CHAPTER 10b_Retailing and Direct Marketing.pptx

retailing and direct marketing

1. Retailing and Direct Marketing Chapter 10b Boone & Kurtz, Contemporary Marketing, Nineteenth Edition. © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

2. Learning Objectives 16.1 Describe the retailing sector in the United States in terms of size, major companies, and marketing channels. 16.2 Describe the six components of retail strategy. 16.3 Given a component of retail strategy, summarize the key strategic considerations for that component. 16.4 Outline the four bases for categorizing retailers. 16.5 Describe the five basic types of direct marketing and nonstore retailing. 16.6 Given a manufacturer’s goals for retailing their products, determine the most effective retail strategy.

3. How Price Affects Demand 16-1 Boone & Kurtz, Contemporary Marketing, Nineteenth Edition. © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

4. 16-1 Retailing in the United States Retailing: the activities involved in selling merchandise to consumers Retailers represent the distribution channel to most consumers. Retailers determine: Locations Store hours Number of sales personnel Store layouts Merchandise selections Return policies Technology is changing the way consumers shop.

5. Exhibit 16.1 Largest Retailers in the United States (Ranked by Annual Sales) Rank Company 2019 U.S. sales (bill.) Number of Stores 1 Walmart $399.80 5,355 2 Amazon.com $193.64 564 3 The Kroger Co. $122.28 3,003 4 Costco $111.75 542 5 Walgreens Boots Alliance $104.53 9,168 6 The Home Depot $102.17 1,972 7 CVS Health Corporation $88.51 9,909 8 Target $77.13 1,868 9 Lowe’s Companies $65.51 1,727 10 Albertsons Companies $62.41 2,258

6. Retailing Strategy 16-2 Boone & Kurtz, Contemporary Marketing, Nineteenth Edition. © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

7. 16-2 Retailing Strategy (1 of 7) A retailer develops a marketing strategy based on the firm’s goals and strategic plans. Part of this strategy includes developing a retailing mix to satisfy the chosen market. Merchandising strategy Customer service standards Pricing guidelines Promotion goals Location/distribution decisions Store atmosphere choices

8. Exhibit 16.2 Components of Retail Strategy

9. 16-2 Retailing Strategy (2 of 7) Merchandising strategy: guides a retailer’s decisions regarding the items it will offer. A retailer must decide on: General merchandise categories Product lines Specific items within lines Depth and width of assortments Example: Selling “all things beauty,” Ulta offers well-known brands such as Cover Girl as well as high-end cosmetics and professional hair care products.

10. 16-2 Retailing Strategy (3 of 7) Customer service strategy: some stores offer no-frills shopping. Others build their retailing strategy around customer service for shoppers. Examples: gift wrapping, alterations, bridal registries, delivery, and installations A retailer’s customer service strategy must specify: The services the firm will offer Whether it will charge customers for the services Example: Ulta allows customers to try products before they buy and provides full-service salons offering haircuts, facials, and manicures.

11. 16-2 Retailing Strategy (4 of 7) Pricing strategy: prices reflect a retailer’s marketing objectives and policies. Prices also impact consumers’ perceptions of a retailer. Example: Ulta offers high-end brands as well as affordably priced products.

12. 16-2 Retailing Strategy (5 of 7) Location/Distribution strategy: location can be a determining factor in the success or failure of a retail business. The location decision depends on the: Type of merchandise Retailer’s financial resources Characteristics of the target market Site availability To change its perception of discount shopping, Ulta stores moved from strip malls to locations near urban centers. Ulta built two distribution centers to improve delivery times for online purchases.

13. 16-2 Retailing Strategy (6 of 7) Promotional strategy: retailers use promotional techniques to entice more shoppers. A retailer communicates information about its stores: Locations Merchandise selections Hours of operation Prices Advertising is typically used to promote current styles. Example: To promote the store, Ulta advertises during prime-time TV shows and uses direct mail and print ads in fashion magazines.

14. 16-2 Retailing Strategy (7 of 7) Atmospherics: the physical characteristics and amenities that attract customers and satisfy their shopping needs Atmospherics include both a store’s exterior and interior décor. Ulta has created store interiors that are bright and clean with an open layout and wide aisles.

15. Strategic Considerations for Retail Strategy 16-3 Boone & Kurtz, Contemporary Marketing, Nineteenth Edition. © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

16. 16-3 Strategic Considerations for Retail Strategy (1 of 8) A retailer begins to define its strategy by selecting a target market. Once a retailer has done that, it must develop a retailing mix to satisfy the chosen market. Example: Best Buy has identified a number of target markets: Small business owners Affluent professionals Adopters of new technology Suburban families

17. 16-3 Strategic Considerations for Retail Strategy (2 of 8) Merchandising strategy: to develop a successful merchandise mix, a retailer must weigh a few priorities: The preferences and needs of its defined target market The overall profitability of each product line and category The competitive environment influences these choices. By offering a range of electronic product categories and multiple brands within each category, Best Buy is a trusted source for consumers’ electronics needs.

18. 16-3 Strategic Considerations for Retail Strategy (3 of 8) Customer service strategy: choosing which services to offer and how much to charge for them depends on: Store size, type, and location Merchandise assortment Services offered by competitors Customer expectations Financial resources The basic objective of all customer services focuses on attracting and retaining target customers in order to increase sales and profits. Example: Best Guy’s Geek Squad provides services such as home installation, set up, support, and repair for thousands of products.

19. 16-3 Strategic Considerations for Retail Strategy (4 of 8) Pricing strategy: retailers determine a pricing strategy based on: Type of product Company objectives Competitor pricing Customer perceptions Markup: the amount a retailer adds to a product’s cost to set the final selling price. The amount of markup typically results from services performed by the retailer and inventory turnover rate.

20. 16-3 Strategic Considerations for Retail Strategy (5 of 8) Showrooming : when a customer examines and compares products at a store, then buys the product through an online retailer Example: Best Buy introduced price matching to reduce lost sales through showrooming.

21. 16-3 Strategic Considerations for Retail Strategy (6 of 8) Location/distribution strategy: planned shopping centers: a group of retail stores designed, coordinated, and marketed to shoppers in a geographic trade area Example: Almost all Best Buy stores are located in planned shopping centers. Distribution impacts how efficiently a retailer gets its products to customers. Example: Best Buy offers same day in-store pickup on many items purchased online.

22. 16-3 Strategic Considerations for Retail Strategy (7 of 8) Promotional strategy: decisions about the amount and type of promotion are influenced by the target market and other components of the retailer’s strategy. Best Buy uses many promotional techniques: Weekly circulars Commercials Banner ads on websites In-store promotions

23. 16-3 Strategic Considerations for Retail Strategy (8 of 8) Store atmospherics: The exterior of a store: Identifies the retailer Attracts its target shoppers The interior of a store should: Complement the retailer’s image Respond to customers’ interests Induce shoppers to buy When designing the interior and exterior of a store, marketers must remember that people shop for reasons other than purchasing needed products. Best Buy’s products are displayed to encourage customers to try them. Products are grouped with clear signage to help customers navigate the stores.

24. Categorizing Retailers 16-4 Boone & Kurtz, Contemporary Marketing, Nineteenth Edition. © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

25. 16-4 Categorizing Retailers (1 of 6) Certain differences define categories of retailers: Forms of ownership Shopping effort expended by customers Services provided to customers Product lines carried These categories are not mutually exclusive.

26. 16-4 Categorizing Retailers (2 of 6) Classification by form of ownership: the easiest way to categorize retailers may be by ownership structure. Chain stores Groups of retail outlets that operate under central ownership and management Independent retailers Those who are responsible for their own businesses

27. 16-4 Categorizing Retailers (3 of 6) Classification by shopping effort: this classification is based on the reasons consumers shop at a particular retailer: convenience retailers: stores that appeal to customers by having accessible locations, extended store hours, rapid checkout service, and adequate parking Examples: local food stores, gas stations, dry cleaners shopping stores: stores where consumers compare prices, assortments, and quality levels before making purchase decisions Examples: furniture stores, clothing outlets, sporting goods stores specialty retailers: stores that combine carefully defined product lines, services, and reputations in attempts to persuade consumers to expend considerable effort to shop at their stores Examples: Macy’s, Sephora, Footlocker

28. 16-4 Categorizing Retailers (4 of 6) Classification by services provided: this classification differentiates retailers by the services they provide: A continuum between self-service and full-service retailers with the middle of the continuum called self-selection Example: A gas station is a self-service retailer; LensCrafters is a full-service eyeglass retailer. Most retailers fall between self-service and full-service and are considered self-selection. Examples: Albertsons and Kroger grocery stores

29. 16-4 Categorizing Retailers (5 of 6) Classification by product line: this classification results in three major categories: specialty stores: focus on a single product category but stock it in considerable depth or variety Examples: health food stores, shoe stores, bakeries general-merchandise retailers : stores that carry a wide variety of product lines stocked in some depth and distinguish themselves from specialty retailers by the large number of product lines they carry Examples: Target, Walmart supermarkets : stores that sell mainly groceries, but also a wide selection of items in other categories Examples: Whole Foods, Fred Meyer, Costco

30. 16-4 Categorizing Retailers (6 of 6) Department Store : a series of specialty stores under one roof

31. Direct Marketing and Nonstore Retailing 16-5 Boone & Kurtz, Contemporary Marketing, Nineteenth Edition. © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

32. 16-5 Direct Marketing and Nonstore Retailing (1 of 6) Direct marketing: a broad concept that includes direct mail, direct selling, online retailing, direct-response retailing, and automatic merchandising Some companies use direct marketing as their sole method for distributing and promoting products. Others use direct marketing to complement their physical stores and traditional promotions.

33. 16-5 Direct Marketing and Nonstore Retailing (2 of 6) Direct mail is a type of direct marketing that comes in many forms. Examples: sales letters, brochures, catalogs, DVDs Advantages: Ability to select a narrow target market Intensive coverage Quick Various formats Complete information Can personalize each mailing piece Disadvantages: High per-reader cost Effectiveness depends on quality of mailing list Some consumers object to it. Marketers are making a shift from direct mail to digital advertisements.

34. 16-5 Direct Marketing and Nonstore Retailing (3 of 6) Direct selling: manufacturers bypass retailers and wholesalers, setting up their own channels to sell their products directly to consumers. Examples: Avon, Pampered Chef, LuLaRoe, Tupperware

35. 16-5 Direct Marketing and Nonstore Retailing (4 of 6) Online retailing: online retailers sell directly to consumers using e-commerce stores. Examples: Amazon (the largest online retailer), Walmart (a physical retailer that is upping its online retailing operation)

36. 16-5 Direct Marketing and Nonstore Retailing (5 of 6) Direct-response retailing: a hybrid of physical retail, online retail, and direct mail promotion Customers can order merchandise by mail or telephone, through a mail-order desk in a retail store, or online. Example: Lillian Vernon makes almost all of its sales through catalog orders. Example: Historically, L.L. Bean was a direct mail company that relied entirely on catalog sales; now its catalog is more likely to drive sales at its e-commerce site.

37. 16-5 Direct Marketing and Nonstore Retailing (6 of 6) Automatic merchandising: nearly 18,000 vending machine operators sell about $7 billion in convenience goods annually in the United States. U.S. marketers have started to realize the potential of this underused marketing tool. Vending-machine companies such as Fresh Healthy Vending are working with schools to replace traditional offerings with fresh, healthy snacks.

38. Determining an Effective Retail Strategy for Manufacturers 16-6 Boone & Kurtz, Contemporary Marketing, Nineteenth Edition. © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

39. 16-6 Determining an Effective Retail Strategy for Manufacturers When considering their retail strategy, manufacturers must consider their goals for retailing their products. The basis for selecting retail partners is whether they reach and serve the company’s target market in a way that is consistent with the company’s objectives and brand.