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Chapter

RMG 200 Chapter Notes -Vending Machine, Direct Selling, Pyramid Scheme


Department
Retail Management
Course Code
RMG 200
Professor
Brent Barr

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NONSTORE RETAIL FORMATS
Electronic
Retailing
Electronic retailing (aka. E-tailing, online retailing, internet retailing): a retail format in
which the retailers communicate with customers and offer products and services for sale
over the internet
Catalogue and
Direct-Mail
Retailing
Catalogue retailing: nonstore retail format in which the retail offering is communicated to
a customer through a catalogue
o Efficient systems for taking orders from individual customers, packaging the
merchandise ordered for shipping, delivering it to homes, and handling returned
merchandise
Direct-mail retailer: a nonstore retailer that commutates directly with customers using
mail brochures and pamphlets to sell a specific product or service to customers at one
point in time
Types of Catalogue and Direct-Mail Retailers
A. General merchandise Catalogue Retailers: nonstore retailers that offer a broad variety of
merchandise in catalogues that are periodically mailed to their customers
B. Specialty Catalogue Retailers: a nonstore retailer that focuses on specific categories of
merchandise, such as fruit, gardening tools, and seeds and plants
Issues in Catalogue Retailing
Difficult for smaller catalogue and direct mail retailers to compete with large, well
established firms that have embraced a multichannel strategy
Mailing and printing costs are high and increasing
Difficult to get consumers’’ attention as they are mailed so many direct mail promotions
The length of time required to design, develop and distribute catalogues makes it difficult
for catalogue and direct mail retailers to respond quickly to new trends and fashions
Direct Selling
Direct selling: a retail format in which a salesperson, frequently an independent
distributor, contacts a customer directly in a convenient location (either at a customer’s
home or at work) and demonstrates merchandise benefits, takes an order, and delivers
the merchandise to the customer
The largest categories of merchandise sold through direct selling are personal care,
home/family care, wellness, other services, and leisure/educational items
Two Special Types of Direct Selling
A. Party Plan System: salespeople encourage people to act as hosts and invite friends or
coworkers to a “party” at which the merchandise is demonstrated, the host or hostess
receives a gift or commission for arranging the meeting
B. Multilevel Network: a retail format in which people serve as master distributors,
recruiting other people to become distributors in their network
o Pyramid scheme: when the firm and its program are designed to sell merchandise and
services to other distributors rather than to end users
Television Home
Shopping
Television home shopping (aka teleshopping):a retail format in which customers watch a
TV program demonstrating merchandise and then place orders for the merchandise by
phone
Three Forms of electronic home shopping retailing are:
A. Cable channels dedicated to television shopping
B. Infomercials: TV programs, typically 30 minutes long, that mix entertainment with
product demonstrations and solicit orders placed by telephone by consumers
C. Direct response advertising: advertisements on TV and radio that describe products and
provide an opportunity for customers to order them
Vending
Machine
Retailing
Vending machine retailing: a nonstore format in which merchandise or services are stores
in a machine and dispensed to customers when they deposit cash or use a credit card
Placed at convenient, high traffic locations such as workplace, the airport, or on university
campuses
SERVICES RETAILING
Services retailers: organization that offers consumers services rather than merchandise
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