Chapter Sixteen Retailing and Multichannel Marketing Beginning Case Barbie is taking the brand from popular doll sold through variety of channels to symbol of optimism and possibility for women of all ages Full featured megastore with interactive experiences designed to convey that all girls just want to have fun and believe that any future is open to them Aspiration values through Career Wall that shows Barbie in more than 100 different careers also represents cultures from around the world Retailing defined as set of business activities that add value to products and services sold to consumers for their personal or family use o Largest retailers in world dictate to their suppliers what should be made how should be configured when should be delivered what it should cost Choosing Retail Partners First factor manufacturers assess how likely it is for certain retailers to carry their products integrated manufacturers Channel structure determined by the degree to which channel is vertically o Degree to which the manufacturer has strong brand or is otherwise desirable in the market and relative power of manufacturer and retailer Customer expectations retailers should know customer preferences regarding o Manufacturers need to know where target market customers expect to find their products and those of their competitors Channel Member Characteristics larger and more sophisticated channel members less likely they will use supply chain intermediaries Distribution Intensity decide the appropriate level of number of channel members to use at each level of marketing channel o Intensive distribution strategy is designed to place products in as many outlets as possible o Exclusive distribution granting exclusive geographic territories to one or very few retail customers so no other retailers in territory can sell particular brand o Selective distribution relies on few selected retail customers in a territory Seller maintain particular image and control the flow of merchandise to sell products Identify Types of Retailers into an area food sales Food Retailers conventional supermarkets account for slightly more than half of o Conventional Supermarkets self service retail food store offering groceries meat and produce with limited sales of nonfood items such as health and beauty aids and general merchandise Stock keeping units represent unique inventory items of which they carry 30 000 Limited assortment extreme value food retailers carry 2 000 as they maximize efficiency and reduce costs Differentiate offerings by emphasizing fresh perishables targeting health conscious and ethnic consumers providing better in store experience offering more private label brands o Supercenters large stores that combine supermarket with full line discount store o Warehouse clubs large retailers that offer limited and irregular assortment of food and general merchandise little service and low prices to general public and small businesses Stock up on large packages of basic items o Convenience stores provide limited variety and assortment of merchandise at convenient location with speedy check out General Merchandise Retailers o Department stores retailers that carry broad variety and deep assortment offer customers services and organize their stores into distinct departments for displaying merchandise To better compete increase amount of exclusive and private label merchandise they sell strengthening their customer loyalty programs and expanding online presence o Full Line Discount Store retailers that offer broad variety of merchandise limited service and low prices Do not expect higher end products in full line discount stores o Specialty Stores concentrate on limited number of complementary merchandise categories and provide high level of service o Drugstores specialty stores that concentrate on pharmaceutical and health and personal grooming merchandise o Category specialists big box retailers or category killers that offer narrow but deep assortment of merchandise with predominantly self service approach Offering complete assortment in category at somewhat lower prices that their competition category specialists can kill a category of merchandise for other retailers Home improvement center is most successful type of category specialist Offering equipment and material used by do it yourselfers and contractors to make home improvements o Extreme value retailers small full line discount stores that offer limited merchandise assortment at very low prices Reduce costs and maintain low prices by buying opportunistically from manufacturers with excess merchandise offering limited assortment and operation in low rent locations o Off Price Retailers close out retailers offer inconsistent assortment of brand name merchandise at significant discount from manufacturers and suggested retail price Sell brand name and even designer label merchandise at prices 20 60 percent lower than the MSRP Bought opportunistically from manufacturers or other retailers with excess inventory at end of season Can buy at low price because do not ask suppliers to help pay for advertising make them take back unsold merchandise charge them for markdowns or ask them to delay payments Outlet stores off price retailers owned by manufacturers of department or specialty store chains Factory outlets owned by manufacturers Service Retailers firms that primarily sell services rather than merchandise are large and growing part of retail industry Developing A Retail Strategy Using the Four P s Product o Providing right mix of merchandise and services that satisfies the needs of target markets is one of retailers most fundamental activities o Many retailers have developed private label brands which are products developed and marketed by retailer and available only from that retailer o Co brands have double benefit available at only one retailer and offer name recognition similar to that of a national brand but manufacturers market is limited Price o Helps define the value of both merchandise and services and general price range of particular store helps define image o Must consider what price will sell product to retailers so that both manufacturer and retailer can make reasonable profit Also concerned about what customer is willing and expecting to pay Promotion consumer base o Good promotion can mean difference between flat sales and growing o Coordinated effort between manufacturer and retailer helps guarantee that the customer receives a cohesive
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