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Chapter 16

chapter 16

7 pages91 viewsWinter 2011

Management (MGM)
Course Code
Ingrid L.Stefanovic

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Retailers are the final link in the marketing channel, since they sell the products to the
ultimate consumer
Retailing is all the activities involved in selling goods and services to the ultimate
oRetailing also includes telephone sales. Internet selling
Retailers play a feedback role
The general store was stocked with general merchandise to meet the needs of a small
community or rural area
oThey are still operated profitably in less developed countries, where income levels
cannot support more specialized retailers, and in a few isolated parts of Canada as
The Importance of Retailing
The introduction of a new product will likely fail if you have not taken into consideration
the complex and sometimes expensive process required to get it stocked in appropriate
retail outlets
Type of person to manage a retail store will need skills involving
oFashion expert
oFinancial analyst
oPersonnel manager
oLogistics manager
oInformation system manager
Innovation and Competition in Retailing
A major determinant of success is to develop a differential advantage over competitors
Retail innovations often develop as attempts to better satisfy particular consumer needs
Offer low prices, or convenience, or wide line of products
The Wheel-of-Retailing
Wheel of Retailing is a hypothesized process of change in retailing, which suggests that
new types of retailers gain a competitive foothold by offering lower prices through the
reduction or elimination of services; but once established they add more services and
their prices gradually rise, so that they then become vulnerable to a new low-price retailer
with minimum services – and the wheel turns
Chain Store is a group of retail stores that are centrally owned and managed and that
handle the same lines of products
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The retailers decision-making process centres on three fundamental steps
oAnalyzing, evaluating and ultimately selecting a target market
oAnalyzing the strengths and weaknesses of competitors
oDeveloping a marketing mix designed to satisfy the chosen target market
Also develop a marketing communications strategy
Conduct Target Market Research and Analysis
Success will be greatly affected by how well she identifies the needs of potential
Retailers must select the target market to which they wish to appeal
Sometimes a retailer finds it necessary to shift target markets
Develop a Marketing (Retail) Mix That Fits the Target Market
The retail mix is comprised of
oDecision about goods and services,
oLocation and distribution
oRetail image and promotion
Goods and Services Strategy
Retailers must determine and evaluate their offerings with respect to
oGeneral goods/services categories
oSpecific lines
oSpecific products
oInventory depth
oInventory breadth
Decisions are determined by the size of the retailer, as well as whether the store sells
convenience, shopping or specialty goods
Pricing Strategy
The essential decisions concern relative price levels
Other pricing decisions concern mark-ups, markdowns, loss leaders, odd pricing, and
promotional pricing
Location and Distribution Strategy
A store must be in an appropriate location for the type and price of merchandise carried
Retail trade area analysis refers to the studies that assess the relative drawing power of
alternative retail locations
Law of retail gravitation is the principle that delineates the retail trade area of a
potential site on the basis of distance between alternative locations and relative
Breaking Point in km from A: km between A and B
1 + Population of B/ Population of A
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