Chapter 13: Managing Retailing, Wholesaling, and Logistics

Chapter 13: Managing Retaining, Wholesaling, and Logistics

Retailing- includes all activities in selling goods or services directly to final consumers for personal, nonbusiness use.

·         Retailer- or retail store is any business enterprise whose sales volume come primarily from retailing.

Types of Retailers

·         Retailers can position themselves as offering on of four levels of service:

1.      Self-service- the cornerstone of all discount operations.

2.      Self-selection- customers find their own goods, though they can ask for assistance

3.      Limited service- these retailers carry more shopping goods and services such as credit and merchandise-return privileges.

4.      Full service- Salespeople are ready to assist every phase of the “locate-compare-select” process.

·         Nonstore retailing- has been growing much faster than store retailing, with the rise in e-commerce and m-commerce.

·         Nonstore retailing falls into four major categories:

1.      Direct marketing

2.      Direct selling (aka: multilevel selling & network selling)

3.      Automatic vending

4.      Buying services

·         Corporate retailing organization- organizations achieve economies of scale, greater purchasing power, wider brand recognition, and better-trained employees than independent stores can usually gain alone.

The Modern Retail Marketing Environment

• ·         The retail marketing environment is dramatically different today from what it was just a decade or so ago.
• ·         Technology is profoundly affecting the way retailers conduct virtually every facet of their business
• ·         Technology is used to produce forecasts, control inventory costs, and order from suppliers, reducing the need to discount and run sales to clear out languishing products.
• ·         Technology is also directly affecting the consumer shopping experience inside the store, including experiments with virtual shopping screens, audio/video presentation, and other applications.
• ·         Shopper marketing- the way manufacturing and retailers use stocking displays, and promotions to influence consumers actively shopping for a product.
• ·         “Marketing insight- the growth of shopper marketing” describes the important role technology is taking in the aisles.

Retailer Marketing Decisions

• ·         With this new retail environment as a backdrop, we now examine retailers’ marketing decisions in some key areas:

o   Target market- defines and profiles the target market

o   Channels- based on a target market analysis and other considerations

o   Product assortment-the retailer’s product assortment must match the target market’s shopping expectations in breadth and depth.

§  Destination categories- play an important role because they have the greatest impact on where households choose to shop and how they view a particular retailer.

o   Procurement- stores are using direct product profitability (DPP) to measure a product’s handling costs from the time it reaches the warehouse until a customer buys it in the retail store.

o   Prices- a key positioning factor and must be set in relationship to the target market, product-and-service assortment mix, and competition.

§  Most retailers fall into the:

·         High-markup, low-volume group

·         Low-markup, higher volume group

o   Services- retailers must decide on the service mix to offer customers.

o   Store atmosphere- every store has a look and a physical layout that makes it hard or easy to move around.

o   Store activities and experiences- the growth of e-commerce has forced traditional brick-and-mortar retailer to respond.

o   Communications- retailers use a wide range of communication tools to generate traffic and purchasing, including:

§  Advertising

§  Special sales

§  Money-saving coupons

§  E-mail promotions

§  Frequent-shopper-reward programs

§  In-store food sampling

o   Location

§  Three keys to retail success are: “location, location, and location”

§  Central business districts- the oldest and most heavily trafficked city areas, often known as “downtown.”

§  Regional shopping centers- large suburban malls containing 40 to 200 stores

§  Community shopping centers- smaller malls with one anchor store and 20 to 40 smaller stores

§  Shopping strips- a cluster of stores, usually in one long building, serving a neighborhood’s needs for groceries, hardware, laundry, and more.

§  A location within a larger store- concession spaces taken by well-known retailers like Starbucks inside larger stores, airports, or schools; “store-within-a-store” specialty retailers located within a department store.

§  Stand-alone stores- freestanding storefronts not connected directly to other retail stores