McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 17, YOU SHOULD BE ABLE TO:
LO1
Identify retailers in terms of the utilities
they provide.
LO2
Explain the alternative ways to classify
retail outlets.
LO3
Describe the many methods of
nonstore retailing.
17-2
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 17, YOU SHOULD BE ABLE TO:
LO4
LO5
Classify retailers in terms of the
retail positioning matrix, and specify
retailing mix actions.
Explain changes in retailing with the
wheel of retailing and the retail life
cycle concepts.
17-3
RETAILERS ARE REINVENTING THEIR STORES
TO MATCH THE WAY YOU WANT TO SHOP!
17-4
LO1
THE VALUE OF RETAILING

Retailing

Consumer Utilities Offered by Retailing

• Place
• Form
• Possession
• Time
The Global Economic
Impact of Retailing
17-5
FIGURE 17-1 Which retailer best provides
which utilities?
17-6
FIGURE 17-2 The relative size of different
types of retailers
17-7
LO2
CLASSIFYING RETAIL OUTLETS
FORM OF OWNERSHIP

Form of Ownership

Independent Retailer

Corporate Chain

Contractual Systems
• Wholesaler-Sponsored Voluntary Chains
• Retailer-Sponsored Cooperatives
17-8
LO2
CLASSIFYING RETAIL OUTLETS
FORM OF OWNERSHIP

Contractual Systems
• Franchising
 Business-Format
Franchises
 Product-Distribution
Franchises
17-9
FIGURE 17-3 The top five franchises in the
United States
17-10
LO2
CLASSIFYING RETAIL OUTLETS
LEVEL OF SERVICE

Self-Service

Limited Service

Full-Service
17-11
LO2
CLASSIFYING RETAIL OUTLETS
TYPE OF MERCHANDISE LINE

Depth of Product Line
• Specialty Outlets
• Category Killers
17-12
FIGURE 17-4 Stores vary in terms of the
breadth and depth of their merchandise
lines
17-13
LO2
CLASSIFYING RETAIL OUTLETS
TYPE OF MERCHANDISE LINE

Breadth of Product Line
• General Merchandise Stores
• Scrambled Merchandising
 Hypermarket
 Supercenter
 Intertype Competition
17-14
FIGURE 17-5 Hypermarkets are popular in
Europe while supercenters are popular in
the U.S.
17-15
FIGURE 17-6 Many types of retailers do not
have stores
17-16
LO3
NONSTORE RETAILING

Automatic Vending

Direct Mail and Catalogs
17-17
LO3
NONSTORE RETAILING

Television Home
Shopping

Online Retailing
17-18
GOING ONLINE
Get Ready for Smack Shopping!
17-19
LO3

NONSTORE RETAILING
Telemarketing
• Do-Not-Call Registry

Direct Selling
17-20
FIGURE 17-7 Elements of a retailing
strategy
17-21
LO4
RETAILING STRATEGY
POSITIONING A RETAIL STORE

Retail Positioning Matrix
• Breadth of Product Line
• Value Added
17-22
FIGURE 17-8 The four positioning
strategies for retailers
17-23
LO4
RETAILING STRATEGY
RETAILING MIX

Retailing Mix

Retail Pricing
• Original Markup
• Maintained Markup
• Gross Margin

Markdown
17-24
LO4
RETAILING STRATEGY
RETAILING MIX

Everyday Low Pricing (EDLP)

Everyday Fair Pricing

Benchmark or Signpost Items
17-25
LO4
RETAILING STRATEGY
RETAILING MIX

Off-Price Retailing
• Warehouse Club
• Outlet Store
• Single/One-Price Policy Store
17-26
LO4
RETAILING STRATEGY
RETAILING MIX

Store Location
• Central Business District
• Regional Shopping Centers
 Anchor Stores
• Community Shopping Center
• Strip Location
• Power Center
17-27
LO4
RETAILING STRATEGY
RETAILING MIX

Retail Communication
• Image
• Atmosphere or Ambiance

Merchandise
• Category Management
 Consumer Marketing at Retail (CMAR)
• Metrics
17-28
USING MARKETING DASHBOARDS
Why Apple Stores May Be
the Best in the United States!
Sales per Square Foot ($) and Same Store Growth (%)
Sales per Square Foot ($) =

Total Sales ($)
Selling Area in Square Feet (#)
 Store Sales Year 2 ($) Š Store Sales Year 1 ($)
Same Store Growth (%) = 
Store Sales Year 1 ($)



 100
17-29
LO5
THE CHANGING NATURE
OF RETAILING
THE WHEEL OF RETAILING AND RETAIL LIFE CYCLE

Wheel of Retailing

Retail Life Cycle
17-30
FIGURE 17-9 The wheel of retailing: How
outlets change over time
17-31
FIGURE 17-10 The retail life cycle
describes the stage of growth and decline
for retail outlets
17-32
LO5
FUTURE CHANGES IN RETAILING

Multichannel Retailers

Managing the Customer Experience
17-33
MARKETING MATTERS
The Multichannel Marketing Multiplier
17-34
VIDEO CASE 17
MALL OF AMERICA: SHOPPING
AND A WHOLE LOT MORE
17-35
VIDEO CASE 17
MALL OF AMERICA
1. Why has Mall of America been
such a marketing success so far?
17-36
VIDEO CASE 17
MALL OF AMERICA
2. What (a) retail and (b) consumer
trends have occurred since Mall
of America was opened in 1992
that it should consider when
making future plans?
17-37
VIDEO CASE 17
MALL OF AMERICA
3. (a) What criteria should Mall of
America use in adding new
facilities to its complex?
(b) Evaluate (i) retail stores,
(ii) entertainment offerings, and
(iii) hotels on these criteria?
17-38
VIDEO CASE 17
MALL OF AMERICA
4. What specific marketing actions
would you propose that Mall of
America managers take to
ensure its continuing success in
attracting visitors (a) from the
local metropolitan area and
(b) from outside of it?
17-39
SUPPLEMENTAL
LECTURE NOTE 17-1
ARE THERE TOO MANY
RETAIL STORES?
17-40
SUPPLEMENTAL
LECTURE NOTE 17-2
FRANCHISING OFFERS
OPPORTUNITIES AND
FINANCIAL, LEGAL, AND
CULTURAL CHALLENGES
17-41
IN-CLASS ACTIVITY 17-1
RETAIL SHOPPING ONLINE:
COMPARING PRICES FOR
A KODAK DIGITAL
PICTURE FRAME
17-42
Kodak EasyShare EX1011 Digital Picture Frame
17-43
Retailing
Retailing consists of all activities
involved in selling, renting, and
providing goods and services to
ultimate consumers for personal,
family, or household use.
17-44
Form of Ownership
Form of ownership distinguishes
retail outlets based on whether
individuals, corporate chains, or
contractual systems own the
outlet.
17-45
Level of Service
Level of service is the degree of
service provided to the customer
from three types of retailers:
self-, limited-, and full-service.
17-46
Merchandise Line
A merchandise line describes
how many different types of
products a store carries and in
what assortment.
17-47
Depth of Product Line
Depth of product line means
that the store carries a large
assortment of each item.
17-48
Breadth of Product Line
Breadth of product line
describes the variety of different
items a store carries.
17-49
Scrambled Merchandising
Scrambled merchandising
consists of offering several
unrelated product lines in a
single store.
17-50
Hypermarket
A hypermarket is a form of
scrambled merchandising, which
consists of a large store (more
than 200,000 square feet) that
offers consumers everything in a
single outlet, eliminating the need
to shop at more than one location.
17-51
Intertype Competition
Intertype competition consists
of competition between very
dissimilar types of retail outlets.
17-52
Telemarketing
Telemarketing consists of using
the telephone to interact with and
sell directly to consumers.
17-53
Retail Positioning Matrix
The retail positioning matrix
is a matrix that positions retail
outlets on two dimensions:
breadth of product line and
value added.
17-54
Retailing Mix
The retailing mix consists of
the activities related to managing
the store and the merchandise in
the store, which includes retail
pricing, store location, retail
communication, and merchandise.
17-55
Off-Price Retailing
Off-price retailing consists of
selling brand-name merchandise
at lower than regular prices.
17-56
Central Business District
A central business district is
the oldest retail setting, usually
located in the community’s
downtown area.
17-57
Regional Shopping Centers
Regional shopping centers
consist of 50 to 150 stores that
typically attract customers who
live or work within a 5- to 10-mile
range, often containing two or
three anchor stores.
17-58
Community Shopping Center
A community shopping center
consists of a retail location that
typically has one primary store
(usually a department store branch)
and often 20 to 40 smaller outlets,
serving a population of consumers
who are within a 10- to 20-minute
drive.
17-59
Strip Location
A strip location consists of a
cluster of neighborhood stores
to serve people who are within a
5- to 10-minute drive.
17-60
Power Center
A power center is a huge
shopping strip with multiple
anchor (or national) stores.
17-61
Category Management
Category management is an approach
to managing the assortment of
merchandise in which a manager is
assigned the responsibility for selecting
all products that consumers in a market
segment might view as substitutes for
each other, with the objective of
maximizing sales and profits in the
category.
17-62
Wheel of Retailing
The wheel of retailing is a
concept that describes how new
forms of retail outlets enter the
market.
17-63
Retail Life Cycle
The retail life cycle is the
process of growth and decline
that retail outlets, like products,
experience. It consists of the
early growth, accelerated
development, maturity, and
decline stages.
17-64
Multichannel Retailers
Multichannel retailers are
retailers that utilize and integrate
a combination of traditional store
formats and nonstore formats
such as catalogs, television, and
online retailing.
17-65