling techniques. Trading up: persuading customers to buy a higher-priced item. Suggestion selling: seeks to broaden customers’ original purchases with related items.
  • Chapter 15 Retailing Notes: Providing customer service is a challenging element in the retail mix because customer expectations are varied. Online shoppers expect an easy-to-use Web site, products to be available, and simple returns.
  • Chapter 15 Retailing
  • Chapter 15 Retailing
  • Chapter 15 Retailing Notes: Retailers are adopting new strategies to better serve customers. Two recent developments are: Interactivity: get customers involved in the process, such as bagging and pricing fruits and vegetables. Another example is Build-A-Bear, a store that enables customers to make their own stuffed animal. M-Commerce: enables consumers using wireless mobile devices to connect to the Internet and shop. For example, Coca-Cola drinkers in Europe dial a phone number on their mobile device, the machine signals to select a drink, and the transaction appears on the next phone bill. M-commerce is used because it saves time and offers more convenience in a greater number of locations.

2011.2.15 marketing 2011.2.15 marketing Presentation Transcript

  • Lamb, Hair, McDaniel CHAPTER 15 Retailing 2010-2011
  • LO 1 Discuss the importance of retailing in the U.S. economy LO 2 Explain the dimensions by which retailers can be classified LO 3 Describe the major types of retail operations LO 4 Discuss nonstore retailing techniques Learning Outcomes
  • LO 5 Define franchising and describe its two basic forms LO 6 List the major tasks involved in developing a retail marketing strategy LO 7 Describe new developments in retailing Learning Outcomes
  • The Role of Retailing Discuss the importance of retailing in the U.S. economy LO 1
  • Retailing Retailing LO 1 All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use.
  • The Role of Retailing
    • Over 1.6 million U.S. retailers employ more than 24 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
    LO 1
    • Because of the recession, customers are in a particularly cost-conscious mood and focusing on value. To grab their attention retailers can:
    Beyond the Book Stress “Value” to Attract Customers SOURCE: Larry Freed, “Satisfied and Buying,” online at http://www.internetretailer.com.
    • Offer unique value propositions, i.e. prices, customer services, loyalty programs
    • Use innovative marketing concepts that will resonate with consumers, e.g. pop-up shops or a “green emphasis
    • Appeal to time-strapped customers with an efficient multi-channel shopping experience
    LO 1
  • REVIEW LEARNING OUTCOME The Importance of Retailing LO 1 11.6% 13% 40% Retailing as a % of U.S. employment Retailing as a % of U.S. businesses Retailing as a % of GDP
  • Classification of Retail Operations Explain the dimensions by which retailers can be classified LO 2
  • Classification of Retail Operations Ownership Level of Service Product Assortment Price LO 2
  • Classification of Ownership LO 2 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
  • Level of Service LO 2 Full Service Self Service Discount stores Exclusive stores Factory outlets Warehouse clubs
  • Types of Stores and Their Characteristics LO 2 Assort- ment Price Gross Margin Broad Narrow Broad Med-Narrow Medium Med-Broad Med-Broad Broad Med-Narrow Narrow Mod-High Mod-High Moderate Mod High Moderate Mod Low Mod Low-low Low-very low Low Low-High Mod High High Low Mod High Low Mod Low Mod Low 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 Low-Mod Mod-Low Mod-Low Low Low Low-High Department Store
  • Price Gross Margin LO 2 The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.
  • Major Types of Retail Operations Describe the major types of retail operations LO 3
  • Major Types of Retail Operations LO 3 Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants Online http://www.walgreens.com
  • Categories of Discount Stores LO 3 Full-Line Discounters Specialty Discount Stores Warehouse Clubs Off-Price Discount Retailers
  • Discount Stores Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products. LO 3 Mass Merchandising
  • 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”.
  • Specialty Discount Stores Category Killers Specialty discount stores that heavily dominate their narrow merchandise segment. LO 3
  • Types of Retail Operations Department Stores Specialty Stores Supermarket Drugstores Convenience Stores Discount Stores Restaurants Scrambled Merchandising Shopping Specialty Goods Distinctive Products Customer Service Food Products Medications Health and Beauty Cosmetics Specialty High Turnover Goods LO 3 Full-line supercenter extreme- value category killer factory outlet Specialty Warehouse Off-price
  • Aldi
    • Started in 1976 in Iowa, ALDI is increasing its market presence as a discount grocer. Offering a slim 1,400 products as ALDI select brands, the chain is able to give consumers deep discounts through supplier deals and their no-frills approach.
    • Products must meet national brand standards, but consumers purchase for up to 50% less.
    LO 3
  • Nonstore Retailing Discuss nonstore retailing techniques LO 4
  • Nonstore Retailing LO 4 Automatic Vending Direct Retailing Direct Marketing Electronic Retailing
  • Direct Retailing LO 4 Door-to-Door Office-to-Office Home Sales Parties Online http://www.avon.com
  • Types of Direct Marketing Shop-at-home networks Online retailing LO 4 Telemarketing Catalogs & Mail Order Direct Mail Electronic Retailing
  • Beyond the Book Top E-Tailers by Sales Volume LO 4 America's Top Ten Retail Businesses Rank Company Web Sales Volume (in billions) 1 Amazon.com Inc. $19.2 2 Staples Inc. $5.6 3 Dell Inc. $4.8 4 Office Depot Inc. $4.8 5 Apple Inc. $3.6 6 OfficeMax Inc. $3.1 7 Sears Holding Corp. $2.7 8 CDW Corp. $2.6 9 Newegg.com $2.1 10 Best Buy $2.0
    • Customer Satisfaction (out of 100 points)
    SOURCE: Larry Freed, “Satisfied and Buying,” online at http://www.internetretailer.com. LO 4 Top E-Tailers by Customer Satisfaction Netflix.com 86 QVC.com 84 Amazon.com 83 DrsFosterSmith.com 81 Apple.com 80 Newegg.com 80 Shutterfly 80
  • Nonstore Retailing Techniques Nonstore Retailing LO 4 Vending Direct retailing Direct marketing Electronic retailing direct mail catalogs telemarketing online shop at home
  • Vending Machine Variety
    • Reverse Vending Machines
      • Input recyclables and the machine sorts, compresses, and pays out refunds based on the container.
    • Used Golf Ball Vending Machines
      • Tilly-Miss fills candy-style dispensers with reclaimed golf balls.
    • Kosher Hot Dog Vending Machines
      • Kosher Cart cooks hot dogs and other kosher foods
    • Custom Juice Drinks Vending Machines
      • Select and mix custom juice drinks
    • Moobella Custom Ice Cream Vending Machines
      • Make custom ice cream by mixing base flavors and mix-ins
    LO 4
  • Franchising Define franchising and describe its two basic forms LO 5
  • Basic Forms of Franchising Business Format Franchising Product and Trade Name Franchising LO 5
  • Franchising LO 5 Product and Trade Name Franchising Dealer agrees to sell in products provided by a manufacturer or wholesaler. Business Format Franchising An ongoing business relationship between a franchiser and a franchisee.
  • Largest U.S. Franchisors LO 5
  • Retail Marketing Strategy List the major tasks involved in developing a retail marketing strategy LO 6
  • Retail Marketing Strategy Develop the “Six Ps” Define & Select a Target Market LO 6
  • Defining a Target Market LO 6 STEP 1: Segment the Market Demographics Geographics Psychographics
  • Choosing the Retailing Mix LO 6 STEP 2: Choose the Retailing Mix Product Price Promotion Place Personnel Presentation Online http://www.publix.com
  • The Retailing Mix LO 6 Target Market Product Price Place Promotion Personnel Presentation
  • Choosing the Retailing Mix The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. LO 6 Product Offering
  • Retail Promotion Strategy LO 6 Advertising Public Relations Publicity Sales Promotion
  • The Proper Location Choosing a Community Choosing a Site LO 6 Economic growth potential Competition Geography Freestanding Store Shopping Center Mall
  • Important Factors for Site Choice
    • Neighborhood socioeconomics
    • Traffic flows
    • Land costs
    • Zoning regulations
    • Public transportation
    • Site’s visibility, parking, entrances and exits, accessibility, and safety
    • Fit with other stores
    LO 6
  • Shopping Center and Mall Locations
    • 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
    LO 6 Advantages Disadvantages
  • Retail Prices Quality Image High Price Low Price Good Value Single Price Point EDLP LO 6
  • Presentation of the Retail Store The overall impression conveyed by a store’s physical layout, décor, and surroundings LO 6 Atmosphere
  • Presentation of the Retail Store LO 6 Employee type and density Merchandise type and density Fixture type and density Sound Odors Visual factors Online http://www.apple.com
  • Personnel and Customer Service LO 6 Suggestion Selling Trading Up Two Common Selling Techniques
  • Customer Service for On-Line Retailers LO 6 Easy-to-use Web site Product availability Simple returns
  • Developing a Retail Marketing Strategy Location PRICE Advertising, and depth of product assortment Width and hours public relations publicity, Customer service Layout and atmosphere LO 6 TARGET PLACE Promotion PRODUCT Personnel PRESENTATION and personal selling
  • New Developments in Retailing Describe new developments in retailing LO 7
  • New Developments in Retailing LO 7 Interactivity Consumers are involved in the retail experience. M-commerce Purchasing goods through mobile devices.