Transcript Retailing - simion.ca

RETAILING AND WHOLESALING
Chapter 11
Instructor Shan A. Garib, S13
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11.1 The Role of Retailing
Retailing: all the activities related to the sale of
goods and servies to the ultimate consumer
for personal, non-business use
-retailing makes up about 30% of the GDP
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11.2 Classification of Retail Operations
Retail operations are classified according to it’s
ownership, level of service, product
assortment and price
-last three are combined to create distinct
retail operations
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Classification of Retail Operations
Form of Ownership – classifies retail outlet on
whether independent, corporate chains, or
contractual systems own or control
Independant retailers: owned by single person or
partnership
Chain stores: multiple outlets owned and operated
by a group or organization eg StarBucks
Contractual System: owned and operated by
individuals but band together and operate like a
chain eh Home Hardware
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Target Market Selection and Positioning
Selecting a Target Market
• Through:
–
–
–
–
Demo
Geo
Psycho
Behavioristics
– Retailers adjust Marketing mix accordingly
Retail Positioning
• Used to differentiate from competition
Shopper Marketing
• Designed to understand how consumers behave as
shoppers in different channels and formats
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Retailing Mix
Products and Services
• Level of Service – degree of service provided to
consumer. A continuum from full service to self
service
-warehouse stores offer no service
1. Self Service eg Costco
2. Limited Service eg Shoppers
3. Full Service eg. Holt Renfrew
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Retailing Mix
Merchandize Mix: how many different products the
store carries and in what assortment
Product Assortment – breadth and depth of product line
-specialty stores are very specialized but have lots
of depth: different assortment within each product line
-carry limited or single line assortment of related
items eg Sport Check carries sporting goods
-often called specialty outlets
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Retailing Mix
-full line discounter carry many different things and
have lots of breadth:
variety of different lines
carried eg dollar store
-limited depth
-Scrambled merchandising: offering several
unrelated product lines eg Shoppers Drug Mart
-often results in intertype competition:
competition between two very dissimilar types of retail
outlets
Eg local bakery might compete with Walmart
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Retailing Mix
Planogram: visual diagram or drawing of
products that illustrate how and where retail
products should be placed on a store shelve
• fastest moving high-margin products have the
biggest shelve space
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11.6 Retail Marketing Strategy
Based on overall goals and strategic plans
Eg. More traffic, higher sales, higher image
Key tasks:
1. Defining and selecting a target market
2. Developing the retail mix
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Retail Marketing Strategy
Retailers combine the elements of the retailing
mix to come up with a single retailing method
to attract the target market
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Retail Marketing Strategy
Retailers combine the elements of the retailing mix
to come up with a single retailing method to
attract the target market
-4P’s + presentation and personnel
-6P’s project a store image which influences
consumers’ perceptions
-marketing managers must make sure the
image is compatible with target market’s
expectations
-managers must use Place, presentation and
promotion to fine tune the basic positioning
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Retail Marketing Strategy
Retail Prices
-usually based on cost of good
-key element in positioning strategy
-keeping prices low is hard because of
Shrinkage, or breakage and theft by customers
and employees
-off-price retailing: selling brand name
merchandise at a lower than regular cost
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Retail Marketing Strategy
Presentation of the Retail Store
-determines the image
-main element is atmosphere:
the overall impression conveyed
by a stores physical layout, decor, and surroundings
-layout includes where products are placed in
the store
-place most commonly purchased items
at convenient place
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Retail Marketing Strategy
Presentation of the Retail Store
-most influential factors in atmosphere:
-employee type and density
-merch type and density
-fixture type and density
-sound
-odours
-visual factors eg colours warm/cool
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Retail Marketing Strategy
Physical Location
-Central business district: oldest retail setting the downtown
-Regional Shopping Centers: 50-150 store attract those who
live/work 5-15kms away
-have anchor stores eg Walmart, Sears
-Community Shopping Center: has one primary store and 2040 smaller stores
-shoppers within 2-5km drive
-Strip Location: 5-10min drive customers
-Power Center: large shopping strip with national stores
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Retailing Mix
Communications
• Multichannel retailers: use and integrate a
combination of traditional store and non-store
formats eg catalogs, on-line retailing
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11.4 Nonstore Retailing
Shopping without visiting a store
-consumers demand convenience
Major forms:
1. Automatic vending
2. Direct retailing
3. Direct marketing
4. Electronic retailing
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Nonstore Retailing
Shopping without visiting a store
1. Automatic vending
-use of machines
-usually food and beverage
2. Direct Selling
-sell products door to door eg Avon
-now direct sellers hold parties
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Nonstore Retailing
Shopping without visiting a store
3. Direct Marketing
-technique used to get purchases from
home, offices or other nonretail setting
-direct mail, telemarketing
-sell products door to door eg Avon
-now direct sellers hold parties
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Nonstore Retailing
Shopping without visiting a store
Direct mail – precisely target customers according to
demo., geographics
Catalogues – usually for highly segmented markets
Telemarketing – use of telephone to sell products
directly to consumers
-outbound, unsolicited
-inperson sales for more closing sales
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Nonstore Retailing
Shopping without visiting a store
4. Electronic Retailing
-24hr, TV retailing shop at home retailing
-shop at home networks
-display merch to home viewers
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11.6 Online Retailing
Nonstore Retailing
-Why buy Online?
convenience: sites have to be easy to locate
Choice: selection and assistance must be offered
Communication : 3 forms – marketer to consumer
email, customer to marketer buying requests, and
consumer to consumer chat rooms
Customization: allow customers to get what they
want
Cost: many items are lower prices
Control: online shoppers are empowered
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Retail Marketing Strategy
The product offering
-first element in retailing mix
-retailers decide what to sell on the basis of what their
target market wants to buy
-base decision on market research, past sales, fashion
trends, customer requests
-can use data mining
-developing a product offering is a question of width
and depth of product assortment
-Width: assortment
-Depth: number of different brands within each
assortment
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Retail Marketing Strategy
The product offering
-merchandise selection most critical for
consumer to decide where to shop
-after finding the right merch to sell
managers must find sources of supply: the buy
function
-final step to evaluate entire process and
find ways to improve
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Retail Marketing Strategy
Promotion Strategy
-includes advertising, public relations, and sales
promotion
-goal is to help position the store in consumers’ minds
-retailers advertising is carried out mostly at the local
level
-usually provides specific information about
their stores such as location, merch., hours, prices
-national advertising focusses on image
-new trend is cooperative ads eg. Shoppers Drug Mart
carrying Nativa Organics
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Retail Marketing Strategy
The Proper Location
-important because:
1. retailer making a large, perminant
commitment of resources
2. location will affect stores future growth and
profitability
-site location begins with choosing a community
-important factors are economic growth
potential, the amount of competition, geography
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Retail Marketing Strategy
The Proper Location
After setting a location retailers must choose site
-important factors are:
-neighbourhood socioeconomic
characteristics, traffic flows, land costs, regulations,
public transportation
-freestanding unit, great visibility
-destination stores eg. Walmart
-or tenant
-anchor stores at ends
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Retail Marketing Strategy
Personnel and Customer Service
-most retail sales involve a customer-salesperson
relationship
-sales personnel provide customers with the amount of
service prescribed in the retail strategy of the store
-they persuade shoppers to buy
-persuade customers what they are selling is
what they need
-sales people trained in two techniques:
1. trading up - buy higher priced item
2. suggestion selling – buy related
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11.3 Major Types of Retail Operations
Department Stores – carries wide variety of
shopping and specialty goods
-purchases made within the department and
not in a central checkout location
-each department is treated as a separate
buying cnetre to achieve economies in promotion
-each department is headed by a buyer who
selects merch., directs promotion and personnel
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Major Types of Retail Operations
Specialty Stores – type and methode of retail
– carries wide variety of shopping and
specialty goods, dep but narrow
-allows retailers to refine their segmentation
strategies to specific target markets
-customer service is more knowledge able
eg. Tim Hortins
-price is secondary importance for consumers
-usually first place of introduction
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Major Types of Retail Operations
Supermarkets – large, departmentalized, self
serving
-being replaced by superstores with many
services
-called scrambelled merchandising
-to stand out, supermarkets offer loyalty
marketing programmes eg points
Drug Stores - pharmacy and OTC
Convenience Stores – mini supermarket, selfserve
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Major Types of Retail Operations
Discount Stores – competes on the basis of low
prices, high turnover and high volumes
Four Categories:
1. Full line discount
2. Specialty discount
3. Warehouse clubs
4. off-price discount retailers
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Major Types of Retail Operations
Discount Stores – competes on the basis of low
prices, high turnover and high volumes
1. Full line discount
-offer very limited service
-broad assortment of goods
-dominated by chains
-called mass merchandisers
-moderate to low prices on large qty of merch
and lower levels of service to stimulate high turnover
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Major Types of Retail Operations
Discount Stores – competes on the basis of low
prices, high turnover and high volumes
2. Specialty discount - single line merch.
-called category killers because they dominate
their narrow merch segment
eg. Futureshop
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Major Types of Retail Operations
Discount Stores – competes on the basis of low prices,
high turnover and high volumes
3. Warehouse clubs – sell a limited selection of brandname items
-sold in bulk
-members charged a fee
eg. Costco
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Major Types of Retail Operations
Discount Stores – competes on the basis of low
prices, high turnover and high volumes
4. off-price discount retailers – sells at a 25%
discount below traditional department store prices
-buy overrun stock
-bankruptcy and liquidation
-end of season
eg. Winners, factory outlet carries it’s own
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Major Types of Retail Operations
Restaurants – straddle between retail and
service
-some are specialty retailer eg startbucks
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11.5 Franchising
Franchise: continuing relationship where a
franchisor grants to a franchisee business rights
to operate or sell a product
Franchisor originates the trade name, product,
method of operation
Franchisee pays franchiser for right to use name,
product and business methods
-usually lasts 10 to 20 years
-usually one time franchisee fee + royalties
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Franchising
Franchise: continuing relationship where a
franchiser grants to a franchisee business rights
to operate or sell a product
Two basic forms:
1. Product and tradename
2. Business format
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Franchising
Franchise: continuing relationship where a
franchiser grants to a franchisee business rights to
operate or sell a product
1. Product and tradename
-dealer sells products provided by manufacturer
2. Business format
-ongoing business relationship
-sells right to franchisee for formula to doing business
eg. Hotel, real estate
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What is Wholesaling?
Wholesaling
-refers to all activities involved in
selling goods and services to those who
intend to resell or use the same for
producing goods or services.
Functions of the Wholesaler
1. anticipating customer needs;
2. selling and promotion;
3. financing;
4. storage;
5. breaking bulk;
6. transportation;
7. risk-taking.
Types of Wholesalers
1. Full Function
Wholesalers
2. Limited function
wholesalers
3. Industrial
wholesalers
A. Merchant Wholesalers
Merchant wholesalers
can be classified into the ff:
the general line
merchant wholesaler who
carry a general assortment of
goods; and
the specialty line
merchant wholesaler who
carry only a limited number of
lines.
Types of Wholesalers
1. Full Function
Wholesalers
2. Limited function
wholesalers
3. Industrial
wholesalers
B. Sales office and
branches
C. Agents
manufacturer’s
agents- sell
only a portion of a
manufacturer’s output.
selling agents- are
required to sell the firm’s
entire output.
Types of Wholesalers
1. Full Function
Wholesalers
2. Limited
function
wholesalers
3. Industrial
wholesalers
Limited function wholesalers
provide only some wholesaling
functions, like order taking and
processing.
They may be classified as follows:
1. drop shippers
2. truck distributors
3. mail-order
wholesalers
4. cash-and-carry
wholesalers
5. cooperatives
6. rack jobbers
Types of Wholesalers
1. Full Function
Wholesalers
2. Limited function
wholesalers
3. Industrial
wholesalers
The following types of
wholesalers serve the industrial
market:
1. those also serving the
retailers:
a. sales branches
b. brokers
c. manufacturer’s agents
d. combination houses
.
Types of Wholesalers
1. Full Function
Wholesalers
2. Limited function
wholesalers
3. Industrial
wholesalers
2. industrial distributors
serving only the industrial
market:
a. general line
wholesalerscarry
complete assortment of goods
in a single line.
b. specialty line
wholesalers- carry only