Chapter 9 Retailing

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

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

Learning objective 1 Define the term marketing Discuss 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

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

Level of service Full service Self service Discount storesExclusive 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-Mod Mod-Low Low Low-High Broad Narrow Broad Med-Narrow Medium Med-Broad Med-Narrow Mod-High Moderate Mod-High Moderate Mod-Low Mod low-Low Low Low-High High Low Mod-High Low Mod-Low Low Low-High 2 Type of retailerService levelAssortmentPrice Gross margin

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 stores 3 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 retailing 4 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 marketing 4 Direct mail Catalogues and mail order Telemarketing Electronic retailing

Learning objective 5 Define franchising and describe its two basic forms

Basic forms of franchising 4 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 strategy 6 Key tasks in strategic retailing: define and select a target market develop the ‘six Ps’

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

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

The retailing mix Target market 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 strategy 6 Advertising Public relations Publicity Sales promotion

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

Location 6 Freestanding store Shopping centre

Price Quality image High priceLow price Good value 6

Presentation of the retail store 6 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 retailing 7 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 retailing 8 Entertainment Convenience and efficiency Customer management

8 Customer management strategies Customer relationship marketing Loyalty programs Developing clientele