Chapter 15 11 18 2011 Retailing all the activities directly related to the sale of goods and services to the ultimate consumer for personal nonbusiness use The Role of Retailing U S retailers employ nearly 25 million people Retailers account for 11 6 of U S employment Retailing accounts for 13 of U S businesses Retailers ring up almost 4 trillion in sales nearly 40 of the U S GDP Industry is dominated by a few giant organizations such as Wal Mart Classification of Retail Operations Ownership o Independent retailers owned by a single person or partnership and not part of a larger retail institution o Chain stores owned and operated as a group by a single organization o Franchises the right to operate a business or to sell a product Level of service o Full service o Self service Product assortment Price o Classification based on breadth and depth of product lines o Gross margin the amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted Major Types of Retail Operations Department stores o A store housing several departments under one roof o Each department is headed by a buyer or department head who selects merchandise Specialty stores Supermarkets Drug stores draw Convenience stores o A retail store specializing in a given type of merchandise o Large departmentalized self service retailer o Specializes in food o Some use scrambled merchandising o Retail store that stocks pharmacy related products and services as its main o A miniature supermarket carrying only a limited line of high turnover convenience goods Discount stores o Categories of discount stores Full line discounters Retailer that offers consumers very limited service and carries a broad assortment of well known nationally branded hard goods Mass merchandising retailing strategy using moderate to low prices on large quantities of merchandise and lower levels of service to stimulate high turnover of products Supercenter retail store that combines groceries and general merchandise goods with a wide range of services Specialty discount stores Retail store that offers a nearly complete selection of single line merchandise and uses self service discount prices high volume and high turnover Category killer specialty discount store that heavily dominate their merchandise segment Warehouse clubs Limited service merchant wholesalers that sell a limited selection of brand name appliances household items and groceries on a cash and carry basis to members Off price retailers Retailer that sells at prices 25 or more below traditional department store prices because it pays cash for its store and usually doesn t ask for return privileges Restaurants o Straddle the line between retail and service establishments o Sell tangible products food drink but also services food prep food service o Many could be considered specialty retailers o The use of machines to offer goods for sale o Vending is the most pervasive retail business in the United States with 11 5 million vending machines selling billions of dollars worth of goods annually Nonstore retailing Automatic vending Direct retailing o Door to door o Office to office o Home sales parties Direct marketing o Telemarketing o Direct mail o Catalogs and mail order o Electronic retailing Electronic retailing Basic forms of franchising Product and trade name franchising dealer agrees to sell in products provided by Business format franchising an ongoing business relationship between a a manufacturer or wholesaler franchiser and franchisee Top 10 Franchisors Subway mcdonald s 711 Hampton Inn Supercuts H R Block Dunkin Donuts Jani King Servpro ampm Retail Marketing Strategy Define and select a target market o Segment market Demographics Geographics Psychographics Develop a retailing mix o Product promotion place price personnel presentation Choosing the Retailing Mix Product offering the mix of products offered to the consumer by the retailer also called product assortment or merchandise mix Retail Promotion Strategy Advertising Public relations Publicity Sales promotion The Proper Location Choosing a community o Economic growth potential o Competition o Geography Choosing a specific site o Socioeconomic characteristics o Traffic flows o Land costs o Zoning regulations Presentation of the Retail store Atmosphere the overall impression conveyed by a store s physical layout d cor o Public transportation Choosing the type of site o Freestanding store o Shopping center o Mall Retail Prices Low price good value single price point High price quality image and surroundings Employee type and density Merchandise type and density Fixture type and density Sound Odors Visual factors Personnel and Customer Service Two common selling techniques o Trading up o Suggestion selling Customer Service for On Line Retailers Easy to use web site Product availability Simple returns New Developments in Retailing Interactivity consumers are involved in the retail experience M commerce purchasing goods through mobile devices Chapter 16 Promotional Strategy 11 18 2011 A plan for the optimal use of the elements of promotion o Advertising o Public relations o Personal selling o Sales promotion Advertising most commonly distributed by traditional media though increasingly through non traditional media such as Websites e mail blogs and interactive video kiosks in malls and Advantages reach large number of people low cost per contact can be micro Disadvantages total cost is high national reach is expensive for small companies supermarkets targeted Traditional advertising media Television Radio Newspapers Magazines Books Direct mail Billboards Transit cards New Advertising media Internet Banner ads Viral marketing E mail Interactive video Public Relations helps an organization communicate with customers suppliers stockholders government officials employees and the community Function of Public Relations Maintain a positive image Educate the public about the company s objectives Introduce new products Support the sales effort Generate favorable publicity Sales Promotion marketing activities other than personal selling advertising and public relations that stimulate customer buying and dealer effectiveness Free samples Contests Premiums Trade shows Vacation giveaways Coupons o all targeted at End Consumers Trade consumers company employees Personal Selling planned presentation to one or more prospective buyers for the purpose of making a sale Win lose outcome Traditional selling
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