OUTLET SELECTION
Consumer shopping
choices
Electronic Commerce
(covered later)
Store marketing
issues
Dealing with
complaints
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 1
The Evolution of Consumer
Outlet Choice
General
Store
Catalog
Sales
Specialty
Stores (where
available)
MKTG 371
Supermarkets
Category
Killers
Discount
Stores
Catalog/
Direct
Marketing
Internet
In-home
Shopping
Note: Evolutionary pressure --->
adaptation or extinction
OUTLET SELECTION
Lars Perner, Instructor 2
Issues in Outlet Marketing
Store positioning
relevant competition
store image
Store location/size
Store brands
In-store marketing
P-O-P displays
Featured promoted brand
Store brand
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 3
Store Layout/Atmosphere
Location of
merchandise
Music/aroma
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 4
Retailing
Positioning issues
Margins
Retail pricing
strategies
Strategic
developments in
retailing
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 5
Positioning Issues
Some ways to profitability:
Low cost, high volumes, low unit
margins, low to moderate service
(profit on volume)
Higher priced, higher per unit
margins, lower sales
“Stuck in the Middle”--midlevel
retailers (e.g., Sears, J. C.
Penney) face competition both
from above and below
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 6
Attributes Influencing Retail
Outlet Selection
Outlet image
Retailer (store) brands
U.S. vs. Europe
Retail advertising
For store
Co-op, brand supported store ads
Location
Size
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 7
Consumer Shopping
Orientations--Segments
 Chameleons—constantly
changing strategies
 Collectors/gatherers—
stockpilers
 Foragers—focused on
desired items
MKTG 371
 Hibernants—indifferent
and opportunistic; will
postpone shopping
 Predators—shoppers who
dislike shoppers but plan
ahead to minimize time
spent
 Scavengers—
”recreational shopping”
OUTLET SELECTION
Lars Perner, Instructor 8
Influences on Shopping
Behavior
Point-of-purchase
(POP) shoppers
Promotions
In-store coupons
Sales
Other deals
Stockouts
Major problem
Difficult to avoid
Technology can help
predict sales
Sales personnel
Outlet atmosphere
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 9
Margins
Margins
Gross = sale price price paid to
wholesaler
Per unit
Per dollar
Per unit of space
Very large increases
in sales volumes are
needed to “break
even” on low prices
Net margin = gross
margin vs. allocated
overhead
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 10
Two Types of Retail
Pricing
“High-low”
High everyday prices
Frequent sales
Profit on price
discrimination--only
some people will
bother to
Every Day Low Price
(EDLP)
Shop while sale is on
Switch brands
MKTG 371
OUTLET SELECTION
Consistent prices-theoretically no sales,
but lower non-sale
prices
Typically lower service
Note that retailers
provide for many
promotions
Lars Perner, Instructor 11
Strategic Issues
Importance of
convenience
Increasing power of
retailers
Private label branding
Lower price but higher
margins
Longer history in
Europe
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 12
Retail Trends
Power retailers
Early purchases
Investment in
technology
Consistent “fair”
prices
Consistent but modest
gross margins
MKTG 371
Category “killers”:
Specialize--significant
selection at low prices
OUTLET SELECTION
Lars Perner, Instructor 13
Retailing Polarity
Trend toward either
Low price--e.g., WalMark, Kmart, Sports
Authority
High quality--e.g.,
Nordstrom’s,
Starbuck’s
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 14
Electronic Commerce
Penetration vs.
potential
Obstacles
Security
Trial
Delayed delivery
Limited demographics
Glitches
Resentment of
commercial intrusions
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 15
SERVICE OUTPUTS AND
SEGMENTATION
Service outputs
Trends
Segmentation
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 16
SERVICE OUTPUTS: DISTRIBUTION
FROM THE CUSTOMER’S POINT OF
VIEW
Bulk breaking
Spatial convenience
Waiting and delivery
time
Breadth of
assortment
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 17
Trends in Consumer
Preferences
Poverty of time (in U.S.)
Increased knowledge
Travel
Information sources
Polarity of incomes
Some increase in top
incomes in U.S.
Incomes slowly equalizing
Worldwide
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 18
Example: Food Customers
Resellers--restaurants
buy from suppliers
Institutional-hospitals buy to feed
patients
Families
“Nuclear”--may buy
from regular food
stores; will favor large
sizes
MKTG 371
OUTLET SELECTION
Small families, singles,
and yuppies--will shop
more in convenience
store; single serving
sizes more popular
Value conscious--buy
at warehouses
Time conscious--will
pay extra for delivery
Service conscious-other services
demanded
Lars Perner, Instructor 19
FOOD CONSUMPTION,
MANUFACTURING, AND MARKETING
Food consumption
patterns
Demographics and
trends
International
comparisons
Issues in food
markets
Food marketing
choices
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 20
Food Consumption
Patterns
Increasing
consumption—so far…
Pork
Chicken
Turkey
Fish
Cheese
Fresh fruit
Frozen vegetables
Flour and cereal products
Soft drinks
MKTG 371
Declining—so far…
Beef
Eggs
Whole milk
Sugar
Coffee
No evident trend
OUTLET SELECTION
Ice cream
Butter, margarine
Fruit juices
Lamb
Fresh potatoes
Lars Perner, Instructor 21
Possible Effects of
Adkins Diet
Low fat diets
Increases:
Increases
Beef
Butter
Cream
Nuts
Chicken
Fish
Low fat dairy
Fruit
Vegetables
Declining
Sweetener
Frozen potato product
Fresh fruit, vegetables
MKTG 371
OUTLET SELECTION
Decreases
Beef, lamb
Eggs
Sweetened products
Lars Perner, Instructor 22
U.S. Food Consumption and
Demand
Typical family spends 9-11% of income on
food
Decreasing percentage spent with
increasing income, but more absolute
dollars spent (income elasticity <1)
Immigration has influenced both food
preferences and retail formats
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 23
Comparative Food Spending
Percentages, 1994
Philippines: 56%
India: 51%
Mexico: 25% (modest
incomes, relatively
high prices)
South Africa: 28%
Japan: 18% (very
expensive food but
high incomes)
West Germany: 17%
MKTG 371
Denmark: 15%
(25% sales tax!)
France: 15%
Netherlands: 11%
U.K.: 11%
Canada:
Percentages10%
of total
OUTLET SELECTION
expenditures—includes
non-consumer spending
such as government and
industry. U.S. figure: 7%
Lars Perner, Instructor 24
Some Common U.S. Food
Outlets
Supermarkets
Neighborhood food
stores
Convenience stores
Drug and discount
stores
Gas stations
Vending machines
Food stands, street
vendors
MKTG 371
Restaurants
Cafeterias
Specialty food stores
Door-to-door sales
Online and catalog
orders
OUTLET SELECTION
Lars Perner, Instructor 25
Some International
Characteristics
Japan: Strong emphasis on neighborhood
stores, vending machines
Europe: Large food stores are available,
some may deliver; government protection
of smaller retailers
Developing countries: Food often bought
at open markets
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 26
Some Food Demand Issues
 Income elasticity
 Price elasticity
Normal vs. “inferior”
goods
 Cross-price elasticity
 “Trading Up” within select
categories
 Increased interest in
convenience foods
MKTG 371
 Conflict between demand
for healthier and “junk”
foods
 Unplanned purchases and
consumption
OUTLET SELECTION
Lars Perner, Instructor 27
 “Functional” foods
Away-From-Home and
Prepared Foods
48% of food expenditures on items eaten
away from home (1999)
Large part of restaurant meals is for nonfood costs
Labor
Ambiance
Facilities
Increase in take-out foods from
restaurants and stores
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 28
Public Food Programs
Food stamps were created
mostly to promote demand
for farm products (thus only
American products)
Only a limited amount of
food stamp value goes
toward increased
consumption (cash is
diverted elsewhere)
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 29
Some Food Marketing
Issues
Branding
Innovation
Brand extensions and improvements to
existing product categories
New product categories
Consumer brand loyalty: The ability to
resist promotional efforts of competitors—
not consistent choice of brand
Multi-brand loyalty
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 30
POST PURCHASE PROCESSES
Satisfaction
Customer commitment
Word-of-mouth
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 31
Post Purchase Dissonance
Regret of purchase or Influences on
question of wisdom of
magnitude
purchase 
Degree of
irrevocability /reversal
“dissonance reduction
of decision (trialability)
strategies”
Return product
Rationalization
Consumption guilt
MKTG 371
OUTLET SELECTION
Importance of
decision
Difficulty of choice
Anxiety proneness of
consumer
Lars Perner, Instructor 32
Product Use and Non-Use
Products bought and
Used as intended
Stored
Not-used
Used for purposes other than intended (use
innovativeness)
E.g., baking soda for odor reduction, upset stomach
E.g., WD40: fish bait additive, removal of gum, enhanced
conduction of electricity, shining of boots
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 33
Disposition
Disposal
Garbage
Recycling
Sale
eBay: Very old products for sale—e.g.,
1980s typewriters, CB radios
Donation/gifting
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 34