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rishush 06

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strategic business advantages of direct marketing …

strategic business advantages of direct marketing

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  • 1. Chapter 6 Web, Nonstore-Based, and Other Forms of Nontraditional Retailing RETAIL MANAGEMENT: A STRATEGIC APPROACH , 10th Edition BERMAN EVANS
  • 2. Chapter Plan
    • To contrast single-channel and multi-channel retailing
    • To look at the characteristics of the 3 major retail institutions involved with nonstore-based strategy mixes: direct marketing, direct selling, and vending machines.
    • To explore the emergence of e-retailing
    • To discuss 2 other nontraditional forms of retailing: video kiosks and airport retailing
  • 3. Nonstore Retailing
    • Retailing strategy that is not store-based
    • It exceeds $375 billion annually
    • 80% comes from direct marketing
    • Web-based retailing is fastest growing area
  • 4. Single-channel & multi-channel
    • Single-channel: when retailer uses one retail format, could be store or nonstore-based.
    • Single-channel: usually in the beginning.
    • Multi-channel: when firm grows
  • 5. Direct Marketing
    • Customer is first exposed to a good or service through a nonpersonal medium and then orders by mail, phone, fax, or computer
    • 2 broad categories: general & speciality
    • Annual U.S. sales exceed $300 billion
    • Other leading countries include
      • Japan, Germany, France, Great Britain, Italy
  • 6. Characteristics of Direct Marketing Customers
    • Married, upper middle class, 36-50 years old
    • Live: far from malls or in upscale metro
    • Desire: convenience, unique merchandise, good prices
  • 7. Strategic Business Advantages of Direct Marketing
    • Reduced costs
    • Lower prices
    • Large geographic coverage
    • Convenient to customers
    • Ability to pinpoint customer segments
    • Ability to eliminate sales tax for some
    • Ability to supplement regular business without additional outlets
  • 8. Strategic Business Limitations of Direct Marketing
    • Products cannot be examined prior to purchase
    • Costs may be underestimated
    • Response rates to catalogs under 10%
    • Clutter exists
    • Long lead time required
    • Industry reputation sometimes negative
  • 9. Data-Base Retailing
    • Collection, storage, and usage of relevant customer information
      • name
      • address
      • background
      • shopping interests
      • purchase behavior
    • Observation of 80-20 rule
  • 10. 8 Steps in direct marketing strategy (Diagram)
    • Business definition, generating customers, media selection, generating customers, media selection, presenting the message, customer contact, customer response, order fulfillment and measuring results & maintaining the database.
  • 11. Business definition
    • A company makes two decision regarding its business definition
    • Is the firm going to be a pure direct marketer or is going to engage in multi channel retailing.
    • Is the firm going to be a general direct marketer & carry a broad product assortment., or will it specialize in one good/service category.
  • 12. Generating customer
    • A firm can
    • Buy a printed mailing list from a broker.
    • Download a mailing list from the web.
    • Send out a blind mailing to all the residents in a particular area.
    • Advertise in a news paper, magazine, websites etc.
    • Contact consumers who have bought from the firm or requested information.
  • 13. Media Selection & Customer Generation
    • Printed catalogs
    • Direct-mail ads and brochures
    • Inserts with monthly credit card and other bills (statement stuffers)
    • Ads in mass media
    • Vending m/c
    • Others
    • Purchase a list
    • Develop a data base
    • Blind mailing
    • Advertise
  • 14. Measuring results
    • Overall response rate
    • Average purchase amount
    • Sales volume by product category
    • Value of list brokers- the revenues generated from various mailing lists.
  • 15. Outcome Measures
    • Overall Response Rate
    • Average Purchase Amount
    • Sales Volume by Product Category
    • Value of List Brokers
  • 16. Direct Selling
    • Includes personal contact with consumers in their homes (and other non-store locations) and phone solicitations
    • Strategy mix emphasizes convenient shopping & personal touch.
    • Lower overhead costs (for retailer).
    • Problems?
  • 17. Problems in direct selling
    • More women work
    • Improved job opportunities in other fields
    • Market coverage is limited by size of sales force.
    • Sales force turnover is high
    • Above average prices due to compensation to sales personnel
    • Legal restrictions
    • Name of door to door selling has poor image.
  • 18. The Role of the Web
    • Project a retail presence
    • Enhance image
    • Generate sales
    • Reach geographically-dispersed customers
    • Provide information to customers
    • Promote new products
    • Demonstrate new product benefits
  • 19. The Role of the Web (cont.)
    • Provide customer service (e.g., e-mail)
    • Be more “personal” with consumers
    • Conduct a retail business efficiently
    • Obtain customer feedback
    • Promote special offers
    • Describe employment opportunities
    • Present information to potential investors, franchisees, and the media
  • 20. Figure 6-8: Five Stages of Developing a Retail Web Presence 1. Brochure Web Site 2. Commerce Web Site 3. Integrated Web Site 4. The ‘Webified’ Store 5. Site Integrated with Manufacturer Systems
  • 21. Web Strengths
    • Using the Web
      • information
      • entertainment
      • interactive communications
    • Shopping Online
      • selection
      • prices
      • convenience
      • fun
  • 22. Reasons NOT to Shop Online
    • Trust
    • Fear
    • Lack of security
    • Lack of personal communication
  • 23. Recommendations for Web Retailers
    • Develop or exploit a well-known, trustworthy retailer name
    • Tailor the product assortment for Web shoppers
    • Enable the shopper to click as little as possible
    • Provide a solid search engine
    • Use customer information
  • 24. Nontraditional Retailing
    • Nontraditional retailing also includes formats that do not fit into the store and nonstore-based categories:
      • Video kiosks
      • Airport retailing
  • 25. Features of Airport Retailing
    • Large group of prospective shoppers
    • Captive audience
    • Strong sales per square foot of retail space
    • Strong sales of gift and travel items
    • Difficulty in replenishment
    • Longer operating hours
    • Duty-free shopping possible
  • 26. Video Kiosks
    • Free standing interactive computer terminal for purchasing (purchase may occur onsite or offsite)
    • Though actual sales may be less from kiosks per se, they influence sales by providing product information
    • Used for greeting cards, movie tickets, book sales