Retailing

13
chapter

Prepared by
Deborah Baker
Texas Christian University

Chapter 13 Version 6e ©2002 South-Western 1

 Learning Objectives
1. Discuss the importance of retailing in the
U.S. economy.

13 2. Explain the dimensions by which retailers

can be classified.
chapter

3. Describe the major types of retail

operations.

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 Learning Objectives (continued)
4. Discuss nonstore retailing techniques.

5. Define franchising and describe its two

13 basic forms.

6. List the major tasks involved in developing

chapter

a retail marketing strategy.

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 Learning Objectives (continued)
7. Discuss the challenges of expanding
retailing operations into global markets.

13 8. Describe future trends in retailing.

chapter

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 1
Learning Objective

Discuss the importance

of retailing in the U.S. economy.

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 1
Retailing

All the activities directly

related to the sale of goods
and services to the ultimate
consumer for personal, non-
business use.

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 1
The Role of Retailing
Retailing is one of the largest
employers

Retailers ring up almost a third of

the U.S. GDP

Industry is dominated by a few

giant organizations, such as
Wal-Mart

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 2
Learning Objective

Explain the dimensions by

which retailers can be classified.

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 2
Classification of Retail Operations
Ownership
Ownership

Level
Level of
of Service
Service

Product
Product Assortment
Assortment
Classification
Classification
of
of
Retail
Retail Price
Price
Establishments
Establishments
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 2
Ownership
Classification
Classification
of
of
Ownership
Ownership

Independent
Independent Franchises
Franchises
Retailers
Retailers

Chain
Chain Stores
Stores

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 2
Level of Service

Self Service Full Service

Factory outlets Discount stores Exclusive stores

Warehouse clubs

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 2
Classification Summary
Type Service
Service Assort-
Assort- Gross
Gross
Typeof
ofRetailer
Retailer Level ment
Price
Price Margin
Level ment Margin
Department
DepartmentStore
Store Mod
ModHi-High
Hi-High Broad
Broad Mod-High
Mod-High Mod
ModHigh
High
Specialty
SpecialtyStore
Store High
High Narrow
Narrow Mod-High
Mod-High High
High
Supermarket
Supermarket Low
Low Broad
Broad Moderate
Moderate Low
Low
Convenience
ConvenienceStore
Store Low
Low Med-Narrow
Mod
Med-NarrowModHigh
High Mod
ModHigh
High
Drugstore
Drugstore Low-Mod
Low-Mod Medium
Medium Moderate
Moderate Low
Low
Full-line
Full-lineDiscounter
Discounter Mod-Low
Mod-Low Med-Broad
Med-Broad Mod
ModLow
Low Mod
ModLow
Low
Specialty
SpecialtyDiscounter
Discounter Mod-Low
Mod-Low Med-Broad
Med-Broad Mod
ModLo-low
Lo-low Mod
ModLow
Low
Warehouse
WarehouseClubs
Clubs Low
Low Broad
Broad Low-lower
Low-lower Low
Low
Off-price
Off-priceRetailer
Retailer Low
Low Med-Narrow
Med-Narrow Low
Low Low
Low
Restaurant
Restaurant Low-High
Low-High Med-Narrow
Med-Narrow Low-High
Low-High Low-High
Low-High
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 2
Gross Margin

The amount of money the

retailer makes as a
percentage of sales after the
cost of goods sold is
subtracted.

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 3
Learning Objective

Describe the major types

of retail operations.

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 3
Major Types of Retail Operations
Department
Department Stores
Stores

Specialty
Specialty Stores
Stores

Supermarkets
Supermarkets

Drugstores
Drugstores

Convenience
Convenience Stores
Stores

Discount
Discount Stores
Stores

Restaurants
Restaurants
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 3
Scrambled Merchandising

The tendency to offer a wide

variety of nontraditional goods
and services under one roof.

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 3
Categories of Discount Stores
Full-Line
Discounters

Discount Specialty
Categories Stores
of Discount
Stores
Warehouse
Clubs

Off-Price
Discount Retailers
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 3
Mass Merchandising

Retailing strategy using

moderate to low prices on
large quantities of
merchandise and lower
service to stimulate high
turnover of products.

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 3
Hypermarket and Supercenter

A
A large
large retail
retail store
store combining
combining
Hypermarket
Hypermarket aa supermarket
supermarket and and
aa full-line
full-line discount
discount store.
store.

Retail
Retail store
store combining
combining groceries
groceries
Supercenter
Supercenter and
and general
general merchandise
merchandise goods
goods
with
with aa wide
wide range
range of
of services.
services.

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 4
Learning Objective

Discuss nonstore retailing techniques.

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 4
Nonstore Retailing
Automatic
Automatic Vending
Vending

Direct
Direct Retailing
Retailing

Direct
Direct Marketing
Marketing
Major
Major Forms
Forms
of
of
Nonstore
Nonstore Electronic
Electronic Retailing
Retailing
Retailing
Retailing
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 4
Direct Retailing

Direct
Direct Retailers
Retailers
sell
sell products:
products:

Home
Home Sales
Sales
Door-to-Door
Door-to-Door Parties
Parties

Office-to-Office
Office-to-Office

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 4
Direct Marketing
Direct
Direct Mail
Mail

Types
Types Catalogs
Catalogs &
& Mail
Mail Order
Order
of
of
Direct
Direct
Marketing
Marketing Telemarketing
Telemarketing

Electronic
Electronic Retailing
Retailing

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 4
Electronic Retailing

Types Shop-at-Home
Shop-at-Home Networks
Networks
Types
of
of
Electronic
Electronic
Retailing
Retailing
On-Line
On-Line Retailing
Retailing

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 5
Learning Objective

Define franchising and

describe its two basic forms.

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 5
Basic Forms of Franchising

Product
Product and
and Trade
Trade Name
Name
Franchising
Franchising
Basic
Basic Forms
Forms
of
of
Franchising
Franchising
Business
Business Format
Format
Franchising
Franchising

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 5
Basic Forms of Franchising

Product
Product and
and Dealer
Dealer agrees
agrees to
to sell
sell certain
certain
Trade
Trade Name
Name products
products provided
provided by
by aa manufacturer
manufacturer
Franchising
Franchising or
or wholesaler.
wholesaler.

Business
Business
Format An
An ongoing
ongoing business
business relationship
relationship
Format
Franchising between
between aa franchiser
franchiser
Franchising
and
and aa franchisee.
franchisee.

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 6
Learning Objective

List the major tasks involved

in developing a retail marketing strategy.

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 6
Retail Marketing Strategy

Define
Define &
& Select
Select
Key
Key Tasks
Tasks aa Target
Target Market
Market
in
in
Strategic
Strategic
Retailing
Retailing
Develop
Develop the
the “Six
“Six P’s”
P’s”

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 6
Defining a Target Market
Demographics
Demographics

STEP
STEP 1:1: Geographics
Geographics
Segment
Segment the
the Market
Market

Psychographics
Psychographics

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 6
Choosing the Retailing Mix

Product
Product Place
Place
STEP
STEP 2: 2:
Choose
Choose the
the Price
Price Personnel
Personnel
Retailing
Retailing Mix
Mix
Promotion
Promotion Presentation
Presentation

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 6
The Retailing Mix
Product
Product

Personnel
Personnel Promotion
Promotion

Target
Market

Presentation
Presentation Place
Place

Price
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 6
Product Offering

The mix of products offered to

the consumer by the retailer;
also called the product
assortment or merchandise
mix.

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 6
Retail Promotion Strategy
Advertising
Advertising

Public
Public Relations
Relations

Publicity
Publicity
Retail
Retail
Promotion
Promotion
Strategy
Strategy Sales
Sales Promotion
Promotion

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 6
The Proper Location

 Large, long-term commitment of

resources
 Location will affect future growth
 Local environment may change
over time

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 6
Location

Location
Location
Decisions
Decisions

Freestanding
Freestanding Mall
Mall
Store
Store
Shopping
Shopping
Center
Center

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Shopping Center and Mall 6
Locations

Advantages Disadvantages

 Design attracts  Expensive leases

shoppers  Failure of common
 Anchor stores draw promotion efforts
customers  Lease restrictions
 Ample parking  Anchor store
 Unified image domination
 Direct competitors
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 6
Price

Low Price High Price

Good Value Quality

Image

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 6
Presentation of the Retail Store
Employee
Employee Type
Type &
& Density
Density

Merchandise
Merchandise Type
Type &
& Density
Density

Fixture
Fixture Type
Type &
& Density
Density

Factors
Factors Sound
Sound
in
in
Creation
Creation Odors
Odors
of
of aa Store’s
Store’s
Atmosphere
Atmosphere Visual
Visual Factors
Factors
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 6
Personnel and Customer Service

Trading
Trading Up
Up
Two
Two Common
Common
Selling
Selling
Techniques
Techniques
Suggestive
Suggestive Selling
Selling

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 7
Learning Objective

Discuss the challenges of

expanding retailing operations
into global markets.

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 7
Global Retailing

Reasons for
Global Expansion

Spread
Spread of
of Growth
Growth potential
potential
communication
communication in
in underserved
underserved
and
and mass
mass media
media markets
markets
Lowering
Lowering of
of trade
trade
barriers
barriers and
and tariffs
tariffs
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 7
Global Retailing
Market
Market Size
Size &
& Economics
Economics
Infrastructure
Infrastructure &
& Distribution
Distribution
Competition
Competition
Operations
Operations
Factors
Factors Used
Used Financial
Financial &
& Tax
Tax Reporting
Reporting
to
to Analyze
Analyze
Global Merchandise
Merchandise Acceptability
Acceptability
Global Retail
Retail
Markets
Markets Partnering
Partnering Capability
Capability
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 7
Global Retailing

Secure
Secure
Domestic
Domestic
Position
Position
Prerequisites for
Going Global
Long-Term
Long-Term
Perspective
Perspective

Consistent
Consistent
Global
Global and
and
Corporate
Corporate
Strategies
Strategies
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 8
Learning Objective

Describe future trends in retailing.

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 8
Trends in Retailing

Entertainment
Entertainment

Trends in Convenience
Convenience
Retailing and
and Efficiency
Efficiency

Customer
Customer Management
Management

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 8
Customer Management
Customer
Customer
Management
Management
Strategies
Strategies

Customer
Customer
Relationship
Relationship Clienteling
Clienteling
Marketing
Marketing
Loyalty
Loyalty
Programs
Programs

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