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THE WORLD OF RETAILING

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WHAT IS RETAILING?

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HISTORY
= Need for food, water, and bodily comforts.
= Human aggressiveness.

= Trade was an outgrowth of friendly gift giving.

= People who had more goods than they could


consume traded the excess away.
!LASSIFI!ATION OF RETAILING
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!LASSIFI!ATION OF RETAILING:
AMOUNT OF SERVI!E

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PRODU!T LINE
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WAREHOUSE !LUBS
= Warehouse club / wholesale club (Sam s, !ostco)
@ No frills, members only (why?)
@ Bulk purchases: price competition, homogeneous
shopping goods
!ONVENIEN!E STORES

= !onvenience products
= Often with gas stations
@ !onvenience stores: fill-in your Îregular shopping
= !ompetition (fast food also)
= 24/7 is more important

= We pay for the convenience


MULTI !HANNEL RETAILING
MULTI !HANNELS

= Designer shops
= Off pricers ( Factory outlets)
= Shop in shop
= Departmental store
= Discount stores
= Spin offs
= E ²Retailing
= !atalogue Retailing
= Direct mail
= TV
= Tele retailing
OVER SEAS EXPANSION (WHY?)

= More profits
= !rowded domestic market
= Overseas market gives capacity advantage.
OVER SEAS EXPANSION

= Wholly owned subsidiaries.


= Franchise arrangements
= Licensed
= Joint venture


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NATURE OF RETAIL INDUSTRY IS !HANGING

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DE!ISION VARIABLES FOR RETAILERS

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!HAPTER 12

Retailing and
Wholesaling
RETAILER MARKETING DE!ISIONS

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PRODU!T ASSORTMENT AND SERVI!ES
DE!ISIONS

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RETAILER S PRI!E, PROMOTION, AND PLA!E
DE!ISIONS

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THE FUTURE OF RETAILING

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THE WHEEL OF RETAILING
 
 
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WHAT IS WHOLESALING?

= All the activities involved in selling goods and


services to those buying for resale or business
use.
= Wholesaler - those firms engaged primarily in
wholesaling activity.
= Wholesalers buy mostly from producers and
sell mostly to:
@ Retailers,
@ Industrial consumers, and
@ Other wholesalers.
WHY ARE WHOLESALERS USED?
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WHOLESALER MARKETING DE!ISIONS

 

 
 
  
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TRENDS IN WHOLESALING

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REST STOP:
REVIEW OF !ON!EPT !ONNE!TIONS
1. Explain the roles of retailers and wholesalers in the
distribution channel.
2. Describe the major types of retailers and give
examples of each.
3. Identify the major types of wholesalers and give
examples of each.
4. Explain the marketing decisions facing retailers and
wholesalers.
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INTRODU!TION
= An intermediary involved in
selling goods and services to
  ultimate consumers (examples?)


       
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STRATEGI! IMPLI!ATIONS:
RETAIL MARKETING STRATEGY
= A retailer develops a marketing
strategy based on the firm s goals and
strategic plans
= Two fundamental steps:
1. Picking a target market: size and profit
potential. POSITION.
2. Developing a retailing mix to satisfy
the chosen target market
1. 4Ps + Personnel & Presentation used to
create a retail image
THE RETAILING MIX
 

    

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!HOOSING THE MER!HANDISING MIX

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!"!"# Retailing strategy which
views each product category as an individual profit
center.

= $%"
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lump-sum payments by
manufacturers for stocking new products.

= '!)$*
'+"*%(%": !ombining dissimilar
product lines to boost sales volume.

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)"*( Battle for shelf space
PRESENTATION OF THE RETAIL STORE -
ATMOSPHERE

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PERSONNEL AND !USTOMER SERVI!E

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!LASSIFI!ATION OF RETAIL BY
1. Ownership (independent, franchise chain)
2. Service level (Nordstrom vs. Wal-mart)
3. Assortment (!VS vs. Smith s)
4. Price (Tiffany vs. jewelry kiosk)
WHEEL OF RETAILING

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WHEEL OF RETAILING



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ETAILING AND DT!
= eTail= electronic retail
= DT!= Direct to consumer
= Shrinking use of wholesalers? (bypassing
wholesalers more and more)
= eBay: hybrid etailer/online auction site
= Even sells services online
(examples of services
on ebay?)
ETAIL

= More innovative e-tail sites


= Printing online www.printresponsibly.com

= Nike ID http://nikeid.nike.com
= Zappos http://www.zappos.com
FUTURE OF RE[E]TAILING

= http://www.youtube.com/watch?v=jtiJaX
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= The key aspects of retail marketing is an attitude
of mind.
= In making retail marketing decisions, retailers
must consider the needs of the customers.
= Retail marketing decisions are driven by what
the shoppers need and want.
2
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= Retail marketing is therefore a philosophy and is
all about satisfying the customers
= What the customers regard as value and what
they buy is decisive.
= What the customers buy determines the nature of
the retailer s business.
3
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= The essence of retail marketing is
developing merchandise and services that
satisfy specific needs of customers, and
supplying them at prices that will yield
profits.

= Retailersmust take the customers  needs


into consideration in retail operation.
4
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= Retail
marketing is stimulating, quick-
paced, and influential.

= It
encompasses a wide range of activities
including:
@ Environmental analysis
@ Market research
@ !onsumer analysis
@ Product planning etc.
5
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= The retail marketing concept is the acceptance by
the retailer that it is the Îcustomer and not
Îdemand that lie at the core of the retail
organisation.
= The retail marketing concept is a philosophy, not a
system of retailing or retail structure.
= It is founded on the belief that profitable retailing
and satisfactory returns on investment can only be
achieved by identifying, anticipating and satisfying
customer needs and desires.
= It is an attitude of mind that places the customer at
the very centre of retailing activities.
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= Marketing is a vital tool for every retailer, as it identifies
current, unfulfilled needs and wants, which it defines and
quantifies.
= Marketing determines which target groups the retailer should
serve.
= Marketing could be seen as delivering an acceptable standard
of living.
= Marketing can ensure complete satisfaction and sustained
customer loyalty.
= Marketing depends on the efficient co-ordination of consumer
prediction, product development, packaging design and
influencing demand through appropriate communication
medium.
= From these, a suitable mix is achieved.
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= The retail marketing objective is a performance
parameter which has been explicitly stated.
= It can be stated in quantifiable terms and time
terms so that results can be measured against it.
Three types of retail objectives include:
1. Basic objective those which defines retailer s
long-term purposes.
2. Goals those which the retailer must achieve to
be successful
3. Targets short-term goals that require
immediate achievement.
ã
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= Retail marketing mix is the term used to describe
the various elements and methods required to
formulate and execute retail marketing strategy.
= Retail managers must determine the optimum
mix of retailing activities and co-ordinate the
elements of the mix.
= The aim of such coordination is for each store to
have a distinct retail image in consumers  mind.
= The mix may vary greatly according to the type of
market the retailer is in, and the type of
product/services.
ã.
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While many elements may make up a firm s retail
marketing mix, the essential elements may include:
= Store location,
= merchandise assortments

= Store ambience,

= customer service,

= price,

= !ommunication with customers

10
- 
= Personal selling
= Store image
= Store design
= Sales incentives
= People
= Process
= Physical evidence
11
 - 
The retail marketing mix is the vehicle through
which a retailer s marketing strategy is
implemented and, in planning the mix,
retailers should be guided by three basic
principles:
1. The mix must be consistent with the
expectation of target customers;
2. Elements must be consistent with each other
to create synergy; and
3. The mix must be responsive to competitive
strategy.
ãã.
      
= Place
= Product
= Price
= Promotion
= People
= Process
= Physical Environment

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= Target market

= !hannel structure

= !hannel management

= Retailer image

= Retail logistics

= Retail distribution

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= Product development

= Product management

= Product features and benefits

= Branding

= Packaging

= After-sales services

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= !osts

= Profitability

= Value for money

= !ompetitiveness

= Incentives

= Quality

= Status

16
  
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= Developing promotional mixes

= Advertising management

= Sales promotion

= Sales management

= Public relations

= Direct marketing

17
  
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= Staff capability
= Efficiency
= Availability
= Effectiveness
= !ustomer interaction
= Internal marketing
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= Order processing

= Database management

= Service delivery

= Queuing system

= Standardisation

19
m  m  
= Retail marketing plan consists of:
= Setting objectives

= Systematic way of identifying a range of options.

= Formulation of plans for achieving goals

= Logical sequence of retailing activities.

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= Hostile and complex retail marketing


environment
= External and internal retail organisation factors
interact
@ Maximising revenue
@ Maximising profit
@ Maximising return on investment
@ Minimising costs
= Each element has conflicting needs
= All these variables interact
= All these variables result in optimum
compromise.
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= To help identify sources of competitive
advantage.
= To force an organised retail approach
= To develop specific areas of retail
activities.
= To ensure consistent relationships
between retail organisation and its
proximate environment.
= To inform customers, suppliers and
competitors.
´ã.
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Top down approach
= Retail management sets goals and plans for all
levels of management.
Bottom up approach
= Various units prepare own goals and plans sent
up for approval.
´´.
  

= Annual plan short term and tactical.

= Long range three to five years relating to


strategic retail management.

= Strategicplans five to ten years long term


plans relating to the adaptation of the
retailing approach.
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Short-term
Tactical planning relating to:
= !urrent retail marketing position
= Strategy for the year
= Objectives for the year
= Action , budgets and controls.
= !oordinating retail activities within
departments.
25
 m 
Long-term
Medium range planning relating to:
= Major factors and forces affecting the
retailer.
= Long-term objectives.

= Resources required.

= Reviewed and updated regularly.

= Deals with current business

26
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= Thisis the process of developing and
maintaining a strategic fit between the
retail organisation s capabilities and its
changing marketing opportunities.

= It
relies on developing a clear corporate
mission, supporting objectives, creating a
sound business portfolio, and coordinating
functional strategies.
 .
m m  3  

= Retailmanagement should plan which


business the retailer should stay in and
which new areas to pursue.
= Design the retail organisation to withstand
shocks.
= Adapt the organisation to take advantage of
market opportunities.
= Define the corporate mission.
.
   

=A strategic plan should begin with a


mission statement.
= A mission statement is a statement of the
retail organization s purpose, what it wants
to achieve in the large environment.
= It guides people in the retail organization so
that they can work independently and yet
collectively towards overall organizational
goals.
.
-  6 
= It is the effective blending of all the elements of
retail marketing mix activities within the retail
organization that determines the success of retail
marketing management. Discuss this statement
and explain with retail examples how the
elements of retail marketing mix could be
blended to ensure the success of retail operation.

= Mastering the process of trying to optimise the


retail marketing mix still defies and frustrates
most retail managers. Explain why personal
guesswork and intuitions are used by retail
managers most of the time.
30
TYPES OF RETAILERS
= Retailers are classified based on:
@ Amount of service they offer
@ Breadth & depth of product lines
@ Relative prices charged
@ How they are organized
AMOUNT OF SERVI!E
= Self-Service Retailers:
@ Serve customers who are willing to perform their own
Îlocate-compare-select process to save money.
= Limited-Service Retailers:
@ Provide more sales assistance because they carry more
shopping goods about which customers need information.
= Full-Service Retailers:
@ Usually carry more specialty goods for which customers
like to be Îwaited on.
PRODU!T LINE !LASSIFI!ATION
= Specialty stores
= Department stores
= Supermarket
= !onvenience stores
= Superstores
= !ategory killers
RELATIVE PRI!ES !LASSIFI!ATION
= Discount stores
= Off-price retailers
= Factory outlet
= Independent off-price retailers
= Warehouse club
ORGANIZATIONAL !LASSIFI!ATION
= !hain Stores
= Voluntary chain
= Retailer cooperative
= Franchise
= Merchandising conglomerates