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of
MARKETING
The Many
Faces of
Retailing:
In-Store, Direct,
and Internet
Chapter
Chapter
16
The Many Faces of Retailing: In-Store, Direct
and Internet
Chapter
16
Objectives
1. Explain the role played by retailing in the marketing mix.
2. Outline the decision framework for retailing.
3. Distinguish between limited-line retailers and generalmerchandise retailers.
4. Identify and explain each of the six bases for
categorizing retailers.
5. Identify the major types of mass merchandisers.
6. Discuss the opportunities and challenges of retailing
through the Internet.
7. Contrast the three types of planned shopping centres.
8. Identify new trends in retailing.
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The Many Faces of Retailing: In-Store, Direct
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Retailing
• All the activities involved in selling goods
and services to the ultimate consumer.
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Wheel of Retailing
• Hypothesized process of change in
retailing, which suggests that new types
of retailers gain a competitive foothold
by offering lower prices through the
reduction or elimination of their prices
gradually rise, so that they then become
vulnerable to a new low-price retailer
with minimum services -- and the wheel
turns.
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Chain Store
• Group of retail stores that are centrally
owned and managed and that handle
the same lines of products.
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Figure 16.1
Marketing Strategy in Retailing
Identify market
segments, select
target market
Analyze
competitors’
strengths and
weaknesses
Develop a
competitive retail
marketing mix that
fits the target market
Retail Marketing Mix
• Goods and services Strategy
Target Market
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• Location and Distribution Strategy
• Pricing Strategy
• Retail Image and Promotional Strategy
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Retail Marketing Mix
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•
•
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Goods and Services Strategy
Retail Pricing Strategy
Location and Distribution Strategy
Image and Promotional Strategy
The Differentiation Triangle
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Location and Distribution Strategy
Retail Trade Area Analysis
Studies that assess the relative drawing
power of alternative locations.
Law of Retail Gravitation
Principle that delineates the retail trade area
of a potential site on the basis of distance
between alternative locations and relative
populations.
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Retail Image
• The consumer’s perception of a store
and of the shopping experience it
provides.
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Differentiation Triangle
• Differentiation of a retail store from
competitors in the same strategic group
through price, location, and store
atmosphere and service.
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Figure 16.2
Differentiation Triangle: Avenues for
Differentiation Within Strategic Groups
Price
Location
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Store Atmosphere
and Service
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Figure 16.3
Bases for Classifying Retailers
Shopping Effort Expended
by Customers
Convenience - preference
retailers
Shopping stores
Specialty outlets
Location of Retail Transactions
Retail stores
Nonstore retailing
House-to-house
Mail order and telephone
Automatic merchandising Internet
Form of Ownership
Corporate chain stores
Independent retailers
Association of independents
Retail cooperative
Voluntary chain
Franchise
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Retailer
Classifications
Product Lines
Limited-line retailer
Clothing, furniture
Specialty retailer
Sporting goods, tanning salon
bookstore
General-merchandise retailer
Department store, discount
store, catalogue retailer
Services Provided to Customers
Self-service
Supermarkets, vending
machines, warehouse retailers
Self-selection
Mail-order retailing, discount retailers
Limited service
Door-to-door, sales, variety stores
Full-service
Specialty stores, department stores,
large-format specialty stores
Margin and Turnover
High-margin/low-turnover retailers
Jewellery stores
Low-margin/low-turnover retailers
Not viable
Low-margin/high-turnover retailers
Discount department stores,
discount stores, big box stores
High-margin/high-turnover retailers
convenience stores
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Limited-Line Store
• Retailer that offers a large assortment of
a single line of products or a few related
lines of products.
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Supermarket
• Large-scale, departmentalized retail
store offering a large variety of food
products.
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Specialty Store
• Retailer that handles only part of a
single line of products.
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Department Store
• Large retailer that handles a variety of
merchandise.
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Variety Store
• Retailer that offers an extensive range
and assortment of low-priced
merchandise.
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Mass Merchandiser
• Retailer that concentrates on high
turnover of items, emphasizes lower
prices than department stores, and
offers reduced services.
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Discount House
• Retailer that, in exchange for reduced
price such traditional retail services as
credit, sales assistance by clerks, and
delivery.
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Membership and Warehouse Club
• Very large, warehouse-type retail store
that offers low prices because of its nofrill format and paid membership
requirement.
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Large-Format Specialty Store
• Large, warehouse-type retail store that
specializes in selling a great variety of
one category of merchandise at very low
prices.
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Power Node
• Groupings of two or more large-format
retailers that result in large customer
drawing power.
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Hypermarket
• Mass merchandiser that operates on a
low-price, self-service basis and carries
lines of soft goods, hard goods, and
groceries.
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Off-Price Retailer
• Retailer that specializes in selling
manufacturers’ excess stocks of brandname merchandise at a discount.
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Recycled Merchandise Retailer
• Retailer that sells castoff clothes,
furniture, and other products.
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Liquidator
• Specialty retailer that either comes into
a bankrupt store and handles the
closeout, or buys the entire lot and sells
it in its own stores.
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Catalogue Retailer
• Retailer that mails catalogues to its
customers and operates from a
showroom displaying samples of its
products.
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House-to-House Retailer
• Retailer that sells products by direct
contact between the retailer-seller and
the customer at the home of the
customer.
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Multilevel Marketing
• The development of a network among
consumers to sell and deliver from one
level of consumers to another using
social obligation, personal influence, and
motivational techniques.
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Mail-Order Merchandiser
• Retailer that offers its customers the
option of placing merchandise orders by
mail, by telephone, or by visiting the
mail-order desk of a retail store.
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Figure 16.4
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Past and Future Modes of
Marketing
Location Free
Time Bound
Digital
Commerce
Time Free
Gravitational
Commerce
Location Bound
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E-tailing
• Retailing via Internet.
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Figure 16.5
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Potential Of Products to Be Sold on
the Internet
Relative Potential
Retail Categories
High
Insurance/financial services
Computer hardware/software
Travel services
Books, magazines, music/videos
Flowers, gifts, greeting cards
Office supplies
Moderate
Cars
Sporting goods
Consumer electronics/appliances
Food and beverages
Collectibles
Apparel, shoes, access
Health and beauty products
Low
Toys and games
Tools/home improvement products
Home furnishings
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Planned Shopping Centre
• Group of retail stores planned,
coordinated, and marketed as a unit to
shoppers in a particular geographic
trade area.
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Types of Shopping Centres
• Neighbourhood Shopping Centre
• Community Shopping Centre
• Regional Shopping Centre
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Scrambled Merchandising
• The retail practice of carrying dissimilar
lines to generate added sales volume.
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