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Chapter 16

chapter 16


Department
Management (MGM)
Course Code
MGMA01H3
Professor
Ingrid L.Stefanovic
Chapter
16

Page:
of 7
INTRODUCTION
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
consumer
oRetailing also includes telephone sales. Internet selling
Retailers play a feedback role
EVOLUTION OF RETAILING
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
well
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
oMarketer
oFashion expert
oFinancial analyst
oPersonnel manager
oLogistics manager
oInformation system manager
oEconomist
oAccountant
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
MARKETING STRATEGY IN RETAILING
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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
profitably
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
customers
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,
oPrices
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
populations
Breaking Point in km from A: km between A and B
-------------------------------------------------
1 + Population of B/ Population of A
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Other Distribution Decisions
Ensure that adequate quantities of stock are available when consumers want to buy
Retail Image and Promotions Strategy
Retail Image is the consumers perception of a store and of the shopping experience it
provides
Promotional strategy is a key element in determining the stores image with the consumer,
also the amenities provided by the retailer
The objective of retailer promotional strategy should be to align the consumer`s
perception of the store with other elements of the retailing mix
Differentiate Store from Competitors
Differentiation Triangle is the differentiation of a retail store from competitors in the
same strategic group through price, location and store atmosphere and service
The way the elements are used is important, since they give the customer reasons to
choose one store over another
Price cuts must be truly significant in order to compete with other retailers who have also
chosen price as a means of differentiation
Improve store atmosphere and customer service
Retailers need to re-evaluate the quality of their service
CATEGORIZING RETAILERS
The following characteristics or bases can be used in categorizing them
oShopping effort expended by customers
oServices provided to customers
oProduct lines
oLocation of retail transactions
oForm of ownership
oMargin and turnover
In-Store Retailing Today
Most retailing occurs in and through stores
Grouping retailers by product lines produces three major categories
oLimited-line retailers
oSpecialty retailers
oGeneral merchandise retailers
Limited Line Retailers
Limited-Line store is a retailer that offers a large assortment of a single line of products
or a few related lines of products
oExamples: hardware, grocery, appliance, sporting goods stores
Supermarkets
Supermarkets are large-scale, departmentalized retail store offering a large variety of
good products such as meats, produce, dairy products, canned goods, and frozen foods in
addition to various non-foods items
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