Chapter 15 Retailing MKTG9 Lamb, Hair, and McDaniel Chapter 13 Marketing Channels Chapter 15 Retailing MKTG9 Lamb, Hair, and McDaniel © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 13 Marketing Channels The Role of Retailing 15-1 Explain the importance of the retailer within the channel and the U.S. economy © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Retailing Retailing All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use. Notes: Retailing has enhanced the quality of our daily lives, with the millions of goods and services provided mirroring the needs and styles of U.S. society. Retailing affects all of us directly or indirectly. The retailing industry is one of the largest employers, as shown on the next slide. Discussion/Team Activity: Poll the class to see how many of the students have worked or are working in the retail industry. How many are pursuing careers in the retail industry? © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Retailing The Role of Retailing U.S. retailers employ more than 15 million people Retailers account for 10.8 percent of U.S. employment Retailing accounts for 10 percent of U.S. businesses Most retailers are quite small The industry is dominated by a few giant organizations, such as Walmart Notes: As the retail environment changes, so too do retailers. Current innovations in retail include the use of social media, new business models, shopper marketing, and new store formats. © 2016 Cengage Learning. All Rights Reserved.

List and understand the different types of retailers Chapter 15 Retailing Types of Retailers and Retail Operations 15-2 List and understand the different types of retailers © 2016 Cengage Learning. All Rights Reserved.

Classification of Retail Operations Chapter 15 Retailing Classification of Retail Operations Ownership Level of Service Product Assortment Notes: A retail establishment can be classified according to its ownership, level of service, product assortment, and price. Retailers use the latter three variables to position themselves in the competitive marketplace. These variables can be combined in several ways to create distinctly different retail operations. Price © 2016 Cengage Learning. All Rights Reserved.

15.1 Types of Stores and Their Characteristics Assort- ment Price Chapter 15 Retailing Assort- ment Price Gross Margin Broad Narrow Med-Narrow Medium Med-Broad Mod-High Moderate Mod High Mod Low Mod Lo-low Low-very low Low Low-High High Type of Retailer Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant Service Level Mod Hi-High Low-Mod Mod-Low Department Store Notes: Exhibit 15.1 lists the major types of retail stores and classifies them by level of service, product assortment, price, and gross margin. © 2016 Cengage Learning. All Rights Reserved. 7

Classification of Ownership Chapter 15 Retailing Classification of Ownership Independent Retailers Chain Stores Franchises Owned by a single person or partnership and not part of a larger retail institution. Owned and operated as a group by a single organization. The right to operate a business or to sell a product. Notes: Retailers can be broadly classified by form of ownership. With franchising, the advantages of both independent ownership and the chain store organization are combined. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Level of Service Chapter 15 Retailing Full- Service Self- Service Notes: The level of service that retailers provide can be classified along a continuum, from full-service to self-service. © 2016 Cengage Learning. All Rights Reserved.

Classification based on width and depth of product lines. Chapter 15 Retailing Product Assortment Classification based on width and depth of product lines. Notes: Product assortment is a third way to classify retail stores. Specialty stores may carry dozens of brands, each in a large variety of shapes and sizes. On the other end of the spectrum, full-line discounters typically carry broad assortments of merchandise with limited depth. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Retailing Price Gross Margin The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted. Notes: Price is a fourth way to position retail stores. Traditional department stores and specialty stores usually charge the full “suggested retail price.” In contrast, discounters, factory outlets, and off-price retailers use low prices as a lure for shoppers. Margins will be covered in more detail in Chapter 19. © 2016 Cengage Learning. All Rights Reserved.

Major Types of In-Store Retail Operations Chapter 15 Retailing Major Types of In-Store Retail Operations Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Off-Price Retailers Restaurants Notes: A department store carries a wide variety of shopping and specialty goods, including apparel, cosmetics, housewares, electronics, and sometimes furniture. A specialty store is not only a type of store but also a method of retail operations—namely, specializing in a given type of merchandise. Supermarkets are large, departmentalized, self-service retailers that specialize in food and some nonfood items. Drugstores stock pharmacy-related products and services as their main draw, but they also carry an extensive selection of cosmetics, health and beauty aids, seasonal merchandise, greeting cards, toys, and some non-refrigerated convenience foods. A convenience store can be defined as a miniature supermarket, carrying only a limited line of high-turnover convenience goods. The discount store is a retailer that competes on the basis of low prices, high turnover, and high volume. An off-price retailer sells at prices 25 percent or more below traditional department store prices because it pays cash for its stock and usually doesn’t ask for return privileges. Restaurants straddle the line between retailing establishments and service establishments. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Retailing The Rise of Nonstore Retailing 15-3 Explain why nonstore retailing is on the rise and list the advantages of its different forms © 2016 Cengage Learning. All Rights Reserved.

Nonstore Retailing Shopping without visiting a physical store. Chapter 15 Retailing Nonstore Retailing Shopping without visiting a physical store. Notes: Nonstore retailing adds a level of convenience for customers who wish to shop from their current locations. © 2016 Cengage Learning. All Rights Reserved.

Major Types of Nonstore Retail Operations Chapter 15 Retailing Major Types of Nonstore Retail Operations Automatic Vending Direct Retailing Direct Marketing Online Retailing Notes: Nonstore retailing is shopping without visiting a store. The major forms are shown here. Automatic vending entails the use of machines to offer goods for sale—for example, the soft drink, candy, or snack vending machines found in college cafeterias and office buildings. Self-service technologies comprise a form of automatic vending where services are the primary focus. Direct retailing representatives sell products door-to-door, in offices, or at in-home sales parties. Direct marketing includes techniques used to elicit purchases from consumers’ homes, offices, and other convenient locations. Telemarketing, direct mail, and shop-at-home television networks are forms of direct marketing. • Telemarketing is the use of the telephone to sell directly to consumers. • Direct mail can be the most efficient or the least efficient retailing method, depending on the quality of the mailing list and the effectiveness of the mailing piece. • Shop-at-home television networks are specialized forms of direct response marketing. Online retailing allows customers to shop over the Internet. Because consumers demand convenience, nonstore retailing is growing faster than in-store retailing. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Retailing Retail Operation Models 15-4 Discuss the different retail operations models and understand why they vary in strategy and format © 2016 Cengage Learning. All Rights Reserved.

Retail Operating Models Chapter 15 Retailing Retail Operating Models A retail operating model can be summarized as a set of guiding principles. For example, off-price retailers de-emphasize customer service and product selection in favor of lower prices, which are achieved through a greater focus on lean inventory management. © 2016 Cengage Learning. All Rights Reserved.

Floor Stock and Back Stock Chapter 15 Retailing Floor Stock and Back Stock Floor stock is inventory displayed for sale to customers Back stock is inventory held in reserve for potential future sale in a retailer's storeroom or stockroom © 2016 Cengage Learning. All Rights Reserved.

Operations Models Today Chapter 15 Retailing Operations Models Today Tradeoffs inherent to restrictive operating models have led to the recent emergence of hybrid retail operating models and online-only retailers. Today, most retail stores remain operationally and tactically similar to those that have been in business for hundreds of years. © 2016 Cengage Learning. All Rights Reserved.

Explain how retail marketing strategies are developed and executed Chapter 15 Retailing Executing a Retail Marketing Strategy 15-5 Explain how retail marketing strategies are developed and executed © 2016 Cengage Learning. All Rights Reserved.

Retail Marketing Strategy Chapter 15 Retailing Retail Marketing Strategy Define a Target Market Choose a Retailing Mix Notes: The first and foremost task in developing a retail strategy is to define the target market. The key tasks in strategic retailing are defining and selecting a target market and developing the retailing mix to meet the needs of the chosen target market. © 2016 Cengage Learning. All Rights Reserved.

Defining a Target Market Chapter 15 Retailing Defining a Target Market Step 1: Segment the Market Demographics Geographics Psychographics Notes: Retailers develop marketing strategies based on overall goals and strategic plans. Defining the target market begins with market segmentation. Successful retailing is based on knowing the customer. Target markets are defined by demographics, geographics, and psychographics. © 2016 Cengage Learning. All Rights Reserved.

Choosing the Retailing Mix Chapter 15 Retailing Choosing the Retailing Mix Step 2: Choose the Retailing Mix Product Promotion Place Price Presentation Personnel Notes: The retailing mix consists of six Ps: the four Ps of the marketing mix (product, price, promotion, and place), plus presentation and personnel. The combination of the 6 Ps projects a store image, which influences consumers’ perceptions. Retail stores can be positioned on the three dimensions: service, product assortment, and price. Everything else—place, presentation, and promotion—should be used to fine-tune the basic positioning of the store. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. 15.2 Chapter 15 Retailing The Retailing Mix Notes: Exhibit 15.2 shows the retailing mix. © 2016 Cengage Learning. All Rights Reserved.

Choosing the Retailing Mix Chapter 15 Retailing Choosing the Retailing Mix Product Offering The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. Notes: Developing a product offering is essentially a question of the width and depth of the product assortment. Width refers to the assortment of products offered; depth refers to the number of different brands offered within each assortment. Price, store design, displays, and service are important to consumers in determining where to shop, but the most critical factor is merchandise selection. © 2016 Cengage Learning. All Rights Reserved.

Retail Promotion Strategy Chapter 15 Retailing Retail Promotion Strategy Advertising Public Relations Publicity Notes: The goal of retail promotion strategy is to position the store in consumers’ minds. Ads, special events, promotions, even grand openings are an orchestrated blend of advertising, merchandising, goodwill, and glitter. Retailers’ advertising is carried out mostly at the local level, providing store information, such as location, merchandise, hours, prices, and sales. In contrast, national retail advertising focuses on image. Sales Promotion © 2016 Cengage Learning. All Rights Reserved.

Economic growth potential Chapter 15 Retailing Place Choosing a Community Economic growth potential Competition Geography Notes: The retailing axiom “location, location, location” has long emphasized the importance of place to the retail mix. The retailer is making a large commitment of resources that reduces future flexibility, and the location will affect the store’s future growth and profitability. Factors to consider in site selection are the area’s economic growth potential, the amount of competition, and geography. © 2016 Cengage Learning. All Rights Reserved.

The Proper Location Choosing a Specific Site Choosing the Type of Site Chapter 15 Retailing The Proper Location Choosing a Specific Site Choosing the Type of Site Socioeconomic characteristics Freestanding Store Traffic flows Shopping Center Land costs Notes: A particular site’s visibility, parking, entrance and exit locations, accessibility, and safety and security issues are also important considerations. Additionally, a retailer should consider how its store will fit into the surrounding environment. 2. One final decision about location is whether to have a freestanding unit or to become a tenant in a shopping center or mall. Lifestyle Center Zoning Regulations Public Transportation © 2016 Cengage Learning. All Rights Reserved.

Good Value Single Price Point Chapter 15 Retailing Retail Prices Low Price High Price Notes: The retailer’s ultimate goal is to sell products to consumers at a price that ensures profits. Price is a key element in a store’s positioning strategy. Higher prices often indicate quality and prestige, while discounters and off-price retailers offer a good value for the money. Quality Image Good Value Single Price Point © 2016 Cengage Learning. All Rights Reserved.

Presentation of the Retail Store Chapter 15 Retailing Presentation of the Retail Store Employee type and density Fixture type and density Sound Odors Visual factors Merchandise type and density Notes: The presentation of a retail store helps determine the store’s image and positioning in consumers’ minds. For example, positioning as an upscale store would use a lavish or sophisticated presentation. The main element of presentation is atmosphere (the overall impression conveyed by a store’s physical layout, décor, and surroundings), with the most influential factors shown on this slide. Employee type and density: An employee’s general characteristics such as friendly and knowledgeable, and the number of employees in the selling space. Merchandise type and density: The type of merchandise carried (best brands) and how it is displayed (neat uncluttered, crowded). Fixture type and density: Elegant, trendy, uncluttered. Fixtures should be consistent with the general atmosphere. Sound: Sound can be pleasant or unpleasant for a customer. Odors: Smell can either stimulate or detract from sales. Visual factors: Colors can create a mood or focus attention. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Retailing Personnel Suggestion Selling Trading Up Two Common Selling Techniques Notes: Retail salespeople persuade shoppers to buy. They are trained in two common selling techniques: Trading up: Persuading customers to buy a higher-priced item. Suggestion selling: Seeks to broaden customers’ original purchases with related items. © 2016 Cengage Learning. All Rights Reserved.

Retailing Decisions for Services 15-6 Discuss how services retailing differs from goods retailing © 2016 Cengage Learning. All Rights Reserved.

Channel and Retailing Decisions for Services Chapter 13 Marketing Channels Channel and Retailing Decisions for Services Prioritize customer service by focusing on four areas: Minimizing wait times Managing service capacity Improving service delivery Establishing channel-wide network coherence Notes: Because service industries are so customer oriented, customer service is a priority. © 2016 Cengage Learning. All Rights Reserved.

Addressing Retail Product/Service Failures 15-7 Understand how retailers address product/service failures and discuss the opportunities that service failures provide © 2016 Cengage Learning. All Rights Reserved.

Channel and Retailing Decisions for Services Chapter 13 Marketing Channels Channel and Retailing Decisions for Services All retailers inevitably disappoint a subset of their customers. The best retailers have plans in place to recover from lapses in service. Actions that might be taken include: Notifying customers in advance of stockouts Implementing liberal return policies Issuing product recalls in conjunction with promotional offers © 2016 Cengage Learning. All Rights Reserved.

Retailer and Retail Customer Trends and Advancements 15-8 Summarize current trends related to customer data, analytics, and technology © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 13 Marketing Channels Shopper Marketing Shopper marketing is becoming increasingly popular as businesses see the implications of this new method of customer research. These implications include the strategic alignment of customers segments and supply chain adaptation. Notes: Shopper marketing is about first understanding how a brand’s target consumers behave as shoppers in different channels and formats, and then using this information in business-based strategies and initiatives that are carefully designed to deliver balanced benefits to all stakeholders—brands, retailers, and shoppers. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 13 Marketing Channels Analytics Shopper analytics are used to dig deeply into customers’ shopping attitudes, perceptions, emotions, and behaviors—and are thereby able to learn how the shopping experience shapes these differences. Notes: Big data analytics is the process of discovering patterns in large data sets for the purposes of extracting knowledge and understanding human behavior. © 2016 Cengage Learning. All Rights Reserved.

Future Developments in Retail Management Chapter 13 Marketing Channels Future Developments in Retail Management Retail Channel Omnification The reduction of multiple retail channel systems into a single, unified system for the purpose of creating efficiencies or saving costs. Click-and-Collect The practice of buying something online and then traveling to a physical store location to take delivery of the merchandise. © 2016 Cengage Learning. All Rights Reserved.