chapter 12 - Retailers.docx

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Grant B Mc Clelland

Retailers, Wholesalers, and Direct Marketers Retailing  Activities involved in selling merchandise to ultimate consumers  contact points between channel members and ultimate consumers  Act as customers and marketers  represent the distribution channel to most consumers since a typical shopper has little contact with manufacturers and virtually no contact with wholesaling intermediaries.  determine locations, store hours, number of sales personnel, store layouts, merchandise selections, and return policies  factors that often influence the consumers’ images of the offerings more strongly than consumers’ images of the products themselves  creating time, place, and ownership utilities.  Marketers should care about retailers  brands need a physical presence  ∆ Channels of Distribution/Retailers within channels = ∆ capabilities/ Brand opportunities Evolution of Retailing  The general store – First type of retail institution  Rise of supermarkets in the early 1930s, discount stores in the 1950s, convenience stores in the 1960s, and off-price retailers in the 1980s and 1990s  Wheel of retailing – Hypothesis that each new type of retailer gains a competitive foothold by offering lower prices than current suppliers charge; the result of reducing or eliminating services  explains the patterns of change in retailing Retailing Strategy  develops a marketing strategy based on the firm’s goals and strategic plans  Retailers base key decisions on two fundamental steps in the marketing strategy process:  Selecting a target market  Developing a retailing mix to satisfy the chosen market Selecting a Target Market  Consider size and profit potential of the market and the level of competition  demographic, geographic, and psychographic profiles to segment markets Merchandising Strategy  Guides retailer’s decisions on the items it will offer  While developing the merchandise mix, retailers should consider:  Needs and preferences of its target market  Competitive environment influencing choices  Overall profitability of each product line and category  How to Display it  decide on general merchandise categories, product lines, specific items within lines, and the depth and width of its assortments  Category Management  Seeks to improve retailer’s product performance through coordinated buying, merchandising, and pricing  Category management evaluates performance according to each product category.  Categories that underperform may be dropped even if they are strong brands.  The Battle for Shelf Space  Proliferation of new products and variations on existing ones have increased the competition for shelf space.  Stock-keeping unit (SKU) – Offering within a product line such as a specific size of liquid detergent  Major retailers increasingly make demands from manufacturers—such as pricing and promotional concessions—in exchange for shelf space.  Slotting allowances – Nonrefundable fees grocery retailers receive from manufacturers to secure shelf space for new products o A manufacturer can pay a retailer as much as $40 000 per item just to get its new products displayed on store shelves.  failure fees  imposed if a new product does not meet sales projections  annual renewal fees  a “pay to stay” inducement for retailers to continue carrying brands  trade allowances, discounts on high-volume purchases, survey fees for research done by the retailers, and even fees to allow salespeople to present new items Customer-Service Strategy  Heightened customer service is one possible retailing strategy.  The goal is to attract and retain target customers to increase sales and profits.  Some services that retailers could provide:  Enhanced comfort through lounges, complimentary coffee, convenient restrooms  Child-care services for customers  Virtual assistance programs  must specify which services the firm will offer and whether it will charge customers for these services  depend on several conditions: o store size, type, and location o merchandise assortment o services offered by competitors o customer expectations; and financial resources. Pricing Strategy  Prices reflect a retailer’s marketing objectives and policies.  They affect consumer perceptions  Markups and Markdowns  Markup  Amount a retailer adds to the cost of a product to determine its selling price  Markup is influenced by two factors: o Services performed by the retailer o Inventory turnover rate  markup affects the retailer’s ability to attract shoppers  Markdown  Amount by which a retailer reduces the original selling price of a product Location/Distribution Strategy  Location depends on many factors, including the type of merchandise, the retailer’s financial resources, characteristics of the target market, and site availability.  determining factor in the success or failure of a retail business.  A retailer can be located at an isolated site, in a central business district, or in a planned shopping centre.  Locations in Planned Shopping Centres  Planned shopping centre  group of retail stores planned, coordinated and marketed as a unit o Neighborhood shopping centre o Community shopping centre o Regional shopping centre o Power centre o Lifestyle centre  Neighbourhood shopping centre o 5 – 15 stores (serves 5000 – 50 000 people)  Community shopping centre o 10 – 30 stores (serve 20 000 to 100 000 people)  Regional shopping centre o some major anchor stores and as many as 200 smaller stores (serves 250 000 people or more)  Power centre o usually located near a regional centre, and brings together many stand- alone specialty retailers, such as Costco, Michaels, Pier 1, Rona, etc.  Lifestyle centre o seeks to offer a combination of shopping, movie theatres, stages for concerts and live entertainment, decorative fountains and park benches in greenways, and restaurants and bistros in an attractive outdoor environment Promotional Strategy  Promotion informs customers about locations, merchandise selections, hours of operation, and prices.  Helps retailers attract shoppers and build customer loyalty  National chains purchase advertising in print and broadcast media.  Salespeople play an important role  Selling up  Persuading customers to buy higher-priced items than originally intended  Suggestion selling  Broadening a customer’s original purchase by adding related items, special promotional products, or seasonal merchandise  Poor service can influence customers’ attitudes about a retailer.  a source of information  salesperson must possess extensive knowledge regarding credit policies, discounts, special sales, delivery terms, layaways, and returns Store Atmospherics  Atmospherics – combination of physical characteristics and amenities that contribute to a store’s image  Exterior décor should help identify the retailer and attract target market shoppers  Interior decor should compliment retailer’s image, respond to customers’ interests, and induce shoppers to buy Types of Retailers (1)forms of ownership  corporate chain, independent retailer (2)shopping effort expended by customers  convience, shopping, specialty stores (3)services provided to customers  self-selection, limited/full/self-service (4)product lines,  specialty retailer, limited-line retailer (5)location of retail transactions  retail stores, non-retail & internet stores Forms of Ownership  chain stores  Groups of retail outlets that operate under central ownership and management and handle the same product lines  Volume purchases allow chains to pay lower prices than their independent rivals must pay.  Independent retailers  Great majority employ four or fewer employees and have revenue of less than $500 000  Traditional advantage is friendly, personalized service Shopping Effort  Convenience retailers – Focus marketing appeals on accessible locations, extended store hours, rapid checkout service, and adequate parking facilities Ex: Gas stations and dry cleaners  Shopping stores – Offer potential customers the chance to compare pricing, assortment, and quality levels  Shopping focus is between Brands. Subject to the same store margin policy Ex: Furniture stores, clothing outlets  Specialty retailers – Combine carefully defined product lines, services, and reputations in attempts to persuade consumers to expend considerable effort to shop at their stores Ex: Michaels Services Provided  Classifications include self-service, self-selection, or full-service retailers  The 7-Eleven convenience stores are classified as self-service stores, while Safeway and Sobeys grocery stores are examples of self-selection stores  Full-service retailers such as Holt Renfrew Product lines  Specialty Stores  Handle only part of a single product line that it stocks in considerable depth or variety Ex: Fish markets, shoe stores, and bake
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