Transcript Chapter 13 Retail

Principles of Marketing
Retailing and Wholesaling
ASB
Based on Kotler
Chapter Outline
1.
2.
Retailing
Wholesaling
‘Modern Trade’
13-3
Retailing
Retailing includes all the activities in selling
products or services directly to final
consumers for their personal, non-business
use
Retailers are businesses whose sales come
primarily from retailing
13-4
Retailing
1.Store retailers
2. Non-store retailing includes selling to final consumers
through:
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Direct mail
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Catalogs
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Telephone
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Internet
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TV shopping
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Home and office parties
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Door-to-door sales
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Vending machines
13-5
Retailing
Types of Retailers
Classified in terms of:
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Amount of service
•
Product lines
•
Relative price
13-6
Retailing
Types of Retailers
Amount of service (for locate, compare, select)
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Self service
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•
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Self selection
Limited service. More info and asst.
Full service- sales people assist
13-7
Retailing
Types of Retailers
Amount of Service
Self-service retailers serve customers who
are willing to perform their own locatecompare-select process to save money
•
Wal-Mart
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Supermarkets / Spencer’s Daily
13-8
Retailing
Types of Retailers
Amount of Service
Limited service retailers provide more sales
assistance because they carry more
shopping goods about which customers
need more information
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Sears
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JC Penney
13-9
Retailing
Types of Retailers
Amount of Service
Full-service retailers assist customers in
every phase of the shopping process,
resulting in higher costs that are passed on
to the customer as higher prices
•
Department stores
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Specialty stores
13-10
Retailing
Types of Retailers
Amount of Service
Specialty stores carry narrow product lines
with deep assortments within the product
lines . Jacob’s
Department stores carry a wide variety of
product lines
Convenience stores carry a limited line of
high-turnover convenience goods
13-11
Retailing
Types of Retailers
Amount of Service
Superstores offer a large assortment of
routinely purchased food products, non
food items, and services
•
Supercenters have very large
combination food and discount stores
13-12
Retailing
Types of Retailers
Amount of Service
Category killers are large stores that carry a
very deep assortment of a particular line
with a knowledgeable staff. Toys R Us,
Office Depot, Office Max, Home Depot,
Service retailers’ product lines are actually
service
13-13
Retailing
Types of Retailers
Relative Prices
•
•
•
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Discount stores
Off-price retailers
Factory outlets
Warehouse clubs, Sam’s club, Costco
13-14
Retailing
Types of Retailers
Relative Prices
Discount stores sell standard merchandise at lower
prices by accepting lower margins and selling higher
volume
Off-price retailers buy at less than regular wholesale
prices and charge customers less than retail.
Surplus, leftovers.
•
Independent off-price retailers either are owned
and run by entrepreneurs or are divisions of larger
retail corporations
13-15
Retailing
Types of Retailers
Relative Prices
Factory outlets are producer-operated stores
Warehouse clubs are large warehouse-like
facilities with few frills and offer ultra-low
prices
13-16
Retailing
Types of Retailers
Organizational Approach
•
•
•
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Corporate chain stores
Retailer cooperatives
Franchise organizations
Merchandising conglomerates
13-17
Retailing
Types of Retailers
Organizational Approach
Corporate chains are two or more outlets that
are commonly owned and controlled
Size allows them to buy in large quantities at lower
prices and gain promotional economies
•
•
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Sears
CVS . Foodworld, daily,
13-18
Retailing
Types of Retailers
Organizational Approach
Voluntary chains are wholesale-sponsored
groups of independent retailers that engage
in group buying and common merchandising
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IGA
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Western Auto
13-19
Retailing
Types of Retailers
Organizational Approach
Retailer cooperative is a group of independent
retailers that band together to set up a joint-owned,
central wholesale operation and conduct joint
merchandising and promotion effort
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Ace Hardware
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Associated Grocers
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Nation egg co-com)
13-20
Retailing
Types of Retailers
Organizational Approach
Franchise organizations are based on some unique
product or service; on a method of doing business;
or on the trade name, good will, or patent that the
franchisor has developed
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Subway
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Holiday Inn
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McDonald’s, vimals
13-21
Retailing
Types of Retailers
Organizational Approach
Merchandising conglomerates are
corporations that combine several retailing
forms under central ownership
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Limited Brands
13-22
Retailing
Retailer Marketing Decisions
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•
•
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Target market and positioning
Product assortment and services
Price
Promotion
Place
13-23
Retailing
Retailer Marketing Decisions
Target market and positioning involves the
definition and profile of the market so the
other retail marketing decisions can be
made
13-24
Retailing
Retailer Marketing Decisions
Product assortment and service decisions
include:
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Product assortment
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Services mix
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Store atmosphere
13-25
Retailing
Retailer Marketing Decisions
Product assortment should differentiate the
retailer while matching target shoppers’
expectations
Offers merchandise that no other competitor carries
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•
•
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Private or national brands
Merchandising events
Highly targeted product assortment
13-26
Retailing
Retailer Marketing Decisions
Services mix should also serve to differentiate the
retailer from the competition
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Customer support
Store atmosphere is the physical layout that makes
moving around the store hard or easy
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Experiential retailing
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Test driving
13-27
Retailing
Retailer Marketing Decisions
Price Decision
Price policy must fit the target market and
positioning, product and service assortment,
and competition
•
•
High markup on lower volume
Low markup on higher volume
13-28
Retailing
Retailer Marketing Decisions
Price Decision
High-low pricing involves charging higher prices on
an everyday basis, coupled with frequent sales and
other price promotions to increase store traffic,
clear out unsold merchandise, create a low price
image, or attract customers who will buy other
goods at full price
13-29
Retailing
Retailer Marketing Decisions
Price Decision
Everyday low prices (EDLP) involves charging
a constant, everyday low price with few
sales or discounts
13-30
Retailing
Retailer Marketing Decisions
Promotion Decision
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•
•
•
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Advertising
Personal selling
Sales promotion
Public relations
Direct marketing
13-31
Retailing
Retailer Marketing Decisions
Place Decision
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Location
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Accessibility
Consistent with positioning
13-32
Retailing
Retailer Marketing Decisions
Place Decision
Central business districts are located in cities and
include department and specialty stores, banks, and
movie theaters
Shopping center is a group of retail businesses planned,
developed, owned, and managed as a unit.
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•
•
•
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Regional shopping centers
Community shopping centers
Neighborhood shopping centers
Power centers
Lifestyle centers
13-33
Retailing
The Future of Retailing
Retailers have to choose target segments carefully,
position themselves strongly, and consider the
following developments as they plan and execute
their competitive strategies:
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•
•
•
•
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Non-store retailing
Retail convergence
Megaretailers
Retail technology
Global expansion
Retail stores as communities
13-34
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Wheel-of-retailing concept states that many new
types of retailing forms begin as low-margin, lowprice, low-status operations and challenge
established retailers. As they succeed, they upgrade
their facilities and offer more services, increasing
their costs and forcing them to increase prices,
eventually becoming the retailers they replaced.
13-35
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Growth of non-store retailing includes:
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Mail order
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Television
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Phone
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Online
13-36
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Retail convergence involves the merging of
consumers, producers, prices, and retailers,
creating greater competition for retailers and
greater difficulty differentiating offerings
13-37
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
The rise of megaretailers involves the rise of mass
merchandisers and specialty superstores, the
formation of vertical marketing systems, and a rash
of retail mergers and acquisitions
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Superior information systems
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Buying power
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Large selection
13-38
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Retail technology includes video-casts,
inventory control, electronic ordering,
transfer of information, scanning, online
transaction processing, improved
merchandise handling systems, and the
ability to connect with customers
13-39
Organised retail in India
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Rs. 10,000 billion – total
Organised – 3% -Rs 300 billion
AT Kearney . Rs 1000 billion by 2010
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CAGR - ~ 50%
Challenges
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Trained manpower
Supply chain
Real estate
Local laws. / political
Nonstore Retailing
(MLM)and Electronic
Channels
Catalogue or Mail order
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Sears Roebuck, JC Penney, Montgomery Ward
GUS in UK
Otto Versand in Germany
Otto Burlington
4- 5% of retail sales in US and Europe.
Moving away from general merchandise to
speciality
TABLE 14.1: TOP 30 U.S. CATALOG RETAILERS, 1998
Company
Dell Computer Corp.
IBM Corp.
J.C. Penney Co.
Micro Warehouse
CDW Computer Centers
Fingerhut Cos.
Spiegel
Lands' End
Brylane
Micron Electronics
L.L. Bean
Intimate Brands
PC Connection
Creative Computers
CompUSA
Hanover Direct
Blair Corp.
Multiple Zones International
Cabela's
Oriental Trading Co.
Damark International
Foster & Gallagher
Williams-Sonoma
J. Crew Group
Coldwater Creek
Cornerstone Brands
Mattel
American Express
Bass Pro Shops
Neiman Marcus Group
1998 Sales ($
million)
Market Segment
$18,243
$5,500 (est.)
$3,929
$2,200
$1,734
$1,609
$1,394
$1,371
$1,328
$1,300 (est.)
$1,030
$759
$732
$690
$646 (est.)
$546
$507
$501
$500 (est.)
$487
$484
$480
$384
$347 (est.)
$320
$320
$300 (est.)
$300
$300 (est.)
$285 (est.)
Computer hardware, software & peripherals
Computer hardware, software & peripherals
General merchandise
Computer hardware, software & peripherals
Computer hardware, software & peripherals
General merchandise
General merchandise
Apparel and home goods
Apparel and home goods
Computer hardware, software & peripherals
Outdoor gear, apparel and home goods
Women's apparel
Computer hardware, software & peripherals
Computer hardware, software & peripherals
Computer hardware, software & peripherals
General merchandise
Apparel and home goods
Computer hardware, software & peripherals
Outdoor sporting goods
Gifts and novelties
General merchandise
Gardening, gifts, food and children's products
Home and garden goods
Apparel
Apparel, gifts and home goods
Home goods and apparel
Toys and collectibles
General merchandise
Outdoor sporting goods
Women's apparel and home decor
Source: Adapted from Sherry Chiger (1999), "The Catalog Age 100: The High & the Mighty," Catalog Age, Vol. 16 (9, August), pp.
1, 68-80. For companies that also operate retail stores, the figures are for catalog sales only. The notation "(est.)" indicates an
estimate.
FIGURE 14.1: RETAIL CATALOG SHOPPER CHARACTERISTICS
Percentage buying from a catalog in the past year: 46.3%
Percentage of women:
Percentage of men:
53%
35.4%
Percentage buying from a catalog:
Married:
Children in home:
Single:
No children in home:
47.8%
49.1%
37.3%
43.6%
Percentage of various income groups buying from a catalog:
$0 - $25,000:
$25,001 - $40,000:
$40,001 - $80,000:
Over $80,000:
29.3%
40.9%
57.7%
64.8%
Top reasons for shopping by catalog (percent of respondents mentioning):
Convenience:
Unique merchandise:
Price is right:
Past experience with catalog company:
Want product delivered to home:
Have no time to go to store:
Recommendation from a friend:
Impulse:
60.0%
52.3%
49.6%
42.7%
35.5%
28.4%
13.5%
12.4%
Source: Adapted from Laura M. Beaudry (1999), "The Catalog Age 1999 Consumer catalog shopping survey," Catalog Age, Vol. 16 (6, May), pp. A5-A18.
Survey was done on a sample of 1,047 consumers in the United States.
Catalog company must
manage:
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Procurement
Creation of catalog
Mailing list
Order fulfilment & shipping
Out of stocks
Merchandise returns
Direct Selling Orgns (DSO)
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Avon, Tupperware
Amway, Herbalife, Mary Kay
‘Distributors’, consultants, salespersons
– independent, part-time
Multi level
IDSA
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What is Direct Selling?
Direct selling is a dynamic, vibrant, rapidly expanding
channel of distribution for the marketing of products
and services directly to consumers. In India, direct
selling has existed for the past 15-20 years and
several large MNCs have entered the market recently.
It is estimated that during the past eight years about
13,00,000 persons have benefited from the
opportunities offered by the industry generating a
turnover in excess of Rs.2400 crore alone.
Worldwide, the direct selling industry is huge
accounting for sales of US $89 billion through the
activities of more than 49 million direct salespersons
in 165 countries.
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Definition: Direct Selling can be best
described as the marketing of products and
services directly to consumers in a face to
face manner, generally in their homes or the
homes of others, at their workplace and other
places away from retail locations, usually
through explanation or personal
demonstration, by an independent direct
salesperson.
IDSA Members
Amway India
AMC Cookware
Avon Beauty
Forever Living
Hindustan Lever Network
Herbalife
ModiCare
Oriflame India
Quantum Int'l Pvt. Ltd.
Sunrider India
Direct Educational Technologies India Pvt Ltd.
Tupperware India
Altos Enterprises Limited
Daehsan Trading (India) Pvt. Ltd.
Max New York Life
Shriram Dth Ltd.
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Pyramid schemes, Ponzi schemes
New recruits required to pay high fees or
purchases. Earn money without selling, but
by recruiting. Concentrate on recruitment
rather than on selling.
And legitimate MLDSO
Using friends and contacts
Easy to sign on and no aptitude
Motivational literature.
Wholesaling
Wholesaling
Wholesalers add value by performing channel functions
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Selling and promoting
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Buying assortment building
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Bulk breaking
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Warehousing
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Transportation
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Financing
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Risk bearing
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Market information
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Management services and advice
13-40
Wholesaling
Wholesaling
Selling and promoting involves the wholesaler’s sales
force helping the manufacturer reach many smaller
customers at lower cost
Buying and assortment building involves the
selection of items and building of assortments
needed by their customers, saving the customers
work
13-41
Wholesaling
Wholesaling
Bulk breaking involves the wholesaler buying
in larger quantity and breaking into smaller
lots for its customers
Warehousing involves the wholesaler holding
inventory, reducing its customers’ inventory
cost and risk
13-42
Wholesaling
Wholesaling
Transportation involves the wholesaler
providing quick delivery due to its proximity
to the buyer
Financing involves the wholesaler providing
credit and financing suppliers by ordering
earlier and paying on time
13-43
Wholesaling
Wholesaling
Risk bearing involves the wholesaler absorbing risk by
taking title and bearing the cost of theft, damage,
spoilage, and obsolescence
Market information involves the wholesaler providing
information to suppliers and customers about
competitors, new products, and price developments
13-44
Wholesaling
Wholesaling
Management services and advice involves
wholesalers helping retailers train their sales
clerks, improve store layouts, and set up
accounting and inventory control systems
13-45
Wholesaling
Types of Wholesalers
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•
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Merchant wholesalers
Agents and brokers
Manufacturers’ sales branches and offices
13-46
Wholesaling
Types of Wholesalers
Merchant wholesalers is the largest group of
wholesalers and include:
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Full-service wholesalers who provide a full
set of services
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Limited-service wholesalers who provide few
services and specialized functions
13-47
Wholesaling
Types of Wholesalers
Brokers and agents do not take title, perform
a few functions, and specialize by product
line or customer type
•
Brokers bring buyers and sellers together
and assist in negotiations
•
Agents represent buyers or sellers
13-48
Wholesaling
Types of Wholesalers
Manufacturers’ sales branches and offices
is a form of wholesaling by sellers or buyers
themselves rather than through independent
wholesalers
13-49
Wholesaling
Wholesaler Marketing Decisions
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Target market and positioning decisions
Marketing mix decisions
13-50
Wholesaling
Wholesaler Marketing Decisions
Target market and positioning decisions
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Size of customer
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Type of customer
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Need for service
13-51
Wholesaling
Wholesaler Marketing Decisions
Marketing mix decisions
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Product
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Price
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Promotion
•
Place
13-52
Wholesaling
Trends in Wholesaling
Challenges
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Resistance to price increases
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Lack of suppliers
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Changing customer needs
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Adding value by increasing efficiency and
effectiveness
13-53
Logistics & SCM
Corporate Value Chain
65
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Physical distribution
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Stocking, transportation, delivery
Market Logistics – planning the infra to meet
demand, controlling physical flow.
Right goods at the right price at the right
time for the right people in the right quantity
Integrated Logistics systems – MM, material
flow, physical distribution, IT
SCM
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Extends into the supplier, his supplier, to
customer and to his customer.