McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin LEARNING OBJECTIVES 16-2 Learning Objectives What are the issues manufacturers consider when choosing retail partners? What types of retailers are available for distributing products? How do manufacturers and retailers work together to develop a strategy? Why is multichannel marketing becoming such a prevalent channel strategy?

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 16-3 Apple Store What makes the Apple store so successful?

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 16-4 Factors for Establishing a Relationship with Retailers

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 16-5 Which of the following is NOT a factor to consider when establishing a relationship with retailers? A. Choosing retail partners B. Facilitating retail strategy C. Managing a multichannel strategy D. Identifying types of retailers E. All of the above

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 16-6 Choosing Retail Partners Channel Structure Degree of vertical integration Manufacturers brand Power of manufacturer and retailer

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 16-7 Choosing Retail Partners Customer Expectations

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 16-8 Choosing Retail Partners Distribution Intensity SelectiveExclusiveIntensive

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 16-9 Limited Distribution Why might Birkenstock choose a limited distribution intensity?

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Red Bull is sold at convenience stores, supermarkets and warehouse clubs. Red Bull has _________ distribution A. selective B. exclusive C. intermediate D. intensive E. limited

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Check Yourself 1. What issues should manufacturers consider when choosing retail partners? 2. What is the difference between intensive, exclusive, and selective levels of distribution intensity?

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Retailer’s Reaction? How do you expect retailers would respond to this?

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Types of Retailers

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Food Retailers Peapod Website

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin General Merchandise Retailers Broad variety and deep assortment Department Stores Broad variety at low prices Full-line Discount Limited merchandise with service in small store Specialty Specialty for pharmaceutical and heath Drugstores Discount with narrow but deep assortment Category Specialist Full line, limited, very low prices Extreme value Inconsistent assortment of brand name at low prices Off-Price

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Kmart and Sears

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A ________ is a retailer with such an extensive assortment in a particular category that would-be competitors do not bother carrying that category of products and instead, simply refer customers to the other firm. A. specialty retailer B. house breaker C. market mammoth D. revolutionary E. category killer

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin GNC Private Brands

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin What are the different types of food retailers? What differences mark their strategies? 2. What are the different types of general merchandise retailers? What differences mark their strategies? Check Yourself

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Facilitating Retail Strategy Using the Four P’s: Product Providing the right mix of merchandise and services Providing the right mix of merchandise and services

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Price Price defines the value of both the merchandise and the service provided Price defines the value of both the merchandise and the service provided Build-a-Bear Workshop Commercial

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Coupons, rebates, and online discounts are types of ________ used by retailers. A. pricing promotions B. specialty product displays C. in-store promotions D. off-price wholesaling E. mass media advertising

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Promotion Retailers use a wide variety of promotions, both within their retail environment and through mass media Retailers use a wide variety of promotions, both within their retail environment and through mass media

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Place Convenience is a key ingredient to success Convenience is a key ingredient to success

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Wal-Mart Faces Biggest Civil Rights Suits

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Exploring Multiple Channel Options: Benefits of Different Channels

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Internet Channel Global Broader Selection Virtual communities More information Customer service Personalized offerings Personalization Brands Technology Gifts Services Touch and Feel

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin How does the Internet Improve Multichannel Shopping?

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Retailers can do more online… Lands End Website H&M’s (CSR) Website

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Perceived Risk in Internet Shopping

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Evolution toward Multichannel Marketing Overcome the limitations of an existing format Expanding market presence Increasing share of wallet Insights into customer’s shopping behaviors Goals for Retailers

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Capabilities for Multichannel RetailingMultichannel Retailing Disintermediation

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Category specialists are discount stores that offer a narrow but deep assortment of merchandise. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Convenience stores provide a limited variety and assortment of merchandise at a convenient location in 2,000-3,000 square foot stores with speedy checkout. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary A conventional supermarket is a self-service food store offering groceries, meat, and produce with limited sales of nonfood items, such as health and beauty aids and general merchandise. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Department stores are retailers that carry a broad variety and deep assortment, offer customer services, and organize their stores into distinct departments for displaying merchandise. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Disintermediation occurs when a manufacturer sells directly to consumers, bypassing retailers. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Drugstores are specialty stores that concentrate on pharmaceuticals and health and personal grooming merchandise. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary An exclusive distribution policy is when manufacturers grant exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Extreme value retailers are small, full-line discount stores that offer a limited merchandise assortment at very low prices. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Full-line discount stores are retailers that offer a broad variety of merchandise, limited service, and low prices. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary An intensive distribution strategy is designed to get products into as many outlets as possible. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Multichannel retailers are retailers that use some combination of stores, catalogs, and the Internet to sell merchandise. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Off-price retailers offer an inconsistent assortment of brand name merchandise at low prices. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Selective distribution uses a few selected customers in a territory. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Specialty stores concentrate on a limited number of complementary merchandise categories and provide a high level of service in relatively small stores. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Supercenters are large stores that combine a supermarket with a full-line discount store. Return to slide

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Warehouse clubs are large retailers that offer a limited and irregular assortment of food and general merchandise with little service at low prices for ultimate consumers and small businesses. Return to slide