Food Marketing Retail Stores

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Food Marketing Retail Stores Powered By Docstoc
					        Chapter 14
 Direct Marketing
  and Marketing
Resellers: Retailers
 and Wholesalers
                Chapter Objectives
1. Explain the wheel of retailing.
2. Explain how retailers select target markets.
3. Show how the elements of the marketing mix apply to
   retailing strategy.
4. Explain the concepts of retail convergence and
   scrambled merchandising.
5. Identify the functions performed by wholesaling
   intermediaries.
6. Outline the major types of independent wholesaling
   intermediaries and the situations appropriate for each.
7. Compare the basic types of direct marketing and non-
   store retailing.
8. Explain how much the Internet has altered the
   wholesaling, retailing, and direct marketing
   environments.
                                                             14-2
                   Retailing
 Evolution of Retailing
  Traced to trading posts such as the Hudson
    Bay Company and peddlers
  First Retail Institution in the U.S. was the
    General Store
  Supermarkets appeared in the early 1930s
  Discount stores arrived in the 1950s
  Convenience food stores emerged in the
    1960s
  The 1980s saw the first off-price retailers

                                                  14-3
 Wheel of Retailing
  Hypothesis that each new type of retailer
   gains a competitive foothold by offering
   lower prices than current retailers, while
   maintaining profits through reduction of
   services
  Once established, more services are
   introduced and prices rise
  It then becomes vulnerable to new, lower
   price competitors




                                                14-4
Wheel of Retailing


 Low-end strategy
 • Low prices
 • Limited facilities and
   services
 • Price-sensitive
   consumers                  Medium strategy
                              • Moderate prices
                              • Improved facilities
                              • Broader base of value-
                                and service-conscious
 High-end strategy              consumers
 • High prices
 • Excellent facilities and
   services
 • Upscale consumers



                                                         14-5
               Retailing Strategy
 A retailer develops a marketing strategy
  based on the firm’s goals and strategic plans
   Two fundamental steps:
      Selecting a target market
      Developing a retailing mix to satisfy the
       chosen target market

  Retail image: Consumers’ perceptions of
   a store and the shopping experience it
   provides

                                                   14-6
14-7
 Selecting a Target
  Market
  Retailers analyze
    demographic,
    geographic, and
    psychographic
    profiles to segment
    and select
    potential markets




                          14-8
 Merchandising Strategy
  Planograms: Diagrams of how to exhibit
    selections of merchandise within a store
  Category management: Retailing
    strategy which views each product
    category as an individual profit center, and
    the retailer manages the performance and
    growth of the entire category




                                                   14-9
 Exclusively designed products are part of
  Target’s merchandising strategy




                                              14-10
 The Battle for Shelf Space
   Stockkeeping unit (SKU): specific
    product offering within a product line that is
    used to identify items within the line
   Slotting allowances: fees paid by
    manufacturers to secure shelf space from
    retailers for their products




                                                     14-11
 Customer Service Strategy
  Retailers must decide on the variety of
    services they make available for shoppers
     Examples include gift wrapping, bridal
      registry, return privileges, electronic
      shopping, and delivery and installation
     Objectives are to enhance shopper
      comfort and attract and retain customers




                                                 14-12
 Pricing Strategy
  Markup: The amount a retailer adds to a
    product’s cost to determine its selling price
     Determined by the services the retailer
       performs and the inventory turnover rate
  Markdown: The amount by which a
    retailer reduces a product’s original selling
    price




                                                    14-13
 Marshall’s
  Promoting its
    low price
    strategy




                   14-14
 Location/Distribution Strategy
   Planned shopping center: A group of
    retail stores planned, coordinated, and
    marketed as a single unit
   Four types of planned shopping centers:
     Neighborhood – “strip mall”
     Community – Washington Square
     Regional – Mall of America
     Power – stand-alone stores, single
       trading area
     Lifestyle – Bridgeport
     Company Outlets - Woodburn
                                              14-15
 Mall of America
   Combining
    shopping with
    entertainment
   Mall of America is
    one of the most
    visited destinations
    in the United
    States, attracting
    more visitors
    annually than
    Disney World,
    Graceland and the
    Grand Canyon
    combined.




                           14-16
 Promotional Strategy
  Retailers use a variety of promotional
    techniques to establish store images and
    communicate information about their stores
  Selling up: retailing selling technique in
    which salespeople try to persuade customers
    to buy higher-priced items than originally
    intended
  Suggestive selling: involves salespeople
    attempting to broaden a customer’s original
    purchase by adding related items,
    promotional products, and/or holiday or
    seasonal merchandise


                                                  14-17
 Store
  Atmospherics
  Physical
    characteristics
    and amenities
    that attract
    customers and
    satisfy their
    shopping needs
   Disney Stores
    borrow from their
    theme parks to
    create a familiar
    shopping
    environment.

                        14-18
             Types of Retailers

 Retailers can be categorized by:
  Form of ownership
  Shopping effort expended by customer
  Services provided to customers
  Product lines
  Location of retail transactions




                                          14-19
14-20
 Classification of
  Retailers by Form
  of Ownership
   Chain stores
   Independent
     Retailers
   Cooperatives
      Ace helps
       independent
       retailers
       compete with
       chains


                      14-21
 Classification by Shopping Effort:
  Classification system based on the reasons
  why consumers shop at particular retail
  outlets
   Retail stores can be classified as:
      Convenience retailers [7/11]
      Shopping stores [REI]
      Specialty retailers [Nordstrom]




                                               14-22
 Pier 1 Imports
  A shopping
    store




                   14-23
 The North Face
   A specialty
    retailer
    featuring
    outdoor
    clothing and
    equipment
   Their products
    are also sold at
    other specialty
    stores


                       14-24
 Classifying by Services Provided
  Self-service Store (e.g., Kmart)
  Self-selection Store (e.g., Winn-Dixie or
    Kroger grocery stores)
  Full-service Retailers (e.g., Dillard’s or
    Macy’s)




                                                14-25
 Classifying by Product Lines: This
  classification system groups stores by the
  product lines they carry.
   Specialty store: A retailer that typically
     handles only part of a single product line
   Specialty retailers carry their particular
     products in considerable variety




                                                  14-26
 Lady Foot Locker -- A specialty store




                                          14-27
 Limited-line store: A retailer that offers a
  large assortment within a single product line,
  or within a few related product lines
   IKEA home furnishings and Levitz furniture
   Category killers: retailers that combine
     huge selection and low prices within a
     single product line
      Home Depot and Office Depot




                                                   14-28
 Lowe’s
   A category
    killer which
    competes
    with the likes
    of Home
    Depot




                     14-29
 General merchandise retailers carry a wide
  variety of product lines, and stock them all in
  some depth
   Variety store: retailer that offers an
    extensive range and assortment of low-
    priced merchandise
   Department store: large store that offers
    a variety of merchandise, such as men’s
    and women’s clothing, appliances, linens,
    and furniture



                                                    14-30
 Sears
  The classic
    department
    store offering
    clothing,
    appliances,
    hardware, etc.




                     14-31
Mass merchandiser: store that stocks
 a wider line of goods than a department
 store, usually without the same depth of
 assortment within each line
  Discount house
  Off-price retailers
  Outlet malls
  Hypermarket
  Supercenters
  Showroom and Warehouse
    Retailers


                                            14-32
 Kmart
  Discount mass
   merchandiser
   selling
   prestigious
   brand names




                   14-33
 T.J. Maxx
   An off-price
    retailer




                   14-34
 Classification of Retail Transactions by Location
    Non-store retailing – Amazon.com, 800# sales

 Retail Convergence: The coming together of
  shoppers, goods, and prices, resulting in the blurring
  of distinctions between types of retailer and the
  merchandise mix they offer. [Similar merchandise
  available from multiple types of retail outlets.]

 Scrambled Merchandising: concept in which a
  retailer combines dissimilar product lines in an
  attempt to boost sales volume. [Walgreens sells
  groceries, develops photos, sells Hallmark cards and
  gift items]


                                                           14-35
         Wholesaling Intermediaries

 Includes not only wholesalers who assume
  title to the goods they handle, but also agents
  and brokers, who conduct wholesaling
  activities without taking title of the goods.

 Functions of Wholesaling Intermediaries
   Creating Utility
     Time utility
     Place utility
     Ownership/possession utility

                                                    14-36
Providing Services
  Wholesalers
   commonly provide
   marketing services
   that reflect the basic
   marketing functions
   of buying, selling,
   storing, transporting,
   providing market
   information,
   financing, and risk
   taking
   Plumbing wholesaler
    providing selling service
                                14-37
14-38
 Lowering Costs by Limiting Contacts
   Intermediaries that represent multiple
    suppliers cut buying and selling costs and
    reduce transaction time
   Firms can increase transaction efficiency
    by only having to contact one or two
    intermediaries, rather than hundreds of
    individual suppliers




                                                 14-39
14-40
 Types of Wholesaling Intermediaries




                                        14-41
 Manufacturer-Owned Facilities
  Sales branch – carries inventory and
    takes customer orders
  Sales office – no inventory, manages
    sales reps
  Trade fair – “Trade Show”, in food
    industry, FMI, NRA
  Merchandise mart- large grouping of
    permanent showrooms, mainly
    wholesaling, Chicago Merchandise
    Mart


                                          14-42
 Independent Wholesaling Intermediaries
    Merchant wholesaler: An independently owned
     intermediary that takes title to the goods it sells
        Rack Jobbers – specialized lines of
         merchandise [M&M Mars]
        Cash-and-Carry Wholesalers [“Cash & Carry in
         Portland]
        Truck Wholesalers [Frito Lay]
        Drop Shippers – take title, don’t handle [coal
         and lumber]
        Mail Order Wholesalers [McMaster Carr]



                                                           14-43
 Table 14.2 – P.466
   Comparison of the Types of Merchant
    Wholesalers and Their Services




                                          14-44
 Agents and Brokers: A second group of
  independent intermediaries who may or may not take
  possession of the goods, but never take title. They
  include:
    Commission merchants [producers’ agents –
     agriculture]
    Auction houses [used cars]
    Brokers [don’t control pricing or promotional
     funding, operate in specific territories - food
     industry]
    Selling agents [controls total marketing
     programs, textile industry]
    Manufacturer’s agents [independent reps, sell
     non-competing products, may have marketing
     responsibilities, paid commission]

                                                        14-45
 Table 14.3
   Services Provided by Agents and Brokers




                                              14-46
 Retailer-Owned Cooperatives and Buying
  Offices
  Retailers sometimes assume numerous
    wholesaling functions to reduce costs or
    provide special services
  Independent retailers sometimes band
    together to form buying groups to save
    through quantity purchases
  Large chains often establish centralized
    buying offices to negotiate large-scale
    purchases directly with manufacturers


                                               14-47
         Direct Marketing and Other
             Nonstore Retailing
 Direct Mail is a major component of direct
  marketing
  It comes in many forms, ranging from sales
    letters to video cassettes

 Direct Selling completely bypasses retailers
  and wholesalers
   Manufacturers set up their own channels to
    sell their products directly to consumers


                                                 14-48
 Direct-Response Retailer Customers can
  order merchandise by mail or telephone, by
  visiting a mail-order desk in a retail store, by
  computer or by fax
   The Retailer then ships the merchandise to
     the customer’s home or to a local store for
     pickup

 Telemarketing refers to direct marketing
  conducted entirely by telephone
   It is the most frequently used form of direct
    marketing


                                                     14-49
 Internet Retailing
   Many retailers operate from virtual
     storefronts on the World Wide Web,
     usually maintaining little or no inventory,
     ordering directly from vendors to fill
     customer orders received via E-mail

 Automatic Merchandising
  Retailing through vending machines
  About $25 billion worth of convenience
    goods are sold to Americans through 4.7
    million vending machines


                                                   14-50
End of Chapter Fourteen




                          14-51

				
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