chapter 13 retailing and e-distribution

Chapter 13 Copyright John Wiley & Sons 2007

Presentation prepared by Robin Roberts, Griffith University and Mike Spark, Swinburne University of Technology


Chapter 13 Retailing and e-distribution


Chapter Objectives

1. Understand the purpose and function of retailers in the marketing channel

2. Identify major types of retailers

3. Explore strategic issues in retailing

4. Recognise the various forms of non-store retailing

5. Understand the characteristics of e-distribution

6. Examine the major types of franchising and the benefits and weaknesses of franchising


Retailing versus e-tailing in the florist industry

Roses Only

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Retailing

Retailing includes all transactions in which buyers are the ultimate consumers, who intend to consume the product through personal, family or household use.

Retailers – are organisations– add value – and create utility


Major types of retail stores

• Many types of retail stores exist

• Classified by breadth of products

• Two general categories include:

– General-merchandise retailers

– Specialty retailers


Department Stores– large retail organisations – wide product mixes

Discount Stores– self-service, general-merchandise stores– brand name and private brand products– low prices

Supermarkets– large, self-service stores – food and non food product ranges

General-merchandise retailers


Superstores– giant retail outlets – food and nonfood products – most routine consumer products

Hypermarkets– combines supermarket and discount

Warehouse Clubs– large-scale, members-only – combining cash-and-carry wholesaling with

discount retailing

General-merchandise retailers (cont’d)


General-merchandise retailers (cont’d)

Warehouse Showrooms– large on-premise inventories– minimal services

Catalog Showrooms– form of warehouse showroom– products are stored out of buyers’ reach

Convenience Stores– Small stores in convenient locations – long opening hours – frequently purchased items


Specialty retailers

Specialty retailers emphasise narrow and deep assortments

There are 3 main types:

1. Traditional Specialty Retailers

2. Category Killers

3. Off-price retailers


Specialty retailers (cont’d)

Traditional Specialty Retailers

– narrow product mix – deep product lines– higher costs and higher margins– more product selection – product expertise – high levels of personal service


Specialty retailers (cont’d)

Category Killers– concentrate on a major product categories– compete on low prices and availability

Off-Price Retailers– buy seconds, overruns, returns and off-season

merchandise – charge less than department stores for

comparable merchandise – offer fewer customer services


Strategic issues in retailing

Consumer purchases may result from social andpsychological influences

Consumers shop for various reasons, retailersmust do more….

Factors affecting location

• Intended target market trading area• Types of products being sold• Suitability of site for customer access• Customer characteristics • Location of competitive retail operations


Strategic issues in retailing (cont’d)

Types of Locations

– Central business district (CBD)– Free-standing structures– Neighbourhood – Community – RegionalEmerging types

• Factory outlet centres• Miniwarehouse centres• Non-anchored centres


What factors should Aldi consider when selecting locations for its new stores?

Today Tonight footage courtesy of Seven Network

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Types of traditional shopping centres

• Neighborhood Shopping Centres– several small convenience and

– specialty stores

• Community Shopping Centres– one or more department stores

– some specialty and convenience stores

• Regional Shopping Centres– home to large department stores

– widest product mix

– deepest product lines


Types of emerging or non-traditional shopping centres

• Factory Outlet Centres– feature discount and factory outlets– carrying traditional brand names

• Miniwarehouse Centres– loosely planned centres that lease to retailers

running stores out of warehouse bays

• Non-anchored Centres– do not have traditional ‘anchors’– combine off-price and category killer stores in a

‘power centre’ format



Retail positioning– Identifying an unserved or underserved

market segment

– a strategy that distinguishes the retailer from others in the minds of consumers in that segment

Store image– Atmospherics

– Interior layout

– Exterior storefront and entrance design


Scrambled merchandising– addition of unrelated products and product

lines to an existing product mix– particularly fast-moving items that can be sold

in volume

Intent of scrambled merchandising:• one-stop shopping focus• Generate customer traffic• Realise higher profit margins• Increase impulse purchases



The wheel of retailing

A hypothesis holding that new

retailers usually enter the market as

low-status, low-margin, low-price

operators but eventually evolve into

high-cost, high price merchants



The Wheel of Retailing


Non-store retailing

Non-store retailing is the selling of

products outside of the confines of a

retail facility

Three factors spurring growth:• Consumers• poorly informed sales force• Impact of older generation


Direct marketing

Direct marketing — use of telecommunications

and non-personal media to introduce products

– Catalogue marketing– Direct-response marketing– Telemarketing– Television home shopping– Online retailing

Direct marketing

Catalogue Marketing

A type of marketing in which an organisation provides a catalogue from which customers can place orders by mail, telephone and the internet


Direct marketing (cont’d)

• Direct-response marketingA type of marketing that occurs when a retailer advertises a product and makes it available through mail or telephone orders

• TelemarketingThe performance of marketing-related activities by telephone


Direct marketing (cont’d)

• Television home shoppingCan buy them by calling a toll-free number and paying with a credit card

• Online retailingMakes products available to buyers through computer connections


Direct selling

• Direct sellingThrough face-to-face sales presentations at home or in the workplace

• Benefits– Convenience of time and place of presentation– Personal attention to customer

• Limitations– High costs make it the most expensive form of

selling– Negative consumer view of direct selling


Automatic vending

• Automatic vendingUse of machines to dispense a product and used for small, routinely-purchased products

• Benefits– continuous and efficient service

• Limitations– high costs of equipment– possible frequent servicing and repairs– impersonal means of selling


e-distribution

The role of e-distribution is to make the

products available at the right time, at

the right place, in the right quantities

• IT advances are allowing close synchronisation and cooperation between external suppliers and the firm and

• internally between the manufacturing and customer contact operations


B2B e-distribution

B2B e-distribution has benefited fromorganisational resources available to buildtechnologically advanced networks amongmanufacturers and supply chain members.

Extranets • secure Web-based networks that connect

companies with their customers and suppliers

• B2B e-marketing infrastructures make the whole channel process more efficient


e-tailing

• The Internet is becoming a major retail venue.

• Security remains an issue which stops customers from using the online purchasing facilities.

• As encryption technology improves, the trust and confidence of customers will make this an escalating opportunity for satisfying customer needs, particularly for information-based products and trading.

Franchising

A form of licensing in which a franchiser in exchange for a financial commitment, grants a franchisee the right to market

its product in accordance with the franchiser’s standards.


Franchising

Retail franchises fall into three major categories:

1. Manufacturer authorises number of retail stores– Trucks, cars, shoes, paint, petrol

2. Producer licences to sell a given product to retailers– Soft drink industry

3. Franchiser supplies brands names, techniques or services– McDonalds, Gloria Jeans, Greens

chapter 13 retailing and e-distribution

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