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Chapter 4

Retail Institutions by Ownership. Chapter 4. Objectives. To Show Retail Classifications To Study Retail Ownership Type To Explore Influences in the Channel of Distribution. Retail Classification. I. Ownership. II. Store-Based Retail Strategy Mix. III. Service vs. Goods Retail

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Chapter 4

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  1. Retail Institutions by Ownership Chapter 4

  2. Objectives • To Show Retail Classifications • To Study Retail Ownership Type • To Explore Influences in the Channel of Distribution

  3. Retail Classification I. Ownership II. Store-Based Retail Strategy Mix III. Service vs. Goods Retail Strategy Mix IV. Nonstore-Based Retail Strategy Mix and Nontraditional Retailing

  4. Independent • Chain • Franchise • Lease Department • Vertical Marketing System • Consumer Cooperative Retail Classification I. Ownership

  5. Independent Advantages • Flexibility • Investment Costs Down • Specialists • Strong Control • Image • Consistency • Independence • Entrepreneurial Drive

  6. Independent Disadvantages • Lack of Power • No Economies of Scale • Labor Intensive • Limited Access to Advertising • Over-dependence on Owner • Limited Resources for Long-run Planning

  7. Chain Advantages • Bargaining Power • Cost Efficiencies • Operating Efficiencies • Technical Abilities • Advertising Availability • Defined Management Philosophies

  8. Chain Disadvantages • Time and Resources Spent on Long-run Planning • Limited Flexibility • Investments High • Managerial Control Difficult • Limited Independence for Personnel

  9. Franchising Types • Product/Trademark • Business Format

  10. Franchising Arrangement Manufacturer-Retailer Voluntary Wholesaler-Retailer Cooperative Service Sponsor-Retailer

  11. Franchisee Benefits • Small Capital Investment • Brand Awareness • Operation Procedures and Management Skills • Cooperative Marketing • Exclusive Selling Rights • Purchasing Costs

  12. Franchisee Problems • Oversaturation • Franchisor Overselling • Contract Provisions • Cancellation Clauses • Short Duration • Gross Sales Based Royalties

  13. Franchisor Benefits • National or Global Presence • Ownership Qualifications Set • Money Obtained on Delivery • Stringent Rules for Franchisees • Franchisee Work Incentive • Royalties Continue

  14. Franchisor Problems • Damaged Reputation • Loss of Customer Loyalty • Intra-franchise Competition • Reduced Resale Value • Injured Profitability • Franchisee Desire for Independence

  15. Lease Department Advantages Store Perspective • Fills Merchandise and Expertise Gaps • Enlarged Market • Reduces Store Costs • Lessee Assumes Administration Rol • Percent of Revenues

  16. Lease Department Disadvantages Store Perspective • Conflicts in Operating Procedures • Damaged Image • Customer Blame

  17. Lease Department Advantages Leasee Perspective • Well Know Store • Reduced Costs • Economies of Scale

  18. Lease Department Disadvantages Leasee Perspective • Inflexibility in Hours • Product Line Restrictions • Raised Rent • Sales Expectations Not Met

  19. FOOD-ORIENTED RETAILERS • Convenience Store • Conventional Supermarket • Food-Based Superstore • Combined Store • Box (limited-line) Store • Warehouse Store Retail Classification II. Store-Based Retail Strategy Mix

  20. GENERAL MERCHANDISE RETAILERS • Specialty Store • Variety Store • Traditional Department Store • Full-Line Discount Store • Off-Price Chain • Factory Outlet • Membership Club • Flea Market Retail Classification II. Store-Based Retail Strategy Mix

  21. Rented Goods • Owned Goods • Nongoods Retail Classification III. Service vs. Goods Retail Strategy Mix

  22. Direct Marketing • Direct Selling • Vending Machine • World Wide Web • Other Emerging • Retail Formats Retail Classification IV. Nonstore-Based Retail Strategy Mix and Nontraditional Retailing

  23. Manufacturer Independent Manufacturer Ownership Wholesaler Independent Wholesaler Ownership Independent Retailer Ownership Retailer Vertical Marketing System Independent

  24. Manufacturer Wholesaler Retailer Vertical Marketing System Partially Integrated Two Channel Members Own All Facilities and Perform All Functions

  25. Manufacturer Wholesaler Retailer Vertical Marketing System Partially Integrated All Production and Distribution Functions are Performed By One Channel Member

  26. Consumer Cooperative • Owned by Consumers • Most Popular in Grocery Retailing

  27. What You Should Know • Ways Retail Institutes Can Be Classified • Retail Ownership Types and Characteristics of Each • Exertion of Influence in the Channel of Distribution • By Manufacturers • By Wholesalers • By Retailers

  28. Questions? Questions? Questions?

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