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Chapter 9Retailing
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
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
Learning objective 1
Define the term marketingDiscuss the importance of retailing to the economy
Retailing
All the activities directly
related to the sale of goods
and services to the ultimate
consumer for personal, non-
business use.
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
1
Learning objective 2
Describe four marketing management philosophies.
Explain the dimensions by which retailers can be classified
Classification of retail operations
2
• Level of service
• Product assortment
• Price
• Gross margin
Ownership2
Classification of ownership:
• independent retailers• chain stores• franchises.
Level of service
Full service Self service
Discount stores Exclusive storesFactory outlets, warehouse clubs
2
Mod-High
Classification summary
Department store
Specialty store
Supermarket
Convenience store
Chemist
Full-line discounter
Specialty discounter
Off-price retailer
Restaurant
Mod high-High
High
Low
Low
Low-Mod
Mod-Low
Mod-Low
Low
Low-High
Broad
Narrow
Broad
Med-Narrow
Medium
Med-Broad
Med-Broad
Med-Narrow
Med-Narrow
Mod-High
Mod-High
Moderate
Mod-High
Moderate
Mod-Low
Mod low-Low
Low
Low-High
High
Low
Mod-High
Low
Mod-Low
Mod-Low
Low
Low-High
2
Type of retailer Service level Assortment Price Grossmargin
Learning objective 3
Describe four marketing management philosophies.
Describe the main types of retail operations
Gross margin
The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.
3
Major types of retail operations
3
• Department stores
• Specialty stores
• Supermarkets
• Chemists
• Convenience stores
• Discount stores
• Hypermarket
Categories of discount stores3
• Full-line discounters
• Discount specialty stores
• Hypermarket
• Category killers
Mass merchandising
Retailing strategy using
moderate to low prices on
large quantities of
merchandise and lower
service to stimulate high
turnover of products.
3
Restaurants
Restaurants can also be
classified as specialty
retailers, given the
concentration of their product
offering
3
Learning objective 4
Discuss non-store
retailing techniques
Non-store retailing4
• Automatic vending
• Direct retailing
• Direct marketing
• Electronic retailing
Direct retailing
• door-to-door
• office-to-office
• home sales parties.
Direct retailers sell products through:
4
Direct marketing4
• Direct mail
• Catalogues and mail order
• Telemarketing
• Electronic retailing
Learning objective 5
Define franchising and describe its two basic forms
Basic forms of franchising4
• Product and trade name franchising
• Business format franchising
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.
5
Learning objective 6
List the main tasks involved in developing a retail marketing strategy
Retail marketing strategy6
Key tasks in strategic retailing:
• define and select a target market
• develop the ‘six Ps’
Defining a target market6
Step 1: Segment the market
• Demographics
• Geographics
• Psychographics
Choosing the retailing mix6
Step 2: Choose the retailing mix
• Product• Place• Price• Personnel• Promotion• Presentation
The retailing mix
TargetTargetmarketmarket
Product
Price
Promotion
Place
Personnel
Presentation
6
Product offering
The mix of products
offered to the consumer
by the retailer; also called
the product assortment or
merchandise mix.
6
Retail promotion strategy6
• Advertising
• Public relations
• Publicity
• Sales promotion
The proper location6
• Large, long-term commitment of resources
• Location will affect future growth
• Local environment may change over time
Location6
• Freestanding store
• Shopping centre
Price
Quality image
High priceLow price
Good value
6
Presentation of the retail store6
Factors in creation of a store’s atmosphere:
• employee type and density• merchandise type and
density• fixture type and density• sound• odours• visual factors
Personnel and customer service
6
Two common selling techniques:
• trading up
• suggestive selling.
Learning objective 7
Discuss the challenges of expanding retailing operations into global markets
Global retailing7
Reasons for global expansion
• Spread of communication and mass media
• Growth potential of undeserved markets
• Lowering of trade barriers and tariffs
Global retailing (cont.)
7
Factors used to analyse global retail markets:
• market size and economics• infrastructure and distribution• competition• operations• financial and tax reporting• merchandise acceptability• partnering capability.
Global retailing (cont.)
Prerequisites for going global:
7
• secure domestic position
• long-term perspective
• consistent global and
corporate strategies.
Describe future
trends in retailing
Learning objective 8
Trends in retailing8
• Entertainment• Convenience and
efficiency• Customer
management
Customer management8
Customer management strategies
• Customer relationship marketing
• Loyalty programs
• Developing clientele