Chapter 11 Retailing

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Chapter 11Retailing
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Introduction

• An intermediary involved in selling goods and
  services to ultimate consumers

Retailer
Wholesaler

• An intermediary that takes title to the goods it
  handles and redistributes them to retailers,
  other distributors, and sometimes end consumers

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STRATEGIC IMPLICATIONS RETAIL MARKETING STRATEGY

• A retailer develops a marketing strategy based on
  the firms goals and strategic plans
• Two fundamental steps
• Picking a target market size and profit
  potential. POSITION.
• Developing a retailing mix to satisfy the chosen
  target market
• 4Ps Personnel Presentation used to create a
  retail image

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Merchandising (Product) Strategy

• Category management Retailing strategy which
  views each product category as an individual
  profit center.
• Slotting Allowances lump-sum payments by
  manufacturers for stocking new products.
• Scrambled Merchandising Combining dissimilar
  product lines to boost sales volume.
• Growth of Store brands Battle for shelf space

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Pricing Strategy

• EDLP Everyday Low Pricing
• Markup amount added to a retailers cost
• Markdown amount taken away from the selling
  price

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Examples

• Markup SP Retailer Cost
• Markup as of Selling Price Markup / Selling
  Price
• Markup as of Cost Markup / Cost
• Product A costs 60 and sells for 100. Compute
  the markup as a of SP and as a of costs.
• Markup
• Markup as on Selling Price
• Markup as on Costs

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Examples

• Markdown Dollar Amount of Markdown / Original
  Selling Price
• Product A sells for 100. Since demand is low at
  this price, the retailer decides to change the SP
  to 80. Compute the markdown .
• Dollar amount of markdown
• Markdown

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Promotional Strategy

• Retailers use a variety of promotional techniques
  to establish store images and communicate
  information about their stores.
• Cooperative advertising
• Selling up - buy higher priced items than
  intended
• Suggestive selling broaden purchases by
  suggesting add-ons.

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Place Issues

• Location
• Decision to be a freestanding store or a tenant
  in a shopping center?

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Presentation

• Atmosphere the overall impression conveyed by a
  stores physical layout, décor, and amenities.

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Types of Retailers
Forms ofOwnership
Product Lines
Width issue
Importance of Retail Turnover
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High Margins Low Margins
HIGH
INVENTORY TURNOVER
LOW
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Wheel of Retailing

• Newer, low-price types of retailing arise to
  challenge older established bigger retailers.

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Wheel of Retailing
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Motel Free Breakfast HBO
Motel Free Breakfast HBO Happy Hour
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New Entrant
Motel Free Breakfast
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No Frills Motel
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Waves in Retailing I
First Innovation (Mom and Pop Store)
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Waves in Retailing II
Second Innovation (Department Store)
Online Retailing
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Lessons from History
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Classifying Retailers by Product Lines NARROW
Lines (1)
Specialty Stores

• Category Killer

Specialty Discount Stores
Focus is on DEPTH Specific Target Markets
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Classifying Retailers by Product Lines BROAD
LINES

• Department store
• Discount stores
• Off-price retailer
• Catalog or Warehouse retailer
• Supermarkets

General Merchandise
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Department Stores (2)
Broad product lines Hazy future
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Discount Stores (3)
Broad product lines Strong sales growth forecast
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Off-Price Retailer (4)
Well-known brand names at low prices Low
service Trend towards outlet malls
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Supermarket (5)