Marketing Exam 5 Notes Chapter 16 Retailing and Multichannel Marketing Mattel hoping that Chinese women new to the Barbie experience will bolster sales in the years ahead Retailing defined as the set of business activities that add value to products and services sold to consumers for their personal or family use Manufacturers no longer rule many supply chains The largest retailers in the world are dictating to their suppliers what should be made how it should be configured when is should be delivered and what it should cost The first factor choosing retailer partners manufacturers assess how likely it is for certain retailers to carry their products and consider where their target customers expect to find the products The second factor identify the types of retailers that would be appropriate to carry their products The third factor develop their strategy manufacturers and retailers do this by implementing the four P s Multichannel Strategy involves selling in more than one channel ex store catalog and Internet The fourth factor consists of examining the circumstances in which sellers may prefer to adopt a particular strategy Factors for Establishing a Relationship with Retailers choosing retailing partners identifying types of retailers developing a retail strategy managing a multichannel strategy 1 Choosing Retailer Partners create value Manufacturers like Estee Lauder use retailers like Macy s to undertake partnerships that When choosing retail partners manufacturers look at the basic channel structure where their target customers expect to find the products channel member characteristics and distribution intensity Channel Structure the level of difficulty a manufacturer experiences in getting retailers to purchase its 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 Customer Expectations retailers should know customer preferences regarding manufacturers but manufacturers need to know where their target market customers expect to find their products and those of their competitors Estee Lauder decides to sell to JCPenney and Kohl s as well as Macy s and Dillard s but not Sears because this is where their customers expect to find their products Channel Member Characteristics the larger and more sophisticated the channel member the less likely that it will use supply chain intermediaries Britt will use a group of independent salespeople to sell her line of green cosmetics whereas a large manufacturer like Estee Lauder will use its own sales force that already has existing relationships in the industry Larger firms find that by performing the channel functions by themselves they can gain more control be more efficient and save money Distribution Intensity the number of channel members to use at each level of the marketing channel Commonly divided into three levels 1 Intensive Distribution designed to place products in as many outlets as possible The more exposure the product gets the more they sell 2 Exclusive Distribution granting exclusive geographic territories to one or very few retail customers so no other retailers in the territory can sell a particular brand Helps to not weaken a brand s image and helps ensure enough inventory to provide the buying public an adequate selection 3 Selective Distribution relies on a few selected retail customers in a territory to sell products Like exclusive distribution selective distribution helps a seller maintain a particular image and control the flow of merchandise into an area These advantages make this approach attractive to many shopping goods manufacturers those products for which customers are will to spend time comparing alternatives 2 Identify Types of Retailers Food Retailers Supermarkets conventional supermarket a 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 Perishables account for 44 of supermarket sales and have higher margins than packaged goods o Supermarkets carry about 30 000 individual items or stock keeping units SKUs represents a unique inventory item o Limited Assortment Supermarkets or extreme value food retailers stock only 2 000 SKUs these stores are designed to maximize efficiency and reduce costs 40 lower prices than conventional supermarkets o Differentiate their offerings to compete successfully by 1 emphasizing fresh perishables 2 targeting health conscious and ethnic consumers with new lines of natural organic or culture specific items 3 providing a better in store experience with a better overall atmosphere and demonstrations and 4 offering more private label brands Trader Joe s 2 000 private label goods account for up to 70 of its inventory compared to 16 at regular grocery stores Supercenters large stores 185 000 square feet that combine a supermarket with a full line discount store o Wal Mart operates 2 700 supercenters in the U S accounting for 81 of total supercenter sales o By offering broad assortments of grocery and general merchandise products under one roof supercenters provide one stop shopping convenience to customers Warehouse Clubs large retailers 100 000 150 000 square feet that offer a limited and irregular assortment of food and general merchandise little service and low prices to the general public Costco Sam s Club Wal Mart o Customers are attracted because they can stock up on large packs of items at lower prices o Sell firm s overstock items Convenience Stores provide a limited variety and assortment of merchandise at a convenient location in 3 000 5 000 square foot stores with speedy checkouts o Limited in terms of depth and breadth and charge higher prices than supermarkets o Face increased competition from other retail formats such as supercenters and supermarket chains who are attempting to increase customer store visits by offering gasoline and tying gasoline sales to their frequent shopper programs Drug stores and full line discount stores are also competition o Responding to competition by offering fresh food and healthy fast food tailoring assortments to local markets and making their stores even more convenient to shop Also adding financial service kiosks General Merchandise Retailers Department Stores retailers that carry a broad variety and deep assortment offer customer services and organize