Transcript Retailing - Webster in china

16
Managing Retailing,
Wholesaling, and Logistics
Marketing Management, 13th ed
Chapter Questions
• What major types of marketing
intermediaries occupy this sector?
• What marketing decisions do these
marketing intermediaries make?
• What are the major trends with
marketing intermediaries?
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Starbucks Hear Music Coffeehouse
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What is Retailing?
Retailing includes all the activities involved in
selling goods or services directly to final
consumers for personal, non-business use.
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Planning a Retailer’s Strategy
Convenience
Product Selection
Key Features
Affecting
Consumers’
Retail Choice
Fairness in Dealings
Helpful Information
Prices
Social Image
Shopping Atmosphere
Major Retailer Types
• Specialty store—narrow
product line
• Department store —
several product lines
• Supermarket—large, lowcost, low-margin, highvolume, self-service store
designed to meet total
needs for food and
household products
• Convenience store—small
store in residential area,
often open 24/7, limited line
of high-turnover
convenience products plus
take out
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Discount store—standard or
specialty merchandise; lowmargin, high-volume stores
Off-price retailer—leftover
goods, overruns, irregular
merchandise sold at less than
retail
Superstore—huge selling
space, routinely purchase food
and household items, plus
services (laundry, shoe repair,
dry cleaning, check cashing;
category killer)
Catalog showroom— broad
selection of high-markup, fastmoving, brand-name goods sold
by catalog at discount
Conventional Retailers – Avoid Price Competition
Single- &
Conventional
limitedOfferings
line stores
Expanded
assortment
& service
Specialty
shops &
dept. stores
Ritz Camera,
Coach, Gap,
Macy’s
Expanded
assortment
&/or reduced
margins &
service
Supermarkets,
disc. houses,
mass merch.,
super-, clubStores, +
Safeway,
IKEA, Home
Depot,
Costco
Added conv.,
higher margins,
reduced
assortment
C-stores,
vending, doorto-door, phone,
mail, some
e-tail
7-11, Pepsi
vending,
Avon, Lands’
End, QVC
Internet
eBay,
Amazon,
Zappos,
Netflix, Dell
Expanded
assortment,
reduced
margins, more
information
Retailer Size and Profits
 Large retail stores do most of the business
• Only about 11% of stores sell over $5 million annually but they
account for almost 70% of retail sales
• Yet, some small retailers control "their" market
 Larger stores enjoy economies of scale
 Corporate chain stores also enjoy economies of scale
• Account for about half of all retail sales (and much higher in
some product categories)
• Continuing to grow
 Independent retailers form chains
• Cooperative chains are retailer sponsored
• Voluntary chains are wholesaler sponsored
Retailing and the Internet
 Growing fast, but still in very early stages
 Convenience not defined by location of product
assortment
 More information of some types but not others
• More technical detail
• Less touch and feel
 Generally requires more advance planning
• Delivery takes time and adds costs
 Competitive effects impact other retailers
 New types of specialists and intermediaries will
continue to develop
Mass-Merchandising Concept
 Retailers should offer low prices to get faster
turnover and greater sales volume—by
appealing to larger markets
 Started with supermarkets in 1930s
 Really caught on with mass-merchandisers
• large stores
• self-service oriented
• Examples: Wal-Mart, Target
 Competition among mass-merchandisers has
heated up
 Limited-line mass-merchandisers (“category
killers”) grew rapidly, but growth has subsided
Examples of Scrambled Merchandising
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Videotapes and DVDs at grocery stores
Microwave popcorn at video rental stores
Computer software at bookstores
Clothing and fashion accessories at a
motorcycle dealership
 One-hour prints from digital pictures at
drugstores
An Example of a Large Retail Chain
Levels of Retail Service
• Self service—many customers will to locatecompare-select process to save money
• Self selection—customers find their own
goods, although they can ask for assistance
• Limited service—retailers carry more
shopping goods and services such as credit
and merchandise-return privileges
• Full service—salespeople are ready to
assist in every phase of the locate-compareselect process
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Nonstore Retailing
• Direct selling —multilevel selling and network
marketing selling door-to-door, or at home sales
parties
• Direct marketing —direct mail, catalog marketing,
telemarketing, television direct-response marketing,
electronic shopping
• Automatic vending —variety of merchandise,
impulse goods, hosiery, cosmetics, hot food, etc.
• Buying service —storeless retailer servicing a
specific clientele—usually employees of a large
organization—who are entitled to buy from a list of
retailers that have agreed to give discounts in return
for membership
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Major Types of Corporate
Retail Organizations
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Corporate chain store —two or more outlets owned and controlled,
employing central buying and merchandising, and selling similar lines
of merchandise (GAP)
Voluntary chain —wholesaler-sponsored group of independent
retailers engaged in bulk buying and common merchandising
(Independent Grocers Alliance)
Retailer cooperative —independent retailers using a central buying
organization and joint promotion efforts (ACE Hardware)
Consumer cooperative —retail firm owned by its customers.
Members contribute money to open their own store, vote on its policies,
elect a group to manage it, and receive dividends
Franchise organization —contractual association between a
franchisor and franchisees (McDonald’s)
Merchandising conglomerate —corporation that combines several
diversified retailing lines and forms under central ownership, with some
integration of distribution and management (Allied Domeq PLC with
Dunkin’ Donuts and Baskin-Robbins, plus a number of British retailers
and a wine and spirits group
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Department Store Model:
The Showcase Store
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What is a Franchising System?
A franchising system is a system of
individual franchisees, a tightly knit
group of enterprises whose systematic
operations are planned, directed, and
controlled by the operation’s franchisor.
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Franchise Operations
 The franchiser develops a good
marketing strategy and the retail
franchise holders carry out the strategy in
their own units.
 Strong legal contracts govern the
relationship.
 Franchisers have been successful with
newcomers.
• especially popular with service operations
 Franchise sales account for about half of
all retail sales.
Characteristics of Franchises
• The franchisor owns a trade or service
mark and licenses it to franchisees in
return for royalty payments
• The franchisee pays for the right to be
part of the system
• The franchisor provides its franchisees
with a system for doing business
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Changes in the
Retail Environment
• New retail forms and combinations
• Growth of intertype competition
• Competition between store-based and
non-store-based retailing
• Growth of giant retailers
• Decline of middle market retailers
• Growing investment in technology
• Global profile of major retailers
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New Retail Forms and Combinations
• Combination retailers—some supermarkets includes
bank branches; bookstore feature coffee shops, etc.
• Pop-ups —lt retailers promote brands, reach seasonal
shoppers for a few weeks in busy areas and create
buzz (JC Penney unveiled designer Chris Madden’s
home, bath, and kitchen line in a 2,500-square-foot
Rockefeller Center space for one month only.
• Showcase stores—Some stores not only sell other
companies’ brands but get the vendors of the brands
to take responsibility for stock, staff, and even the
selling space. The vendors then hand over a
percentage of the sales to the store’s owner
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Retailers’ Marketing Decisions
• Target market—profile of
customer
• Product assortment—
breadth and depth
• Procurement—
merchandise sources
• Prices—decided in relation
to the target market
• Services—pre-purchase,
post-purchase, ancillary
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Retailers’ Marketing Decisions (cont.)
• Store atmosphere
• Store activities—brick-andmortar and e-commerce
• Communications—
advertisement, special sale,
money-saving coupons, etc.
• Locations
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Store Atmosphere
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Walls
Lighting
Signage
Product
placement
• Floors
• Surface space
• Music
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Retail Category Management
Define the category
Figure out its role
Assess performance
Set goals
Choose the audience
Figure out tactics
Implement the plan
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Retailer Services Mix
• Pre-purchase services —accepting
telephone and mail orders, advertising,
window and interior display, fitting rooms,
shopping hours, fashion shows, and trade-ins
• Post-purchase services —shipping and
delivery, gift wrapping, adjustments and
returns, alterations and tailoring, installations
• Ancillary services —general information,
check cashing, parking, restaurants, repairs,
interior decorating, credit, rest rooms, and
baby-attendant service
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Location Decision
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General business districts—downtown
Regional shopping centers—large suburban
malls containing 40 to 200 stores, typically
featuring one or two nationally known anchor
store, such as JC Penney or Lord & Taylor
Community shopping centers—smaller malls
with one anchor store and between 20 and 40
smaller stores
Strip malls strips—cluster of stores, usually
housed in one long building, serving a
neighborhood’s needs for groceries, hardware,
laundry, shoe repair, and dry cleaning
Location within a larger store—certain wellknown retailers—McDonald’s, Starbucks,
Nathan’s, Dunkin’ Donuts—locate new, smaller
units as concession space within larger stores
or operations, such as airports, schools, or
department stores
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Tips for Increasing Sales
in Retail Space
• Keep shoppers in the store
• Don’t make them hunt
• Make merchandise available to the
reach and touch
• Note that men do not ask questions
• Remember women need space
• Make checkout easy
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Indicators of Sales Effectiveness
Number of people passing by
% who enter store
% of those who buy
Average amount
spent per sale
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Trends in Retailing
• New retail forms and combinations
• Competition between store-based and
non-store-based retailing
• Growth of giant retailers
• Decline of middle market retailers
• Growing investment in technology
• Global presence of major retailers
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Some Trends in Retailing
 Growth of Internet merchants and online
retailing
 Electronic retailing (kiosks, TV, etc.)
 In-home shopping (catalogs, etc.)
 More price competition
 Vertical integration
 More chains and franchises
• chains becoming larger, more powerful
 More and better information (for example,
scanner data)
Private Label Brands
• Private labels (reseller, store, house, or
distributor brand) is a brand that retailers and
wholesalers develop are ubiquitous
• Consumer accepts private labels
• Private-label buyers come from all
socioeconomic strata
• Private labels are not a recessionary
phenomenon
• Consumer loyalty shifts from manufacturers
to retailers
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Private Labels
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Wholesaling Functions
• Selling and promoting—
sales force help
manufacturers reach many
small business customers at
a relatively low cost
• Buying and assortment
building—select items and
build the assortment their
customers need
• Bulk breaking—buy large
carload lots and breaking
the bulk into smaller units
• Warehousing—hold
inventories, and reduce
inventory costs and risks to
suppliers and customers
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Transportation—provide
quicker delivery to buyers
because they are closer to the
buyers
Financing—grant credit, and
finance suppliers by ordering
early and paying bills on time
Risk bearing—absorb some risk
by taking title and bearing cost of
theft, damage, spoilage, and
obsolescence
Market information—supply
competitor activities, new
products, price developments,
etc
Management services and
counseling—training sales
clerks, helping with store layouts
and displays, etc.
Wholesalers’ Marketing Decisions
Target market
Product assortment
Price
Promotion
Place
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What a Wholesaler Might Do for
Customers
 Regroup products—to provide quantity and
assortment customers need
 Anticipate customers' needs—and buy
accordingly
 Carry products in inventory—which helps
reduce customers' inventory costs
 Deliver products promptly and economically
 Grant credit
 Provide information and advice
 Provide part of the buying function—make it
easy for customers to buy what they want
What a Wholesaler Might Do for
Producer-Suppliers
 Provide part of the selling function
 Store inventory (cut producer's
warehousing costs)
 Supply capital (by purchasing producer's
output before it is sold to final customers)
 Reduce credit risks
 Provide marketing information
Manufacturer’s Sales Branches
 Separate business that producers set up
away from their factories to handle
wholesaling functions.
 Represent only about 4.3 percent of all
wholesalers
 Handle 28.4 percent of total wholesale
sales
• Sales high because they are placed in best
markets
 True operating costs may be difficult to
determine
Types of Wholesalers
U.S. Wholesale Trade by Type of
Wholesale Operation
Major Wholesaler Types
Merchant
Full-service
Limited-service
Brokers and agents
Manufacturers
Specialized
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Merchant Wholesalers
 Take title to (own) the products they sell
 About 88.3% of wholesalers are merchant
wholesalers
 Handle about 61.2% of total wholesale
sales
 Two basic types:
• Full-service wholesalers
• Limited-function wholesalers
Full-Service Merchant Wholesalers
 Provide all of the wholesaling functions
 Three major types:
• General merchandise wholesalers
• Single-line (or general-line) wholesalers
• Specialty wholesalers
Some Limited-Function Merchant
Wholesalers
 Cash and carry wholesalers—operates
like service customers except must pay
cash
 Drop-shippers—take title to products they
sell but do not stock or deliver them
 Truck wholesalers—typically deliver
perishable items
 Rack jobbers—usually display products
on their own racks
 Catalog wholesalers—sell out of catalogs
Agent Middlemen Are Strong on Selling
Manufacturer’s
Agents
Brokers
Types of
Agent
Middlemen
Auction
Companies
Selling Agents
Manufacturers’ Agents
 Sell similar products for several
noncompeting producers
 Work on a commission basis
 Basically are independent, aggressive
sales reps
 Especially helpful to small producers and
producers whose customers are very
spread out
Brokers
 Main purpose is to bring buyers and
sellers together
 Usually have a temporary relationship
with buyer and seller while the deal is
negotiated
 Earn a commission—from either the
buyer or seller—depending on who hired
them
 Especially common with seasonal
products and products sold infrequently
Agent Middlemen
 Wholesalers who do not own the products
they sell
 Main purpose is to help with buying and
selling
 Usually operate at relatively low cost
 Usually provide fewer functions than
merchant wholesalers
 Often specialize not only by product-type,
but also by customer type
Trends in Wholesaling
 Fewer, but larger, wholesalers
 Use of computers to control inventory,
order processing
 Closer relationships with customers
 More selective in picking customers
Market Logistics Planning
• Deciding on the company’s value
proposition to its customers
• Deciding on the best channel design
and network strategy
• Developing operational excellence
• Implementing the solution
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What are
Integrated Logistics Systems?
An integrated logistics system (ILS)
includes materials management,
material flow systems, and physical
distribution, aided by information
technology.
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Market Logistics
• Sales forecasting
• Distribution
scheduling
• Production plans
• Finished-goods
inventory decisions
• Packaging
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• In-plant
warehousing
• Shipping-room
processing
• Outbound
transportation
• Field warehousing
• Customer delivery
and servicing
Market Logistics Decisions
• How should orders be
handled?
• Where should stock
be located?
• How much stock
should be held?
• How should goods be
shipped?
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Determining Optimal Order Quantity
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Transportation Factors
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Speed
Frequency
Dependability
Capability
Availability
Traceability
Cost
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Containerization
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