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Chapter 13

Chapter 13 - Retailing

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Wilfrid Laurier University
Dave Ashberry

Chapter 13: Retailing  It is the retailer‟s responsibility to make customer‟s expectations are met  Retailing: set of business activities that add value to products and services sold to consumers for their personal or family use  Is Canada‟s 3 largest industry; appox. 2 million employed CHOOSING RETAIL PARTNERS  Manufacturers must look at the basic channel structure, where their target customers expect to find the products, and channel member characteristics Channel Structure  The level of difficulty a manufacturer has in getting retailers to purchase its products is determined by the degree to which the channel is vertically integrated (strong brand, desirable market, relative power) Customer Expectations  It is important to know from which manufacturers retailer‟s customers want to buy  For manufacturers, they need to know where their target market customers expect to find their products and those of their competitors  Generally expect to find certain products at some stores but not at others Channel Member Characteristics  The larger and more sophisticated the channel member, the less likely that it will use supply chain intermediaries IDENTIFYING TYPES OF RETAILERS Food Retailers  Traditional grocery stores; Drugstores, discount stores, warehouse clubs, convenience stores  3 major categories of food retailers o Conventional supermarket – offers groceries, meat, and produce with limited sales of non-food items, such as health and beauty aids and general merchandise, in a self service format o Big-Box Food Retailers: supercentres, hypermarkets, warehouse clubs; carries both food and non-food items o Convenience Stores – provides a limited number of items at convenient locations in small stores with speed checkout General Merchandise Retailers  Discount Stores - Broad variety of merchandise, limited service, & low prices (e.g. Walmart and Zellers)  Specialty Stores – concentrate on a limited number of complimentary merchandise categories in a relatively small store (e.g. Fitness Depot and Payless ShoeSource)  Category Specialists – offers narrow variety but a deep assortment of merchandise (e.g. Chapters Indigo – books) o most category specialists use a self-service approach, but some, provide extensive customer service o Category killer = extensive assortment that is so overwhelming that other retailers have difficulty competing  Department Stores – offer many different types of merchandise (broad) & lots of items within each (deep), offer some customer services, & are organized into departments o Have lost market share to specialty stores, discount stores, & category specialists  Drugstores – specialty stores that concentrate on health & beauty merchandise (e.g. Shoppers Drug Mart)  Off-Price Retailers – offer inconsistent assortment of merchandise at relatively low prices (e.g. Winners, Home Sense) o Extreme Value Retailers = general merchandise discount store found in lower-income areas CREATING A RETAIL STRATEGY  Important for retailers to develop effective retailing strategies and market positioning in order to differentiate themselves  (1) obtain a deep understanding of the consumers in their markets – attitudes, behaviours, and preferences  (2) use the knowledge of their customers to develop market segments and select those segments they want to serve  (3) develop product merchandising, pricing, promotion, and place strategies to reach and serve these customers Product  Providing the right mix of P/S that satisfies the target market is one of retailers‟ most fundamental activities  Offering more gives consumers more choice  Retailers provide value to both manufacturers & customers by performing the storage function  Private-label brands = store brands = developed & marketed by the retailer & available only from them Price  Helps define value of the merchandise and service  The general price range of the store helps define its image  Must be aligned with the other elements of the retail mix: product, promotion, place, personnel, and presentation Promotion  Use traditional media (magazines, newspaper, television) to get consumers into the stores  Once in the stores, retailers use displays & signs to inform customers & stimulate purchases  Cooperative advertising: an agreement between a manufacturer and retailer in which the manufacturer agrees to defray some advertising costs  Store credit cards or gift cards are more subtle forms of promotion  Pricing promotions su
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