An Introduction to Retailing 2 Retailing Retailing encompasses the business activities involved in selling goods and services to consumers for their personal family or household use It includes every sale to the final consumer ID: 557659
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LOG 561 Retail Management
An Introduction to RetailingSlide2
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Retailing
Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes every sale to the final consumer.Slide3
Retailing
– a set of business activities that adds value to the products and services sold to consumers for their personal or family use.
A retailer is a business that sells products and/or services to consumers for personal or family use.
What is Retailing?Slide4
Examples of Retailers
Retailers:
-Holiday Inn, McDonalds, Amazon.com..
Firms that are retailers and wholesalers that sell to other business as well as consumers:
-The
Home Depot, United Airlines, Bank of
America
..
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How Retailers Add Value
Breaking Bulk
-Buy it in quantities customers want
Holding Inventory -Buy it at a convenient place when you want itProviding Assortment
-Buy other products at the same time
Offering Services
-See it before you buy, get credit, layawaySlide6
Doll can be bought on credit or put on layaway
Doll is featured on floor display
Doll is offered in
convenient locations in quantities of one
Doll is developed in several styles
How Retailers Add Value
Doll is developed at manufacturer
The value of the product and service increases
as the retailer performs functions.Slide7
Manufacturer’s Perspective
The Four P’s of Marketing
Distribution
Retailers are part of the
distribution channel
Retailers are part of the
distribution channel
Product
Price
PromotionSlide8
Distribution ChannelSlide9
Accounting
Finance
MIS
Operations
Marketing
Human Resources
Retailers are a Business Like ManufacturersSlide10
Decision Variables for Retailers
Customer Service
Store Design
and Display
Merchandise
Assortment
Communication
Mix
Location
Pricing
Retail
StrategySlide11
Hot Topic’s Retail Mix
Retail Strategy
Customer Service
Location
Merchandise
Assortment
Pricing
Communication
Mix
Store Design
And DisplaySlide12
STRATEGIC IMPLICATIONS: RETAIL MARKETING STRATEGY
A retailer develops a marketing strategy based on the firm’s goals and strategic plans
Two fundamental steps:
Picking a target market: size and profit
potential. POSITION.
Developing a retailing mix to satisfy the chosen target market
4Ps +
Personnel & Presentation
used to create a retail imageSlide13
Target
Market
Product
Price
Place
Promotion
Personnel
Presentation
The Retailing MixSlide14
Issues in Retailing
How can we best serve our customers while earning a fair profit?
How can we stand out in a highly competitive environment where consumers have so many choices?
High unemployment, low consumer confidence, high savings rates have reduced consumer spending. At the same time retail competition has increased through increased format blurring (sales of cameras at office supply stores, carpeting and major appliances at home improvement centers).
How can we grow our business while retaining a core of loyal customers?
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The Philosophy
Retailers can best address these questions by fully understanding and applying the basic principles of retailing, as well as the elements in a well-structured, systematic, and focused retail strategy.Slide16
Top 100 Retailers
Walmart, Kroger, Costco, Target, The Home Depot, Walgreen, CVS Caremark, Lowe’s, Amazon.com, Safeway...
https://
nrf.com/2014/top100-table
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A
Typical Channel of Distribution
Manufacturer
Wholesaler
Final
Consumer
RetailerSlide18
The
Retailer’s Role in the Sorting ProcessSlide19
Multi-Channel Retailing
A retailer sells to consumers through multiple retail formats:
Web sites
Physical storesSlide20
Multi-Channel Retailing
Cross selling across channels (in-store product availability info on Web site)
Consistent pricing in all channels (credibility)
Can buy, and return product regardless on channel
Role of each channel
Store– try on, ease of return, fast availability (immediacy), compare offerings
Web– 24/7, product information, product reviews by customers, personalization (tailored assortment based on past purchases), most current pricing, closeout sales
Catalog-permanency, true colorSlide21
Non-Store Retailing
Vending: hi costs; hi prices (flat sales)
Vending is a $40
billion U.S. marketCashless vending=wave of futureDirect Marketing (Mail, Catalog, Telemarketing)E-tailing (TV shopping, online)
M-commerce: buy from mobile devices
(e.g., cell phones)Slide22
AppleSlide23
Distribution Types
Exclusive
: suppliers make agreements with one or few retailers, designating such retailers as the only ones to carry certain brands or products within a specified geographic area
Intensive
: suppliers sell through as many retailers as possible
Selective
: suppliers sell through a moderate number of retailersSlide24
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Retail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall
Exclusive vs Intensive Distribution
Exclusive Distribution– Fate of retailer is tied to manufacturer success, retailer has no “free-rider” concerns, retailer has less price competition, manufacturer is better assured of high levels of customer support
Intensive Distribution- Manufacturer is better assured of maximizing sales (especially for convenience goods), retailers face strong competition for price and service, intratype competitionSlide25
Comparing
Distribution TypesSlide26
Special
Characteristics Affecting Retailers
Impulse
Purchase
Popularity
of
Stores
Retailer’s
Strategy
Small
Average
SaleSlide27
Retail Strategy
An overall plan for guiding a retail firm
Influences the firm’s business activities
Influences firm’s response to market forcesSlide28
Six Steps in Strategic Planning
1. Define the type of business (corporate mission)
2. Set long-run and short-run objectives
3. Determine the customer market
4. Devise an overall, long-run plan
5. Implement an integrated strategy
6. Evaluate and correct (fine-tune)Slide29
Applying
the Retailing Concept
Customer Orientation
Coordinated Effort
Value-driven
Goal Orientation
Retailing
Concept
Retail
StrategySlide30
The
Build-A-Bear Experience: Never BoringSlide31
Customer Service
Activities undertaken by a retailer in conjunction with the basic goods and services it sells. This includes:
Store hours
Parking
Shopper-friendliness
Credit acceptance
SalespeopleSlide32
A Customer Respect Checklist
Do we trust our customers?
Do we stand behind what we sell?
Is keeping commitments to customers important to our company?
Do we value customer time?
Do we communicate with customers respectfully?
Do we treat all customers with respect?
Do we thank customers for their business?
Do we respect employees?Slide33
Relationship Retailing
Retailers seek to establish and maintain long-term bonds with customers, rather than act as if each sales transaction is a completely new encounter
Concentrate on the total retail experience
Monitor satisfaction
Stay in touch with customersSlide34
Effective Relationship Retailing
Use a “win-win” approach
It is easier to keep existing customers happy than to gain new ones (present value of current customers income stream– cost of keeping existing customers content versus cost of replacing them with new customer
Develop a customer database (loyalty programs)
Ongoing customer contact is improved with information on people’s attributes and shopping behaviorsSlide35
Types of Loyalty Programs
Additional discounts at register
Not a real loyalty program
1 free with every “n” items purchased
Easily copied, no customer database
Rebates based on cumulative purchases
Customer maintains records
Can develop “heavy half” programs like Hilton
Targeted offerings and mailing based on purchase history
Tesco example “Market research staff know more about my customers than board chairperson”Slide36
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Retail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall
Relationship Management Among Retailers and Suppliers
Disagreements may occur in the following areas (channel conflict):
control over channel (private label)
profit allocation (resale price control)
number of competing retailers (exclusive, selective or intensive distribution)
product displays
promotional support (cooperative advertising funds and restrictions)
payment terms (payment on time)
operating flexibility
gray market sales
markdown monies, chargebacks by dominant retailersSlide37
Approaches to the
Study of Retailing
Institutional
Functional
StrategicSlide38
Parts of
Retail Management:
A Strategic Approach
Building relationships and strategic planning
Retailing institutions
Consumer behavior and information gathering
Elements of retailing strategy
Integrating, analyzing, and improving retail strategySlide39
Retailing is a set of functions that adds value to products/services that are sold to end users = functional understanding,
Retailing is a specific institution within a marketing channel that executes retail functions = institutional understanding Slide40
End of Week 2, any questions???