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Lecture Guide

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Clow - Lascu

Marketing: Essentials 5e

Sample Pages Follow

CH 02: The Environment of Marketing in the 21st Century

Clow-Lascu 5e 14

2-3a The Socio-Demographic and Cultural Environment (contd.)

• Characterization of consumers:

Backgrounds

Values

Attitudes

Interests

Behavior

• Demographics of consumers:

Gender

Age

Social class

Ethnicity

Education

Income


Clow-Lascu 5e 17

2-3b An Age Categorization of Socio-Demographic Groups (contd.)

• Characteristics: Individuals born between 1954 and 1964

Account for 50% of total spending

60% own their own homes.

Mortgage expenditures, home furnishing, renovations, and family purchases account for most spending.

Focus on home and family.

Young Boomers


Clow-Lascu 5e 20

2-3b An Age Categorization of Socio-Demographic Groups (contd.)

• Characteristics

Individuals over 65

Account for 14% of all spending

Live on a fixed income

Expenditures: - Home related

- Groceries

- Healthcare

• Healthcare is number one spending item. Six times more than the average person.

• Fixed Income means tighter budgets.

Seniors


Clow-Lascu 5e 22

2-4 The Economic and Natural Environment

• Determines consumers’ income, spending, borrowing decisions, and savings.

• Impacts the use of resources, the production of goods and services, and the allocation of goods and services.

Drivers of the economy

Influence

Impacts marketing decisions

Marketing Economy

CH 04: Consumer Behavior Clow-Lascu 5e 6

4-3 Social Influences on Consumer Behavior

Social Influences Include:

• Culture: “a society’s personality” A continuously changing totality of learned and shared meanings,

rituals, norms, and traditions among the members of an organization or society.

• Social class

• Role and status

• Families and household

• Reference groups

• Values Enduring beliefs about a specific mode of conduct or desirable end-

state that guides the selection or evaluation of behavior.


4-3 Social Influences on Consumer Behavior (contd.)

Cultures are set apart by value systems, e.g.:

• Western Cultures stress success, achievement, and competitiveness.

• Eastern Cultures emphasize collective welfare.


4-3b Social Class, Role, and Status Influences on Consumer Behavior

• Social Class: Shared values, attitudes, interests, opinions; determined by occupation, education, income, wealth, and values.

• Social Classes in the United States:

Upper Upper Class (“old money”) Wealthiest 1% of U.S.

population Inherited their money Educated in private

schools/best colleges Very socially concerned

and self-actualized Own expensive homes Pay others to purchase

goods for them

Lower Upper Class (“new money”) Next 2% of wealthiest

Americans Earned their money, rather

than inheriting it Have college degrees Spend money on luxury

items


4-3b Social Class, Role, and Status Influences on Consumer Behavior (contd.)

• Upper Lower Class (“blue collar”)

Comprises 35% of U.S. population—work at manual jobs

Live routine lives, have limited social interaction, and spend impulsively on national brands

Rely on relatives for socialization and support

• Lower Lower Class (“unskilled or unemployed”)

Comprise 20% of U.S. population—make money through unskilled work or underground jobs and illegal activities

Buy impulsively

Live in sub-standard housing

Social Classes in the United States (contd.)

Social classes define an individual’s position in society


4-3b Social Class, Role, and Status Influences on Consumer Behavior (contd.)

• Role: Behavior based on the activities people are expected to perform according to individuals around them

Role of women in the United States

Role of women in Islamic countries

Man in a marriage relationship

Partners in a gay or lesbian relationship

• Status: The esteem that society bestows upon a particular role

Soccer mom

Company president

Judge

Car salesperson

Advertising creative

CH 10: Retail and Channel Strategies Clow-Lascu 5e 8

10-3 Channel Dimensions

• Channel length

The number of levels of distributors in a distribution channel.

• Channel width

The number of independent intermediaries involved at a particular stage of distribution.

• Direct vs. Indirect Distribution Channels Indirect Distribution Channel

- A channel with no intermediaries: manufacturer sells directly to the final consumer.

Indirect Distribution Channel

- Channel that involves one or more intermediaries between the manufacturer and the final consumer.


10-3 Channel Dimensions (contd.)

1. Intensive distribution Full market coverage

Available to all target customers when and where consumers want them

2. Exclusive distribution High level of channel control by intermediaries

Intermediaries thus control marketing strategy

Limited product availability

3. Selective distribution Firms control marketing strategy

Limit distribution to a select group of resellers in each area

Channel Strategies


10-7 Retailing and Retail Formats

Retailing: All the activities involved in the final stage of distribution - selling goods to the final consumers for their consumption.

Functions performed by retailers:

• Creating convenience for consumers

• Informing consumers

• Serving the other channel members


Top U.S. Retail Categories (based on sales)


Top 10 U.S. Retailers (based on sales)

Rank CompanyRevenues

(million U.S.$)

1 Wal-Mart Stores, Inc. 466,114

2 Costco Wholesale Corp. 97,062

3 Kroger Co. 96,751

4 The Home Depot 74,757

5 Target Corp. 73,301

6 Walgreens 71,633

7 CVS Caremark Corp. 63,654

8 Amazon.com 61,093

9 Lowe’s Cos. Inc. 50,208

10 Safeway Inc. 44,207


10-7a General Merchandise Retailing

• Specialty stores have a narrow product line and deep assortment.

Examples: Victoria’s Secret, Barnes & Noble.

Large stores (Home Depot, Best Buy) are known as category specialists.

• Department stores have great variety, deep assortments, and sell fashion, appliances, electronics, and furniture.

Examples: Sears, JC Penney, Macy’s.

Often anchoring malls (anchor stores) to generate traffic for other stores.

• General merchandise discount stores sell high volumes of merchandise, offer limited service, and charge low prices. Example: Wal-Mart.

• Off-price retailers sell brand name merchandise below regular retail price – often sell overruns and excess inventories. Examples: Factory or department store outlets, closeout retailers (TJ Maxx).

• Catalog showrooms display products of catalog retailer. Example: IKEA


10-7b Food Retailers

• Conventional supermarkets Self-service food retailers with annual sales higher than $2 m. and less than 20,000

square feet of store space. - Example: D’Agostino, Martin’s

• Superstores Known as supercenters in the USA and hypermarkets in Europe and Latin America,

combining supermarket, discount, and warehouse retailing into more than 20,000 sq. ft. and $17 m in annual sales

- Example: Wal-Mart

• Warehouse clubs Offer limited lines of brand-name and dealer-brand groceries, apparel, appliances a

substantial discount in low-overhead, large warehouse.

Sell to final consumers who pay an annual fee and to businesses - Example: Costco, Sam’s Club

• Convenience stores One-stop shopping small retailers in residential areas, open long hours.

Limited lines of high turn-over necessities (bread, milk, gas) - Example: 7-11


10-7c Non-store Retailing

Internet Retailing: Includes traditional retailers with an online presence and dot.com companies, such as Amazon, Zappos, and eBay.

Vending Machines: Interactive mode of selling convenience goods.

• Eliminate the need for salespeople.

Television Home Shopping: Cable channels (QVC, HSN) selling to consumers in their homes.

• Include infomercials and direct response advertising in broadcast media.

Catalog Retailing and Direct Mail: Selling traditionally retail products through catalogs and direct mail.

Direct selling: Salesperson contacting and persuading a consumer at a convenient location (i.e., work or home).

Network Marketing (multi-level marketing): Alternative distribution center using acquaintance networks for the purpose of distribution.


10-8a The Organization of Retailing

Ownership categories:

1. Independent retailer: Operates one outlet that is conveniently located to the customer.

2. Retail chains: Two or more outlets, and involves central purchasing and decision-making.

3. Retail franchises: Here, a franchisor allows the franchisee to operate one or more units of the franchisor.

4. Retailer cooperatives: Associations of independent retailers who engage in centralized buying and promotion, e.g., Ace Hardware Stores.


It is the task of a retailer to appeal

to the target market.

Merchandise mix

The product assortment and brands that will be carried by the store

Service mix

Types of services offered to customers

10-8a The Organization of Retailing (cont’d)

Many retailers are extending the merchandise mix by providing products that are ‘not related to the existing merchandise mix’

(scrambled merchandising) in order to offer consumers a one-stop shopping opportunity.


10-8a The Organization of Retailing (cont’d)

Scrambled Merchandising can create a self-perpetuating cycle as shown in this example:


10-8b Atmospherics

General atmosphere of the store.

• Created by physical attributes of the store or non-store retailer Lighting

Fixtures

Tempo of music played

Colors

Store layout.

These are likely to create a particular mood for the customer and enhance the buying experience, increase the shopping time, and the

overall purchase amount.


10-8c Location

Types of Business Districts:

Central: Located downtown, in the commercial and cultural heart of a city.

• Secondary: Form at the intersection between two important streets, Consisting primarily of convenience and specialty stores.

• Neighborhood : Meet the needs of the neighborhood Located on a main street of a neighborhood.

Shopping Centers: group of stores that are planned, developed, and managed as one entity.

Types of Shopping Centers: Regional: At least 100 stores that sell shopping goods to a geographically dispersed

market.

Community: Fewer than 40 retailers, with a department store, a supermarket, and several smaller specialty retailers.

Neighborhood: Between 5 and 15 retailers serve the neighborhood providing convenience in the form of a supermarket, discount store, a laundry service, and other smaller specialty stores.


10-9 Trends in Retailing

• Shortening retail life cycles: New forms of retailing evolve faster, e.g., Internet retailing as opposed to department stores.

• Wheel of retailing: describes how stores add services and increase prices, thereby losing their initial customer base. Retailers start off as low-margin, low-cost, and low-price store.

Their success drives them to seek a broader customer base by including more services.

Increased service leads to higher costs. Higher costs lead to higher prices. Higher prices lead to the loss of the initial

customer. New innovative retailers take away their

customers.

New retailers need to be innovative and proactive to survive.


10-9 Trends in Retailing (cont.)

• Technology-based developments: Technology eliminates the need for salespeople and increases transaction

accuracy

Optical scanners facilitate checkout process, ensuring accurate calculation, allowing for self-service, and facilitating inventory control.

Online retailing enables traditional retailers to further penetrate their current market, diversify, and expand their market.

• Broadening competitive base Retailers face greater competition from other retail categories. Scrambled merchandising.

• International expansion of retailers Reduces costs (e.g., creates economies of scale). Learning curve allows for lower-cost operations. Increases brand awareness.

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