CHAPTER 16Retailing:
Bricks and Clicks
M A R K E T I N GReal People, Real Choices
Fourth Edition
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Chapter Objectives• Define retailing and understand how retailing
evolves• Describe how retailers are classified• Describe the more common forms of nonstore
retailing• Describe the B2C e-commerce, its benefits,
limitations, and future promise• Understand the importance of store image to a
retail positioning strategy and explain how a retailer can create an image in the marketplace
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Retailing
• Final stop on the distribution path• The process by which products are sold
to consumers for personal use• Retailers add value with image,
inventory, service quality, location, and pricing policies
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The Wheel of Retailing
• New types of retailers find it easiest to enter the market by offering goods at lower prices than competitors; after they gain a foothold, they gradually trade up, improving facilities and increasing the quality and assortment of merchandise, and offering special amenities; upscaling increases costs causing prices to rise; higher prices open the door for a new entrant charging lower prices
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Retail Life Cycle
• Retailers are also products because they provide benefits and must offer a competitive advantage to survive– Introduction: new retailer takes a unique approach to
doing business– Growth: retailer catches on with shoppers, sales and
profits rise, others start to copy it so retailer expands offerings
– Maturity: many have copied it and an entire industry has formed, profits decline
– Decline: retail format becomes obsolete
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What’s in Store for the Future
• Demographics• Technology• Globalization
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Major Demographic Factors
• Convenience for consumers• Catering to specific age segments• Recognizing ethnic diversity
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Classifying Retailers
• All retailers are classified by the NAICS codes
• Some lines still blurred– scrambled merchandising – strategy
of carrying a combination of food and nonfood items
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Classifying Retailers by Service
• Self-service retailers• Full-service retailers• Limited-service retailers
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Classifying by Merchandise Selection
• Merchandise breadth is the number of different product lines available– Narrow versus broad assortments
• Merchandise depth is the variety of choices available for each specific product– Shallow versus deep assortments
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Store Types
• Convenience stores• Supermarkets• Specialty stores• Department stores• Hypermarket stores
• Discount stores– General
merchandise discount stores
– Off-price retailers– Warehouse clubs– Factory outlet
stores
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Nonstore Retailing
• Any method a firm uses to complete an exchange that does not require a customer visit to a store– Direct selling– Automatic vending
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Direct Selling
• Direct selling occurs when a salesperson presents a product to one individual or a small group, takes orders, and delivers the merchandise– Door-to-Door Sales– Parties and Networks
• party plan systems• multilevel pyramid schemes
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Automatic Vending
• Appealing for selling convenience goods because of small space required, and minimal personnel to maintain and operate– French fries– Software– Levi’s jeans
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E-Commerce and the Customer
• Benefits– Shop 24/7– Less travel– More choices– More information– Price competition– Fast delivery
• Limitations– Lack of security– Fraud– Can’t touch items– Hard to
distinguish color/ texture online
– Expensive to return
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E-Commerce and the Marketer
• Benefits– The world is your
marketplace– Decreases costs– Very specialized
businesses possible
– Real-time pricing– Tracking of
consumer behavior
• Limitations– Lack of security– Must maintain site – Price competition– Conflicts with
conventional retailers
– Legal issues not resolved
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Developing a Store Positioning Strategy
• Store image– how the target market perceives the
store– its market position relative to the
competition• Atmospherics
– the use of color, lighting, scents, furnishings, sounds, and other design elements to create a desired setting
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Store Design: Setting the Stage
• Store layout and traffic flow• Fixture type and merchandise density• The sound of music• Color and lighting• The Actors: Store Personnel• Pricing policy
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Building the Theater: Store Location
• Types of locations• Site selection
– Location planners evaluate trade area and conduct site evaluation • traffic flow, number of parking spaces
available, ease of delivery access, visibility from street, local zoning laws, population characteristics, community life cycle, mobility, degree of competition
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Site Selection
• Reflect growth strategy• Convenient to customers in trade area• Population characteristics• Degree of competition• Target market location
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Issues for Discussion
• Why do retailers usually enter with low-priced goods and then increase over time? Is this the right path for all retailers?
• Is Wal-Mart’s power in the marketplace good for consumers? For retailing? Why do some communities prevent Wal-Mart from opening?
• Do you feel that atmospherics affect your purchase behavior?
• What effect will the growth of e-retailing have on traditional retailing?