Chapter 12 Copyright ©2013 by Cengage Learning Inc. All rights reserved 1
Lamb, Hair, McDaniel
CHAPTER 15
Retailing
2012-2013
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Discuss the importance of retailing in the U.S. economy
Explain the dimensions by which retailers can be classified
Describe the major types of retail operations
Discuss nonstore retailing techniques
Learning OutcomesLearning Outcomes
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Define franchising and describe its two basic forms
List the major tasks involved in developing a retail marketing strategy
Describe new developments in retailing
Learning OutcomesLearning Outcomes
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Discuss the importance of
retailing in the U.S. economy
The Role of RetailingThe Role of Retailing
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Retailing
RetailingRetailing
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The Role of Retailing
U.S. retailers employ nearly 25 million people
Retailers account for 11.6 percent of U.S. employment
Retailing accounts for 13 percent of U.S. businesses
Retailers ring up almost $4 trillion in sales—nearly 40 percent of the U.S. GDP
Industry is dominated by a few giant organizations, such as Wal-Mart
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Explain the dimensions by which retailers
can be classified
Classification of Retail OperationsClassification of Retail Operations
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Classification of Retail Operations
OwnershipOwnership
Level of ServiceLevel of Service
Product AssortmentProduct Assortment
PricePrice
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Exhibit 15.1Exhibit 15.1Types of Stores and Their Types of Stores and Their
CharacteristicsCharacteristics
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Assort-ment Price Gross
Margin
Broad
Narrow
Broad
Med-Narrow
Medium
Med-Broad
Med-Broad
Broad
Med-Narrow
Narrow
Mod-High
Mod-High
Moderate
Mod High
Moderate
Mod Low
Mod Lo-low
Low-very low
Low
Low-High
Mod High
High
Low
Mod High
Low
Mod Low
Mod Low
Low
Low
Low-High
Type of Retailer
Specialty Store
Supermarket
Convenience Store
Drugstore
Full-line Discounter
Specialty Discounter
Warehouse Clubs
Off-price Retailer
Restaurant
Service Level
Mod Hi-High
High
Low
Low
Low-Mod
Mod-Low
Mod-Low
Low
Low
Low-High
Department Store Broad
Broad
Medium
Mod-High
Moderate
Moderate
Mod High
LowSupermarket
Drugstore
Mod Hi-High
Low
Low-Mod
Department Store
IndependentRetailers
IndependentRetailers
Chain StoresChain Stores
FranchisesFranchises
Owned by a single person or partnership and not part of a larger retail institution
Owned by a single person or partnership and not part of a larger retail institution
Owned and operated as a group by a single organizationOwned and operated as a group by a single organization
The right to operate a business or to sell a productThe right to operate a business or to sell a product
Classification of Ownership
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Level of Service
Full Full ServiceService
Self Self ServiceService
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Product Assortment
Classification based on BREADTHBREADTH and DEPTHDEPTH of product lines.
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Price
GrossMargin
GrossMargin
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Describe the major types of
retail operations
Major Types of Retail OperationsMajor Types of Retail Operations
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Major Types of Retail OperationsDepartment StoresDepartment Stores
Specialty StoresSpecialty Stores
SupermarketsSupermarkets
DrugstoresDrugstores
Convenience StoresConvenience Stores
Discount StoresDiscount Stores
RestaurantsRestaurants
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Types of Retail Operations
Department StoreDepartment Store
A store housing several departments under one roof.Each department is headed by a buyer, or department head who selects merchandise.
A store housing several departments under one roof.Each department is headed by a buyer, or department head who selects merchandise.
Specialty StoreSpecialty Store A retail store specializing in a given type of merchandise.
A retail store specializing in a given type of merchandise.
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Types of Retail Operations
SupermarketSupermarket
Large, departmentalized, self-service retailer. Specializes in food. Some use scrambled merchandising.
Large, departmentalized, self-service retailer. Specializes in food. Some use scrambled merchandising.
DrugstoreDrugstoreA retail store that stocks pharmacy-related products and services as its main draw.
A retail store that stocks pharmacy-related products and services as its main draw.
Convenience StoreConvenience Store
A miniature supermarket, carrying only a limited line of high-turnover convenience goods.
A miniature supermarket, carrying only a limited line of high-turnover convenience goods.
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Categories of Discount Stores
Full-LineDiscounters
Specialty Discount Stores
WarehouseClubs
Off-PriceRetailers
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Discount Stores
Full-line discount store
Full-line discount store
A retailer that offers consumers very limited service and carries a broad assortment of well-known, nationally branded “hard goods”.
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Discount Stores
Mass Merchandising
Mass Merchandising
A retailing strategy using moderate to low prices on large quantities of merchandise and lower levels of service to stimulate high turnover of products.
A retailing strategy using moderate to low prices on large quantities of merchandise and lower levels of service to stimulate high turnover of products.
SupercenterSupercenter
Retail store that combines groceries and general merchandise goods with a wide range of services.
Retail store that combines groceries and general merchandise goods with a wide range of services.
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Discount Stores
a retail store that offers a nearly complete selection of single-line merchandise and uses self-service, discount prices, high volume, and high turnover.
a specialty discount store that heavily dominate their merchandise segment.
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A Specialty Discount Store is…
A Category Killer is…
Discount Stores
Warehouse membership clubs
Warehouse membership clubs
Limited-service merchant wholesalers that sell a limited selection of brand name appliances, household items, and groceries on a cash-and-carry basis to members.
Limited-service merchant wholesalers that sell a limited selection of brand name appliances, household items, and groceries on a cash-and-carry basis to members.
Off-price retailerOff-price retailer
A retailer that sells at prices 25 percent or more below traditional department store prices because it pays cash for its store and usually doesn’t ask for return privileges.
A retailer that sells at prices 25 percent or more below traditional department store prices because it pays cash for its store and usually doesn’t ask for return privileges.
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Restaurants
• Straddle the line between retail and service establishments
• Sell tangible products (food, drink) but also services (food prep, food service)
• Many could be considered specialty retailers
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Discuss nonstore retailing techniques
Nonstore RetailingNonstore Retailing
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Nonstore Retailing
Automatic VendingAutomatic Vending
Direct RetailingDirect Retailing
Direct MarketingDirect Marketing
Electronic RetailingElectronic Retailing
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the use of machines to offer goods for sale.
Vending is the most pervasive retail business in the United States, with 11.5 MILLION vending
machines selling billions or dollars worth of goods annually.
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Automatic Vending is…
Direct Retailing
Door-to-DoorDoor-to-Door
Office-to-OfficeOffice-to-Office
Home Sales PartiesHome Sales Parties
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Types of Direct Marketing
Catalogs and Mail OrderCatalogs and Mail Order
Direct MailDirect Mail
TelemarketingTelemarketing
Electronic RetailingElectronic Retailing
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Shop-at-Home NetworksShop-at-Home Networks
Top E-Tailers by Sales VolumeAmerica's Top Ten Retail Businesses
Rank Company Web Sales Volume (in billions)
1 Amazon.com Inc. $34.2
2 Staples Inc. $10.2
3 Apple Inc. $5.2
4 Dell Inc. $4.8
5 Office Depot Inc. $4.1
6 Walmart.com $4.0
7 Sears $3.1
8 Liberty Media (owns QVC) $3.0
9 Office Max $2.8
10 CDW $2.7
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Define franchising and describe its two basic forms
FranchisingFranchising
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The Basic Forms of Franchising
Product and Trade Name Franchising
Product and Trade Name Franchising
Dealer agrees to sell in products provided by a manufacturer or wholesaler.
Dealer agrees to sell in products provided by a manufacturer or wholesaler.
BusinessFormat
Franchising
BusinessFormat
Franchising
An ongoing business relationship between a franchiser and a franchisee.
An ongoing business relationship between a franchiser and a franchisee.
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Top 10 Franchisors
1.1. SubwaySubway2.2. McDonald’sMcDonald’s3.3. 7-Eleven Inc.7-Eleven Inc.4.4. Hampton Inn/Hampton Inn Hampton Inn/Hampton Inn
& Suites& Suites5.5. SupercutsSupercuts6.6. H & R BlockH & R Block7.7. Dunkin’ DonutsDunkin’ Donuts8.8. Jani-KingJani-King9.9. ServproServpro10.10. ampmampm
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List the major tasks involved in developing
a retail marketing strategy
Retail Marketing StrategyRetail Marketing Strategy
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66
Retail Marketing Strategy
Develop a Retailing Mix
Define & Select a Target Market
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Defining a Target Market
STEP 1:Segment the Market
STEP 1:Segment the Market
DemographicsDemographics
GeographicsGeographics
PsychographicsPsychographics
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Choosing the Retailing Mix
STEP 2:Choose the Retailing Mix
STEP 2:Choose the Retailing Mix
ProductProduct
PromotionPromotion
PersonnelPersonnel
PlacePlace
PricePrice
PresentationPresentation
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Exhibit 15.3Exhibit 15.3The Retailing MixThe Retailing Mix
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Choosing the Retailing Mix
ProductOffering
ProductOffering
The mix of products
offered to the consumer by
the retailer; also called the
product assortment or
merchandise mix.
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Retail Promotion Strategy
Public RelationsPublic Relations
PublicityPublicity
Sales PromotionSales Promotion
AdvertisingAdvertising
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The Proper Location
Economic growth potential
Economic growth potential
CompetitionCompetition
GeographyGeography
Choosing a Community
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The Proper Location
Socioeconomic characteristics
Socioeconomic characteristics
Traffic flowsTraffic flows
Land costsLand costs
Choosing a Specific Site
Zoning RegulationsZoning Regulations
Public TransportationPublic Transportation
Choosing the Type of Site
Freestanding StoreFreestanding Store
Shopping CenterShopping Center
MallMall
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Mall Stores Try to Shrink
• Traditional mall retailers like Gap and AnnTaylor are trying to restructure the size of their mall stores.
• Sales per square foot have sunk in recent years.
• By shrinking the store size, retailers hope to provide a more intimate shopping experience while maximizing store efficiency.
Source: Elizabeth Holmes, "Sizing Up Property, Mall Stores Try to Shrink," March 19, 2010, B1.
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Retail Prices
QualityImage
High PriceHigh Price Low Price Low Price
Good ValueSingle Price Point
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Presentation of the Retail Store
AtmosphereAtmosphere
The overall impression
conveyed by a store’s
physical layout, décor,
and surroundings
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Presentation of the Retail Store
Employee type and densityEmployee type and density
Fixture type and densityFixture type and density
SoundSound
OdorsOdors
Visual factorsVisual factors
Merchandise type and densityMerchandise type and density
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Personnel and Customer Service
Suggestion SellingSuggestion Selling
Trading UpTrading Up
Two Common Selling
Techniques
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Customer Service for On-Line Retailers
Easy-to-use Web site Easy-to-use Web site
Product availabilityProduct availability
Simple returnsSimple returns
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Describe new developments
in retailing
New Developments in RetailingNew Developments in Retailing
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New Developments in Retailing
InteractivityInteractivityConsumers areinvolved in the retail experience.
Consumers areinvolved in the retail experience.
M-commerceM-commercePurchasing goods through mobile devices.
Purchasing goods through mobile devices.
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Chapter 15 Video
Sephora - Retailing
As you watch the video, notice what other retailing methods Sephora uses to promote sales.
http://www.cengage.com/marketing/book_content/9781133190110_lamb/videos/ch15.html
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Part 4 Video
Distribution Decisions
Watch the video on White Rock. What are some of the key distribution decisions the company has to make to maintain their marketing channels?
http://www.cengage.com/marketing/book_content/1439039429_lamb/part_videos/part04.html
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