END OF CHAPTER MATERIAL
Discussion and Critical Thinking
Discussion Questions
11.1. Define the concept of shopper marketing and explain why it has grown in prominence.
(AACSB: Communication)
Answer:
Retailers play an important role in connecting brands with consumers in the final phases of
the buying process and at the point of purchase. In fact, many marketers are now embracing
the concept of shopper marketing, focusing the entire marketing process—from product
and brand development to logistics, promotion, and merchandising—toward turning shoppers
into buyers as they approach the point of sale. Of course, every well-designed marketing
11.2. Explain how retailers can be classified based by the amount of service offered and
discuss an example of each retailer type. (AACSB: Communication; Reflective Thinking)
Answer:
Different types of customers and products require different amounts of service. To meet these
varying service needs, retailers may offer one of three service levels: self-service, limited
service, and full service. Self-service retailers serve customers who are willing to perform
their own locate-compare-select process to save time or money. Self-service is the basis of all
11.3. Name and describe the three types of off-price retailers. How do off-price retailers differ
from discount stores? (AACSB: Communication)
Answer:
The three main types of off-price retailers are independents, factory outlets, and warehouse
clubs. Independent off-price retailers either are independently owned and run or are
divisions of larger retail corporations. Examples include store retailers such as TJ Maxx,
Marshalls, and HomeGoods, all owned by TJX Companies, and online sellers such as
A discount store (for example, Target, Kohl’s, or Walmart) sells standard merchandise at
lower prices by accepting lower margins and selling higher volume. The early discount stores
11.4. Name and describe the three major groups of wholesalers. (AACSB: Communication;
Reflective Thinking)
Answer:
Wholesalers fall into three major groups: merchant wholesalers, brokers and agents, and
manufacturers’ and retailers’ branches and offices. Merchant wholesalers are the largest
single group of wholesalers and include two broad types: full-service wholesalers and
Brokers and agents differ from merchant wholesalers in two ways: They do not take title to
goods, and they perform only a few functions. Like merchant wholesalers, they generally
11.5. Compare and contrast brokers and agents with merchant wholesalers. (AACSB:
Communication; Reflective Thinking)
Answer:
Brokers and agents differ from merchant wholesalers in two ways: They do not take title to
goods, and they perform only a few functions. Like merchant wholesalers, they generally
Critical Thinking Exercises
11.6. In a small group, present a plan for a new retail store. Who is the target market? Describe
the merchandise, atmospherics, price points, services provided, location, and how you
would promote your retail store. Describe how you will differentiate your store from
competitors. (AACSB: Communication; Reflective Thinking)
Answer:
11.7. Visit a local mall and evaluate five stores. What type of retailer is each of these stores?
What is the target market for each? How is each store positioned? Do the retail
atmospherics of each store enhance this positioning effectively to attract and satisfy the
target market? (AACSB: Communication; Reflective Thinking)
Answer:
Students’ responses will vary depending on the stores selected. An example is Anthropologie,
which is a trendy clothing and homeware store targeted toward young women. The stores
The types of retailers are specialty store, department store, supermarket, convenience store,
11.8. Identify a retailer that is currently struggling. Discuss why it is having difficulties and
suggest ways to turn things around. (AACSB: Communication; Reflective Thinking)
Answer:
Students should not have a problem finding retailers that are struggling. The chapter
discusses challenges facing Sears. Other examples include J.C. Penney, Radio Shack, Best
For another source on struggling retailers, see “Tale of 4 Struggling Retailers,” available at
Apparel retailers targeting teens are shuttering many stores as well. Abercrombie & Fitch and
Aeropostale are discussed in the previous sources, and the following source also discusses
Minicases and Applications
Online, Mobile, and Social Media Marketing: Local Retailers
It seems you can’t get away from the buzz of online, mobile, and social media marketing from
the likes of Amazon, Walmart, Nordstrom, and other large retailers. But what about the small
independent retailers? Are they also getting on the online, mobile, and social media bandwagon?
Some independent retailers are using these tools. For example, a convenience store owner in
Miami tweets a picture to 7,000 followers of a new beer he just stocked that morning, and by late
afternoon customers come streaming in to check it out. Emerson Salon in Seattle sources 75
percent of its business from Facebook, Twitter, and its blog. Butter Lane cupcake bakery in New
York City has found success using social media as well. Although these retailers have embraced
online, mobile, and social media marketing, to most small retailers, using Facebook, Twitter,
Pinterest, Tumblr, Groupon, Instagram, Yelp, Foursquare, and other digital media can seem
downright intimidating.
11.9. Find an example of a local retailer in your community that uses online, mobile, and social
media marketing. Interview the owner of the store or restaurant and ask about the
challenges and successes they’ve experienced when implementing this strategy.
(AACSB: Communication; Use of IT; Reflective Thinking)
Answer:
Students’ examples will vary. Even in small communities, retailers can use social media
11.10. Create a presentation to give to local retailers explaining how they can effectively use
online, mobile, and social media marketing to engage customers and enhance their
business. (AACSB: Communication; Reflective Thinking)
Answer:
Students’ presentations and recommendations will vary. Some useful sources for using
online, mobile, and social media marketing for small retailers are:
This blog suggests sharing employee recommendations; telling customers what’s new in
Eilene Zimmerman, “Small Retailers Open Up Storefronts on Facebook Pages,” New York
This article suggests getting started by opening a Facebook storefront; using your
Ellen Davis, “Five Tips for Small Retailers to Grow Their Brands,” Retail’s BIG Blog, January
21, 2013, http://blog.nrf.com/2013/01/21/five-tips-for-small-retailers-to-grow-their-brands/.
Suggestions include: Facebook isn’t free – spend money on it; look for reasons to
Jamie Saine, “Want to Have a Successful Retail App? Innovate,” UTest, January 9, 2014,
Marketing Ethics: Lilly for Target
The Lilly Pulitzer brand of brightly-colored dresses and resort-themed designer items is the
uniform of the preppy, Palm Beach set. Indeed, only select young women belonging to certain
sororities in certain communities are allowed discounts on the $100-$500 items. But Target
created a buying frenzy by debuting its Lilly for Target collection in April 2015. Target’s Pulitzer
line comprised 250 items, such as Lilly dresses at $40, which sold out within minutes of launch,
crashed the store’s Web site and created a firestorm of negative online comments from
customers. The long lines outside stores caused one manager to name the event “Preppy Black
Friday,” likening it to the frenzied shopping day after Thanksgiving known as Black Friday.
Most shoppers went home empty-handed because others scooped up as much as they could,
emptying the racks within minutes. Items then sold on eBay for much higher prices. This type of
launch is not new for Target. In 2011, the retailer launched a line of Missoni items priced at
$30-$40. Missoni’s distinctive zig-zag and geometric-patterned knitwear, shoes, and houseware
items normally sell for hundreds of dollars at retailers such as Bloomingdale’s and Saks Fifth
Avenue. During the Missoni event, shoppers grabbed goods by the armload, even poaching items
from others’ shoppers’ carts. While some shoppers went away happy, many more were not. In
both merchandise promotions, Target officials announced the sold-out items would not be
replenished.
11.11. Is it ethical for retailers to create a promotion but not have sufficient merchandise for all
shoppers who want to buy the items? (AACSB: Communication; Ethical Reasoning)
Answer:
Students’ opinions will vary. Oftentimes there are limited quantities of deeply promoted
11.12. Is it smart for Target to create such shopping frenzies even though some customers are
dissatisfied? Explain why or why not. (AACSB: Communication; Reflective Thinking)
Answer:
Students’ answers will vary. Some will argue that it created considerable publicity for Target,
Marketing by the Numbers: Stockturn Rate
Retailers need merchandise to make sales. In fact, a retailer’s inventory is its biggest asset. Not
stocking enough merchandise can result in lost sales, but carrying too much inventory increases
costs and lowers margins. Both circumstances reduce profits. One measure of a reseller’s
inventory management effectiveness is its stockturn rate (also called inventory turnover rate for
manufacturers). The key to success in retailing is realizing a large volume of sales on as little
inventory as possible while maintaining enough stock to meet customer demands.
11.13. Refer to Appendix 3, Marketing by the Numbers, and determine the stockturn rate of a
retailer carrying an average inventory at cost of $850,000, with a cost of goods sold of
$1,800,000. (AACSB: Communication; Analytical Reasoning)
Answer:
cost of goods sold
Stockturn rate = ———————————
average inventory at cost
11.14. If this company’s stockturn rate was 4.5 last year, is the stockturn rate calculated above
better or worse? Explain. (AACSB: Communication; Reflective Thinking)
Answer:
The higher the stockturn rate, the higher the management efficiency and company