Download Chapter 14

14
C H A P T E R
Retailing
McGraw-Hill/Irwin
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
After studying this chapter, you should be able to:






Understand the economic importance of retailing and its
role in the marketing channel.
Cite evidence of the globalization of retailing.
Discuss some of the advances in retailing technology.
Explain the reasons behind the growth of nonstore
retailing.
Describe key factors in the retail marketing environment,
and understand how they relate to retail strategy.
Cite important ethical and legal issues facing retailers.
Bearden Marketing 5th Ed
14-2
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Best Buy
Best Buy, the nation’s largest
seller of electronics, is doing
what many retail analysts
believe all retailers should do:
Focus on certain types of
customers and ignore the rest.
For the chosen customers, Best
Buy is creating more value by
concentrating on their needs and
preferences. For those not
chosen, Best Buy would be
happy if those customers took
their business elsewhere.
Bearden Marketing 5th Ed
14-3
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Retailers’ Uniqueness in Channel
Sell Smaller
Quantities,
More Frequently
Retailers’
Uniqueness
Provide
Assortments
Emphasize
Atmospherics
Bearden Marketing 5th Ed
14-4
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
The Role of Retailing
Retailing
Retail Sales
Bearden Marketing 5th Ed
An important part of many marketing
channels, includes all the activities
involved in selling products and services
to the ultimate, or final, consumer..
Retail sales are sales to final
consumers; wholesale sales are those
to other businesses that in turn resell the
product or service, or use it in running
their own businesses.
14-5
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Retail versus Wholesale
To be classified as a retailer, a firm’s retail sales
must equal or exceed 50 percent of its total
revenues. Firms with less than 50 percent retail
sales are classified as wholesalers.
Wal-Mart was reminded of the distinction when
its Sam’s Wholesale Club was forced to change
its name to Sam’s Club in states in which its
retail sales exceeded the 50 percent
benchmark. Ultimately, the word wholesale was
dropped from all Sam’s Club store names.
Bearden Marketing 5th Ed
14-6
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Economic Importance
Retailing is a major force in the economy. Three million
U.S. retailers employ 14 million people and generate an
astonishing $2.5 trillion in annual revenues. This
translates into a $9,100 retail expenditure for every man,
woman, and child in the United States.
Bearden Marketing 5th Ed
14-7
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Types of Retailers
Independent
Retailers
Chains
Independent retailers own and operate
only one retail outlet – they account for
more than three-fourths of all retail
establishments.
A retail chain owns and operates
multiple retail outlets. By far, chain stores
sell more merchandise than any other
category of retailers.
more
Bearden Marketing 5th Ed
14-8
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Types of Retailers (con’t)
Retail franchising is a form of chain ownership in which a
franchisee pays the franchisor fees or royalties and agrees
to run the franchise by prescribed norms, in exchange for
use of the franchisor’s name.
more
Bearden Marketing 5th Ed
14-9
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Types of New Products (con’t)
Leased
Departments
Cooperatives
Bearden Marketing 5th Ed
Leased departments are sections in a
retail store that the owner rents to a
second party.
Responding to competitive pressures
exerted by the buying power of chain
stores, independent retailers sometimes
band together to form retail
cooperatives. Although each store
remains independently owned, the retail
cooperative generally adopts a common
name and storefront.
14-10
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Trends in Retailing
Global
Retailing
Trends
in
Retailing
Technological
Advances
Customer
Service
Bearden Marketing 5th Ed
14-11
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Nonstore Retailing
Nonstore retailing: sales outside a physical structure.
Direct
Retailing
Direct retailing is the portion of direct
marketing in which ultimate consumers,
not business customers, do the buying.
Direct
Selling
Direct selling: the sale of a consumer
product or service, person-to-person,
away from a fixed retail location.
Vending
Machine
Sales
Vending machines allow customers to
purchase and receive merchandise
from a machine.
Bearden Marketing 5th Ed
14-12
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Customer Service in Retailing
Customer service refers to the activities that increase the
quality and value customers receive when they shop and
purchase merchandise. Retailers rush to give lip service to
the importance of customer service, but many still fall
woefully short of providing it.
Bearden Marketing 5th Ed
14-13
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Nonstore Retailing
Consumers can buy almost anything via nonstore
retailing. Amazon.com, which began as an online
bookseller, now offers thousands of products
ranging from home electronics to baby toys.
Bearden Marketing 5th Ed
14-14
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Developing Retail Strategy
The scope of retail products and services and the
demands of consumers combine to produce a constantly
changing business environment. A successful retailer
must effectively manipulate the factors it can control to
survive in a largely uncontrollable environment.
Exhibit 14-4
Bearden Marketing 5th Ed
14-15
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Evaluating Retail Locations
The old saying—and experts confirm it—is that the three
most important factors in retailing are location, location,
and location.
Bearden Marketing 5th Ed
14-16
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Scrambled Merchandising
The practice of adding unrelated product categories to
existing product lines is referred to as scrambled
merchandising.
Exhibit 14-6
Bearden Marketing 5th Ed
14-17
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Scrambled Merchandising
Bearden Marketing 5th Ed
14-18
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Ethical and Legal Issues
Consumer
Fraud
Supplier
Labor
Practices
Ecological
Considerations
Use of
Customer
Information
Ethical and Legal
Issues in
Retailing
Retail
Theft
Slotting
Allowances
Bearden Marketing 5th Ed
14-19
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Summary
After studying this chapter, you should be able to:






Understand the economic importance of retailing and its role
in the marketing channel.
Cite evidence of the globalization of retailing.
Discuss some of the advances in retailing technology.
Explain the reasons behind the growth of nonstore retailing.
Describe key factors in the retail marketing environment,
and understand how they relate to retail strategy.
Cite important ethical and legal issues facing retailers.
Bearden Marketing 5th Ed
14-20
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.