MKTG 307
Retail Marketing and
Management
An Introduction to Retailing
Learning Objectives
• To define retailing, consider it from different
perspectives, demonstrate its impact, and note its
special characteristics
• To introduce the concept of strategic planning and
apply it
• To show why the retailing concept is the foundation of
a successful business, with an emphasis on the total
retail experience, customer service, and relationship
retailing
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.
Retailers are part
of the distribution
channel
Product
Price
Distribution
Promotion
Fig 1. The Role of Retailing within Marketing
A Typical Channel of Distribution
Fig 2. A Typical Channel of Distribution (Berman, Evans, and Chatterjee, 2018)
Retailer’s Role in the Sorting Process
Fig 3. The Retailer’s Role in the Sorting Process (Berman,
Evans, and Chatterjee, 2018)
Types of Distribution
Fig 4. Comparing Exclusive, Intensive, and Selective
Distribution (Berman, Evans, and Chatterjee, 2018)
Special Characteristics Affecting Retailers
Fig 5. Special Characteristics Affecting Retailers (Berman, Evans, and Chatterjee, 2018)
Issues in Retailing
Shift in
consumer
behavior
Weak
economy
Competitive
landscape
Supply chain
disruptions
Shift to omnichannel
retail
High
customer
expectations
Issues in Retailing and Approach
• 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?
• Low consumer confidence and high savings rates have
reduced consumer spending. At the same time retail
competition has increased through increased format
blurring (e.g., 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?
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.
• Willingness to adapt !!
Reasons for Studying Retailing
• Impact of retailing on the economy
▪ U.S. retail store sales in 2015 - $4.785 trillion
• Major source of employment
• Social responsibility and community impact
• Global presence
Retail Strategy
• An overall plan for guiding a retail firm
• Influences the firm’s business activities
• Influences firm’s response to market forces
Steps in Strategic Planning
• Define the type of business (corporate mission)
• Set long-run and short-run objectives
• Determine the customer market
• Devise an overall, long-run plan
• Implement an integrated strategy
• Evaluate and correct (fine-tune)
The Retailing Concept
Fig 6. Applying the Retailing Concept (Berman, Evans, and
Chatterjee, 2018)
The Total Retail Experience
• All elements in a retail offering that encourage or inhibit
customers during their contact with a retailer
• Controllable – prices, advertising, product availability
• Uncontrollable – parking spots, economy
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
▪ Salespeople
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 customers
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 behaviors
MKTG 307
Retail Marketing and
Management
Building and Sustaining Relationships in
Retailing
Learning Objectives
• To explain what “value” really means and to highlight its
pivotal role in retailers’ building and sustaining
relationships
• To describe how both customer relationships and
channel relationships may be nurtured in today’s highly
competitive marketplace
• To examine the differences in relationship building
between goods and services retailers
• To discuss the impact of technology on relationships in
retailing
Value
Channel Perspective
• Series of activities and processes (the “value chain”) that provide a
certain value for the consumer.
Customer Perspective
• Perception that the shopper has of the value chain.
• View of all the benefits from a purchase versus the price paid.
Do Retailers Add Value?
Example
a box of crackers at a grocery store
▪ costs $1 to manufacturer
▪ sells at a price of $2
Retailers add significantly to the prices consumers face
Why not buy directly from the manufacturer?
Does that mean that retail stores are very profitable?
1-23
How Retailers Add Value
• Provide Assortment
▪ Buy other products at the same time
• Break Bulk
▪ Buy it in quantities customers want
• Hold Inventory
▪ Buy it at a convenient place when you want it
• Offer Services
▪ See it before you buy; get credit; option to
return items
Value-Oriented Retail Strategy
Retail value chain
Total bundle of benefits
offered to consumers
through a channel of
distribution
Store location, parking,
retailer ambience,
customer service,
brands/products
carried, quality, in-stock
position, shipping,
prices, image etc
Customer Service
Expected customer service
• Service level that customers want to receive from any retailer such as basic
employee courtesy.
• Must have elements; do not differentiate retailer. While absence of these
expected values provides anguish, presence does not provide satisfaction.
Augmented customer service
• Includes the activities that enhance the shopping experience and give
retailers a competitive advantage.
• Services that can provide a competitive advantage. Double warranty, special
delivery, product demonstrations.
Classifying Customer Services
Fig 7. Classifying Customer Services (Berman, Evans, and Chatterjee, 2018)
Turning Around Weak Customer
Service
Fig 8. Turning Around Weak Customer Service (Berman, Evans, and Chatterjee, 2018)
Rewards Program Categories
Economic
Hedonistic
Functional
Sociorelational
Informational
Services Retailing
Rented
goods
services
Owned
goods
services
Non-goods
services
Characteristics of Services Retailing
Intangibility
Perishability
Inseparability
Variability
Intangibility
• Display/distribute customer testimonials.
• Explain in detail how the service will be performed and
what the expected results will be.
• Have strong, clearly stated guarantees of performance.
• Be competitively priced.
Inseparability
• Prominently promote major points of distinction with
competition
• At the time a service is completed, encourage
customers to schedule appointments for a follow-up
service visit or call.
• If possible, rotate employees who interact with
customers each time they buy a service so that
customers do not leave if a popular employee goes
elsewhere.
• Call customers after a service is performed to
demonstrate the firm’s interest in them.
Perishability
• Carefully plan each work day to optimize service
visits or calls.
• Be prepared to do alternative tasks if the weather is
bad.
• Offer appropriate other services that are popular
during off-season.
• Be willing to work longer hours during peak periods
and fewer hours during slower times.
Variability
• Develop and implement systematic procedures for
performing each service—including a series of steps
to be undertaken every time the same service is
requested.
• Train employees well.
• Computerize as many steps as possible, such as
inputting customer information, verifying that each
step has been completed, and billing.
• Regularly observe employee actions to be sure
they are done correctly.
Technology in Retailing
Virtual
Reality
Augment
ed
Reality
Automation
Interne
t of
Things
Big Data
Analytics
Artificial
Intellige
nce