MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University Lamb, Hair, McDaniel 2008-2009 Retailing 13 CHAPTER

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

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

The Role of Retailing Discuss the importance of retailing in the U.S. economy LO 1

Retailing LO 1 Retailing 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 LO 1 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

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

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

Classifying Retailers Explain the dimensions by which retailers can be classified LO 2

Classification of Retail Operations LO 2 Ownership Level of Service Product Assortment Price

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 Lo-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 LO 2 Gross Margin 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 LO 3 Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products. 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 LO 3 Category Killers Specialty discount stores that heavily dominate their narrow merchandise segment.

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

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 LO 4 Shop-at-home networks Online retailing Telemarketing Catalogs & Mail Order Direct Mail Electronic Retailing

LO 4 Beyond the Book Top E-Tailers SOURCE: Cecily Hall, “Netflix, QVC Lead Online Satisfaction,” WWD, June 1, 2007, p13. Mass Merchants QVC.com Amazon.com HSN.com Target.com Overstock.com JCPenney.com Apparel And Accessories LLBean.com Zappos.com Victoriassecret.com eBags.com Coldwatercreek.com Customer Satisfaction Netflix.com QVC.com Amazon.com BN.com DrsFosterSmith.com

Mass Merchants

QVC.com

Amazon.com

HSN.com

Target.com

Overstock.com

JCPenney.com

Apparel And Accessories

LLBean.com

Zappos.com

Victoriassecret.com

eBags.com

Coldwatercreek.com

Customer Satisfaction

Netflix.com

QVC.com

Amazon.com

BN.com

DrsFosterSmith.com

REVIEW LEARNING OUTCOME LO 4 Nonstore Retailing Techniques Nonstore Retailing Vending Direct retailing Direct marketing Electronic retailing direct mail catalogs telemarketing online shop at home

Franchising Define franchising and describe its two basic forms LO 5

Basic Forms of Franchising LO 5 Business Format Franchising Product and Trade Name Franchising

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 SOURCE: http:www.entrepreneur.com “2007 Franchise 500 Rankings” September 2007

Retail Marketing Strategy List the major tasks involved in developing a retail marketing strategy LO 6

Retail Marketing Strategy LO 6 Develop the “Six Ps” Define & Select a Target Market

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 LO 6 The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. Product Offering

Retail Promotion Strategy LO 6 Advertising Public Relations Publicity Sales Promotion

The Proper Location LO 6 Choosing a Community Choosing a Site Economic growth potential Competition Geography Freestanding Store Shopping Center Mall

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

Neighborhood socioeconomics

Traffic flows

Land costs

Zoning regulations

Public transportation

Site’s visibility, parking, entrances and exits, accessibility, and safety

Fit with other stores

Shopping Center and Mall Locations Design attracts shoppers Activities and anchor stores draw customers Ample parking Unified image Sharing of common area expenses LO 6 Expensive leases Failure of common promotion efforts Lease restrictions Hours of operation Anchor store domination Direct competitors Consumer time limits Advantages Disadvantages

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

Retail Prices LO 6 Quality Image High Price Low Price Good Value Single Price Point EDLP

Presentation of the Retail Store LO 6 The overall impression conveyed by a store’s physical layout, décor, and surroundings 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

REVIEW LEARNING OUTCOME LO 6 Developing a Retail Marketing Strategy

New Developments in Retailing Describe new developments in retailing LO 7

LO 7 New Developments in Retailing Interactivity Consumers are involved in the retail experience. M-commerce Purchasing goods through mobile devices.