MARKETING Real People Real Choices Fourth Edition CHAPTER

MARKETING Real People, Real Choices Fourth Edition CHAPTER 16 Retailing: Bricks and Clicks

Chapter Objectives • Define retailing and understand how retailing evolves • Describe how retailers are classified • Describe the more common forms of nonstore retailing • Describe the B 2 C e-commerce, its benefits, limitations, and future promise • Understand the importance of store image to a retail positioning strategy and explain how a retailer can create an image in the marketplace 16 -2

Retailing • Final stop on the distribution path • The process by which products are sold to consumers for personal use • Retailers add value with image, inventory, service quality, location, and pricing policies 16 -3

The Wheel of Retailing • New types of retailers find it easiest to enter the market by offering goods at lower prices than competitors; after they gain a foothold, they gradually trade up, improving facilities and increasing the quality and assortment of merchandise, and offering special amenities; upscaling increases costs causing prices to rise; higher prices open the door for a new entrant charging lower prices 16 -4

Retail Life Cycle • Retailers are also products because they provide benefits and must offer a competitive advantage to survive – Introduction: new retailer takes a unique approach to doing business – Growth: retailer catches on with shoppers, sales and profits rise, others start to copy it so retailer expands offerings – Maturity: many have copied it and an entire industry has formed, profits decline – Decline: retail format becomes obsolete 16 -5

What’s in Store for the Future • Demographics • Technology • Globalization 16 -6

Major Demographic Factors • Convenience for consumers • Catering to specific age segments • Recognizing ethnic diversity 16 -7

Classifying Retailers • All retailers are classified by the NAICS codes • Some lines still blurred – scrambled merchandising – strategy of carrying a combination of food and nonfood items 16 -8

Classifying Retailers by Service • Self-service retailers • Full-service retailers • Limited-service retailers 16 -9

Classifying by Merchandise Selection • Merchandise breadth is the number of different product lines available – Narrow versus broad assortments • Merchandise depth is the variety of choices available for each specific product – Shallow versus deep assortments 16 -10

Store Types • • • Convenience stores Supermarkets Specialty stores Department stores Hypermarket stores • Discount stores – General merchandise discount stores – Off-price retailers – Warehouse clubs – Factory outlet stores 16 -11

Nonstore Retailing • Any method a firm uses to complete an exchange that does not require a customer visit to a store – Direct selling – Automatic vending 16 -12

Direct Selling • Direct selling occurs when a salesperson presents a product to one individual or a small group, takes orders, and delivers the merchandise – Door-to-Door Sales – Parties and Networks • party plan systems • multilevel pyramid schemes 16 -13

Automatic Vending • Appealing for selling convenience goods because of small space required, and minimal personnel to maintain and operate – French fries – Software – Levi’s jeans 16 -14

E-Commerce and the Customer • Benefits – Shop 24/7 – Less travel – More choices – More information – Price competition – Fast delivery • Limitations – Lack of security – Fraud – Can’t touch items – Hard to distinguish color/ texture online – Expensive to return 16 -15

E-Commerce and the Marketer • Benefits • Limitations – The world is your – Lack of security marketplace – Must maintain site – Decreases costs – Price competition – Very specialized – Conflicts with businesses conventional possible retailers – Real-time pricing – Legal issues not resolved – Tracking of consumer behavior 16 -16

Developing a Store Positioning Strategy • Store image – how the target market perceives the store – its market position relative to the competition • Atmospherics – the use of color, lighting, scents, furnishings, sounds, and other design elements to create a desired setting 16 -17

Store Design: Setting the Stage • • • Store layout and traffic flow Fixture type and merchandise density The sound of music Color and lighting The Actors: Store Personnel Pricing policy 16 -18

Building the Theater: Store Location • Types of locations • Site selection – Location planners evaluate trade area and conduct site evaluation • traffic flow, number of parking spaces available, ease of delivery access, visibility from street, local zoning laws, population characteristics, community life cycle, mobility, degree of competition 16 -19

Site Selection • • • Reflect growth strategy Convenient to customers in trade area Population characteristics Degree of competition Target market location 16 -20

Issues for Discussion • Why do retailers usually enter with low-priced goods and then increase over time? Is this the right path for all retailers? • Is Wal-Mart’s power in the marketplace good for consumers? For retailing? Why do some communities prevent Wal-Mart from opening? • Do you feel that atmospherics affect your purchase behavior? • What effect will the growth of e-retailing have on traditional retailing? 16 -21