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Chapter 13

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Dave Ashberry

BU352 Chapter 13 - Retailing Week 8 Introduction -Retailing – the set of business activities that add value to products and services sold to consumers for their personal or family use; includes products bought at stores, through catalogues, and over the Internet, as well as fast-food restaurants, airlines, and hotels -Multichannel strategy – selling in more than one channel (ex. Store, catalogue, kiosk, and Internet) Choosing Retail Partners -When 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 manufacture has in getting retailers to purchase is products is determined by the degree to which the channel is vertically integrated, the degree to which the manufacturer has a strong brand or is otherwise desirable in the market, and the relative power of the manufacturer and retailer Customer Expectations -For a retailer, it is important to know from which manufacturers its customers want to buy -Manufacturers need to know where their target market customers expect to find their products and those of their competitors 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 -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 – Ex. Sobeys -Big-box retailer – comes in three types: supercentre, hypermarket, and warehouse club; larger than a conventional supermarket; carries both food and non-food items – Ex. Costco General Merchandise Retailers -General merchandise retailers – may be a discount store, specialty store, category specialist, department store, drugstore, off-price retailer, or extreme value retailer; may sell through multiple channels, such as the internet and catalogues Discount Stores -Discount store – offers a broad variety of merchandise, limited service, and low prices -Ex. Walmart Specialty Store -Specialty store – concentrates on a limited number of complementary merchandise categories in a relatively small store -Ex. Payless concentrates on shoes Category Specialists -Category specialist – offers a narrow variety but a deep assortment of merchandise -Ex. Chapters Indigo, RONA -Category killer – offers an extensive assortment in a particular category, so overwhelming the category BU352 Chapter 13 - Retailing Week 8 that other retailers have difficulty competing Department Stores -Retailers tht carry many different types of merchandise and lots of items within each item -Ex. Sears and The Bay Drugstores -Drugstore – a specialty store than concentrates on health and personal grooming merchandise, though pharmaceuticals may represent more than 60 percent of its sales Off-Price Retailers -Off-price retailers – a type of retailer that offers an inconsistent assortment of merchandise at relatively low prices -Extreme value retailer – a general merchandise discount store found in lower-income urban or rural areas Creating a Retail Strategy -Retailers must first obtain a deep understanding of the consumers in their markets – their attitudes, behaviours, and preferences -Retailers must use the four Ps in their retail strategy to create value for consumers Product -Providing the right mix of merchandise and services that satisfies the needs of the target market is one of retailers’ most fundamental activities -To reduce transportation costs and handing, manufacturers typically ship cases of merchandise to retailers Price -Price helps define the value of both the merchandise and the service Promotion -Retailers and manufacturers know that good promotion can mean the difference between flat sales and a growing consumer base -Co-operative advertising – an agreement between a manufacturer and retailer in which the manufacturer agrees to defray some advertising costs -Store credit cards and gift cares are more subtle forms of promotion that also facilitate shopping -Retailers also might offer pricing promotions to attract consumers and stimulate sales -Many retailers are devoting more resources to their overall retail environment as a means to promote and showcase what the store has to offer – ways they display merchandise -Personal selling and customer service representatives are also part of the overall promotional package -Share of wallet – the percentage of the customer’s purchases made from a particular retailer Place -Convenient locations are key -Many consumers choose store on the basis of where they are located The Changing Retail Landscape -Success for retailers means learning how to compete in a value-driven world -Consumers have changed their reference points for both price and quality sine they have been trained to expect low prices -Value retailers continue to improve their “shopability” providing more co
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