Presentation prepared by Robin Roberts, Griffith University and
Chapter
13
Mike Spark,
Swinburne University
Technology
Copyright Johnof
Wiley
& Sons 2007
Chapter 13
Retailing and e-distribution
Chapter 13
Copyright John Wiley & Sons 2007
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
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Retailing versus e-tailing in the florist
industry
Dial-Up
Broadband
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
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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
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General-merchandise 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
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General-merchandise retailers (cont’d)
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
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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
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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
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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
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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
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Strategic issues in retailing
Consumer purchases may result from social and
psychological influences
Consumers shop for various reasons, retailers
must 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
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Strategic issues in retailing (cont’d)
Types of Locations
– Central business district (CBD)
– Free-standing structures
– Neighbourhood
– Community
– Regional
Emerging types
• Factory outlet centres
• Miniwarehouse centres
• Non-anchored centres
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What factors should Aldi consider when
selecting locations for its new stores?
Dial-Up
Broadband
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
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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
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Strategic issues in retailing (cont’d)
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
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Strategic issues in retailing (cont’d)
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
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Strategic issues in retailing (cont’d)
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
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The Wheel of Retailing
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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
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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
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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 marketing
A type of marketing that occurs when a
retailer advertises a product and makes it
available through mail or telephone orders
• Telemarketing
The performance of marketing-related
activities by telephone
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Direct marketing (cont’d)
• Television home shopping
Can buy them by calling a toll-free number
and paying with a credit card
• Online retailing
Makes products available to buyers
through computer connections
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Direct selling
• Direct selling
Through 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
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Automatic vending
• Automatic vending
Use 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
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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
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B2B e-distribution
B2B e-distribution has benefited from
organisational resources available to build
technologically advanced networks among
manufacturers 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
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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 informationbased products and trading.
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Copyright John Wiley & Sons 2007
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
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Copyright John Wiley & Sons 2007
Chapter 13
Copyright John Wiley & Sons 2007