Chapter 9 Retailing

1. Chapter 9Retailing

2. Learning objectives 1 Discuss the importance of retailing to the economy 2 Explain the dimensions by which retailers can be classified 3 Describe the main types of retail operations 4 Discuss non-store retailing techniques

3. Learning objectives (cont.) 5 Define franchising and describe its two basic forms 6 List the main tasks involved in developing a retail marketing strategy 7 Discuss the challenges of expanding retailing operations into global markets 8 Describe future trends in retailing

4. Learning objective 1 Define the term marketing Discuss the importance of retailing to the economy

5. 1 Retailing All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use.

6. 1 The role of retailing • Retailing is one of the largest employers • Supermarkets and grocery stores account for 23% of total retail income • Small business made up 95% of retail business, but only 38% of total retail income

7. Learning objective 2 Describe four marketing management philosophies. Explain the dimensions by which retailers can be classified

8. 2 Classification of retail operations • Level of service • Product assortment • Price • Gross margin

9. 2 Ownership Classification of ownership: • independent retailers • chain stores • franchises.

10. 2 Level of service Self service Full service Factory outlets, warehouse clubs Discount stores Exclusive stores

11. 2 Classification summary Type of retailer Service level Assortment Price Grossmargin Mod-High Mod high-High Broad 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 Chemist 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 Off-price retailer Low Med-Narrow Low Low Restaurant Low-High Med-Narrow Low-High Low-High

12. Learning objective 3 Describe four marketing management philosophies. Describe the main types of retail operations

13. 3 Gross margin The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.

14. 3 Major types of retail operations • Department stores • Specialty stores • Supermarkets • Chemists • Convenience stores • Discount stores • Hypermarket

15. 3 Categories of discount stores • Full-line discounters • Discount specialty stores • Hypermarket • Category killers

16. 3 Mass merchandising Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products.

17. 3 Restaurants Restaurants can also be classified as specialty retailers, given the concentration of their product offering

18. Learning objective 4 Discuss non-store retailing techniques

19. 4 Non-store retailing • Automatic vending • Direct retailing • Direct marketing • Electronic retailing

20. 4 Direct retailing Direct retailers sell products through: • door-to-door • office-to-office • home sales parties.

21. 4 Direct marketing • Direct mail • Catalogues and mail order • Telemarketing • Electronic retailing

22. Learning objective 5 Define franchising and describe its two basic forms

23. 4 Basic forms of franchising • Product and trade name franchising • Business format franchising

24. 5 Basic forms of franchising Product and trade name franchising Dealer agrees to sell certain products provided by a manufacturer or wholesaler. Business format franchising An ongoing business relationship between a franchiser and a franchisee.

25. Learning objective 6 List the main tasks involved in developing a retail marketing strategy

26. 6 Retail marketing strategy Key tasks in strategic retailing: • define and select a target market • develop the ‘six Ps’

27. 6 Defining a target market Step 1: Segment the market • Demographics • Geographics • Psychographics

28. 6 Choosing the retailing mix Step 2: Choose the retailing mix • Product • Place • Price • Personnel • Promotion • Presentation

29. 6 The retailing mix Product Personnel Promotion Targetmarket Presentation Place Price

30. 6 Product offering The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix.

31. 6 Retail promotion strategy • Advertising • Public relations • Publicity • Sales promotion

32. 6 The proper location • Large, long-term commitment of resources • Location will affect future growth • Local environment may change over time

33. 6 Location • Freestanding store • Shopping centre

34. 6 Price Low price High price Good value Quality image

35. 6 Presentation of the retail store Factors in creation of a store’s atmosphere: • employee type and density • merchandise type and density • fixture type and density • sound • odours • visual factors

36. 6 Personnel and customer service Two common selling techniques: • trading up • suggestive selling.

37. Learning objective 7 Discuss the challenges of expanding retailing operations into global markets

38. 7 Global retailing Reasons for global expansion • Spread of communication and mass media • Growth potential of undeserved markets • Lowering of trade barriers and tariffs

39. 7 Global retailing (cont.) Factors used to analyse global retail markets: • market size and economics • infrastructure and distribution • competition • operations • financial and tax reporting • merchandise acceptability • partnering capability.

40. 7 Global retailing (cont.) Prerequisites for going global: • secure domestic position • long-term perspective • consistent global and corporate strategies.

41. Learning objective 8 Describe future trends in retailing

42. 8 Trends in retailing • Entertainment • Convenience and efficiency • Customer management

43. 8 Customer management Customer management strategies • Customer relationship marketing • Loyalty programs • Developing clientele