Lamb, Hair, McDaniel

1. Lamb, Hair, McDaniel 2010-2011 CHAPTER 15 Retailing

2. Learning Outcomes LO 1 Discuss the importance of retailing in the U.S. economy LO 2 Explain the dimensions by which retailers can be classified LO 3 Describe the major types of retail operations LO 4 Discuss nonstore retailing techniques

3. Learning Outcomes LO 5 Define franchising and describe its two basic forms LO 6 List the major tasks involved in developing a retail marketing strategy LO 7 Describe new developments in retailing

4. The Role of Retailing Discuss the importance of retailing in the U.S. economy LO1

5. All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use. Retailing Retailing LO1

6. The Role of Retailing • Over 1.6 million U.S. retailers employ more than 24 million people • Retailers account for 11.6 percent of U.S. employment • Retailing accounts for 13 percent of U.S. businesses • Retailers ring up almost $4 trillion in sales—nearly 40 percent of the U.S. GDP • Industry is dominated by a few giant organizations, such as Wal-Mart LO1

7. Stress “Value” to Attract Customers Because of the recession, customers are in a particularly cost-conscious mood and focusing on value. To grab their attention retailers can: Beyond the Book • Offer unique value propositions, i.e. prices, customer services, loyalty programs • Use innovative marketing concepts that will resonate with consumers, e.g. pop-up shops or a “green emphasis • Appeal to time-strapped customers with an efficient multi-channel shopping experience SOURCE: Larry Freed, “Satisfied and Buying,” online at http://www.internetretailer.com. LO1

8. Retailing as a %of U.S. employment Retailing as a %of U.S. businesses Retailing as a %of GDP 11.6% 13% 40% REVIEW LEARNING OUTCOME The Importance of Retailing LO1

9. Classifying Retailers Explain the dimensions by which retailers can be classified LO2

10. Classification of Retail Operations Ownership Level of Service Product Assortment Price LO2

11. Independent Retailers Owned by a single person or partnership and not part of a larger retail institution Chain Stores Owned and operated as a group by a single organization Franchises The right to operate a business or sell a product Classification of Ownership LO2

12. Self Service Full Service Factory outlets Warehouse clubs Discount stores Exclusive stores Level of Service LO2

13. Type of Retailer Service Level Assort- ment Price GrossMargin Mod Hi-High Broad Mod-High Mod High Department Store Specialty Store High Narrow Mod-High High Supermarket Low Broad Moderate Low Convenience Store Low Med-Narrow Mod High Mod High Drugstore Low-Mod Medium Moderate Low Full-line Discounter Mod-Low Med-Broad Mod Low Mod Low Specialty Discounter Mod-Low Med-Broad Mod Low-low Mod Low Warehouse Clubs Low Broad Low-very low Low Off-price Retailer Low Med-Narrow Low Low Restaurant Low-High Narrow Low-High Low-High Types of Stores and Their Characteristics LO2

14. The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted. Price Gross Margin LO2

15. Major Types of Retail Operations Describe the major types of retail operations LO3

16. Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores http://www.walgreens.com Restaurants Online Major Types of Retail Operations LO3

17. Full-LineDiscounters Specialty Discount Stores WarehouseClubs Off-PriceDiscount Retailers Categories of Discount Stores LO3

18. MassMerchandising Discount Stores Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products. LO3

19. Supercenter Retail store combining groceries and general merchandise goods with a wide range of services. Full-line discounter Retailer offering consumers very limited service and carrying a broad assortment of well-known, nationally branded “hard goods”. Discount Stores LO3

20. Specialty Discount Stores CategoryKillers Specialty discount stores that heavily dominate their narrow merchandise segment. LO3

21. supercenter Full-line extreme- value Specialty categorykiller Warehouse Off-price factoryoutlet Types of Retail Operations Department Stores Specialty Stores Supermarket Drugstores Convenience Stores Discount Stores Restaurants Shopping Medications Distinctive Products Food Products High TurnoverGoods Health and Beauty Specialty Goods Customer Service Cosmetics ScrambledMerchandising Specialty LO3

22. Aldi Started in 1976 in Iowa, ALDI is increasing its market presence as a discount grocer. Offering a slim 1,400 products as ALDI select brands, the chain is able to give consumers deep discounts through supplier deals and their no-frills approach. Products must meet national brand standards, but consumers purchase for up to 50% less. LO3

23. Nonstore Retailing Discuss nonstore retailing techniques LO4

24. Automatic Vending Direct Retailing Direct Marketing Electronic Retailing Nonstore Retailing LO4

25. Door-to-Door Office-to-Office Home Sales Parties http://www.avon.com Online Direct Retailing LO4

26. Direct Mail Catalogs & Mail Order Telemarketing Electronic Retailing Types of Direct Marketing Shop-at-home networks Online retailing LO4

27. Top E-Tailers by Sales Volume Beyond the Book LO4

28. Top E-Tailers by Customer Satisfaction Customer Satisfaction (out of 100 points) SOURCE: Larry Freed, “Satisfied and Buying,” online at http://www.internetretailer.com. LO4

29. Vending Direct retailing direct mail catalogs telemarketing Direct marketing online shop at home Electronic retailing Nonstore Retailing Techniques Nonstore Retailing LO4

30. Vending Machine Variety • Reverse Vending Machines • Input recyclables and the machine sorts, compresses, and pays out refunds based on the container. • Used Golf Ball Vending Machines • Tilly-Miss fills candy-style dispensers with reclaimed golf balls. • Kosher Hot Dog Vending Machines • Kosher Cart cooks hot dogs and other kosher foods • Custom Juice Drinks Vending Machines • Select and mix custom juice drinks • Moobella Custom Ice Cream Vending Machines • Make custom ice cream by mixing base flavors and mix-ins LO4

31. Franchising Define franchising and describe its two basic forms LO5

32. Basic Forms of Franchising Product and Trade Name Franchising Business FormatFranchising LO5

33. Product and Trade Name Franchising Dealer agrees to sell in products provided by a manufacturer or wholesaler. Business Format Franchising An ongoing business relationship between a franchiser and a franchisee. Franchising LO5

34. Largest U.S. Franchisors LO5

35. Retail Marketing Strategy List the major tasks involved in developing a retail marketing strategy LO6

36. Retail Marketing Strategy Define & Select a Target Market Develop the “Six Ps” LO6

37. Demographics STEP 1: Segment the Market Geographics Psychographics Defining a Target Market LO6

38. STEP 2: Choose the Retailing Mix Product Place Price Personnel Promotion Presentation http://www.publix.com Online Choosing the Retailing Mix LO6

39. Product Personnel Place TargetMarket Presentation Promotion Price The Retailing Mix LO6

40. Product Offering Choosing the Retailing Mix The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. LO6

41. Advertising Public Relations Publicity Sales Promotion Retail Promotion Strategy LO6

42. Economic growth potential Freestanding Store Competition Shopping Center Mall Geography The Proper Location Choosing a Community Choosing a Site LO6

43. Important Factorsfor Site Choice • Neighborhood socioeconomics • Traffic flows • Land costs • Zoning regulations • Public transportation • Site’s visibility, parking, entrances and exits,accessibility, and safety • Fit with other stores LO6

44. Design attracts shoppers Activities and anchor stores draw customers Ample parking Unified image Sharing of common area expenses Advantages Disadvantages Shopping Center and Mall Locations • Expensive leases • Failure of common promotion efforts • Lease restrictions • Hours of operation • Anchor store domination • Direct competitors • Consumer time limits LO6

45. Retail Prices Low Price High Price Quality Image Good ValueSingle Price PointEDLP LO6

46. Atmosphere Presentation of the Retail Store The overall impression conveyed by a store’s physical layout, décor, and surroundings LO6

47. Employee type and density Merchandise type and density Fixture type and density http://www.apple.com Sound Online Odors Visual factors Presentation of the Retail Store LO6

48. Two Common SellingTechniques Trading Up Suggestion Selling Personnel and Customer Service LO6

49. Easy-to-use Web site Product availability Simple returns Customer Service for On-Line Retailers LO6

50. PRODUCT PLACE Promotion PRESENTATION Personnel and personalselling TARGET Width and depth of product assortment Developing a Retail Marketing Strategy and hours Location publicity, Advertising, public relations PRICE Layout and atmosphere Customer service LO6