Chapter 9 Retailing

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Chapter 9Retailing
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Learning objectives
1 Discuss the importance of retailing to the
economy 2 Explain the dimensions by which
retailers can be classified 3 Describe the main
types of retail operations 4 Discuss non-store
retailing techniques
3
Learning objectives (cont.)
5 Define franchising and describe its two basic
forms 6 List the main tasks involved in
developing a retail marketing strategy 7 Discuss
the challenges of expanding retailing operations
into global markets 8 Describe future trends in
retailing
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Learning objective 1
Define the term marketing
Discuss the importance of retailing to the economy
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Retailing
1
All the activities directly related to the sale
of goods and services to the ultimate consumer
for personal, non-business use.
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The role of retailing
1

• 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

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Learning objective 2
Describe four marketing management philosophies.
Explain the dimensions by which retailers can be
classified
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Classification of retail operations
2

• Level of service
• Product assortment
• Price
• Gross margin

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Ownership
2
Classification of ownership

• independent retailers
• chain stores
• franchises.

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Level of service
2
Full service
Self service
Discount stores
Exclusive stores
Factory outlets, warehouse clubs
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Classification summary
2
Type of retailer
Service level
Assortment
Price
Grossmargin
Mod-High
Mod high-High
Broad
Mod-High
Department store
Specialty store
High
Narrow
Mod-High
High
Supermarket
Low
Broad
Moderate
Low
Convenience store
Low
Med-Narrow
Mod-High
Mod-High
Chemist
Low-Mod
Medium
Moderate
Low
Full-line discounter
Mod-Low
Med-Broad
Mod-Low
Mod-Low
Specialty discounter
Mod-Low
Med-Broad
Mod low-Low
Mod-Low
Off-price retailer
Low
Med-Narrow
Low
Low
Restaurant
Low-High
Med-Narrow
Low-High
Low-High
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Learning objective 3
Describe four marketing management philosophies.
Describe the main types of retail operations
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Gross margin
3
The amount of money the retailer makes as a
percentage of sales after the cost of goods sold
is subtracted.
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Major types of retail operations
3

• Department stores
• Specialty stores
• Supermarkets
• Chemists
• Convenience stores
• Discount stores
• Hypermarket

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Categories of discount stores
3

• Full-line discounters
• Discount specialty stores
• Hypermarket
• Category killers

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Mass merchandising
3
Retailing strategy using moderate to low prices
on large quantities of merchandise and lower
service to stimulate high turnover of products.
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Restaurants
3
Restaurants can also be classified as specialty
retailers, given the concentration of their
product offering
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Learning objective 4
Discuss non-store retailing techniques
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Non-store retailing
4

• Automatic vending
• Direct retailing
• Direct marketing
• Electronic retailing

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Direct retailing
4
Direct retailers sell products through

• door-to-door
• office-to-office
• home sales parties.

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Direct marketing
4

• Direct mail
• Catalogues and mail order
• Telemarketing
• Electronic retailing

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Learning objective 5
Define franchising and describe its two basic
forms
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Basic forms of franchising
4

• Product and trade name franchising
• Business format franchising

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Basic forms of franchising
5
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.
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Learning objective 6
List the main tasks involved in developing a
retail marketing strategy
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Retail marketing strategy
6
Key tasks in strategic retailing

• define and select a target market
• develop the six Ps

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Defining a target market
6
Step 1 Segment the market

• Demographics
• Geographics
• Psychographics

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Choosing the retailing mix
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Step 2 Choose the retailing mix

• Product
• Place
• Price
• Personnel
• Promotion
• Presentation

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The retailing mix
6
Product
Promotion
Personnel
Targetmarket
Place
Presentation
Price
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Product offering
6
The mix of products offered to the consumer by
the retailer also called the product assortment
or merchandise mix.
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Retail promotion strategy
6

• Advertising
• Public relations
• Publicity
• Sales promotion

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The proper location
6

• Large, long-term commitment of resources
• Location will affect future growth
• Local environment may change over time

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Location
6

• Freestanding store
• Shopping centre

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Price
6
High price
Low price
Quality image
Good value
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Presentation of the retail store
6
Factors in creation of a stores atmosphere

• employee type and density
• merchandise type and density
• fixture type and density
• sound
• odours
• visual factors

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Personnel and customer service
6
Two common selling techniques

• trading up
• suggestive selling.

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Learning objective 7
Discuss the challenges of expanding retailing
operations into global markets
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Global retailing
7
Reasons for global expansion

• Spread of communication and mass media
• Growth potential of undeserved markets
• Lowering of trade barriers and tariffs

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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.

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Global retailing (cont.)
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Prerequisites for going global

• secure domestic position
• long-term perspective
• consistent global and corporate strategies.

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Learning objective 8
Describe future trends in retailing
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Trends in retailing
8

• Entertainment
• Convenience and efficiency
• Customer management

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Customer management
8
Customer management strategies

• Customer relationship marketing
• Loyalty programs
• Developing clientele