16-1: Check Yourself 1. Food retailers include:
a.Supermarkets: a self-service food store
offering groceries, meat, and produce with
limited sales of nonfood items, such as health
and beauty aids and general merchandise.
b. Supercenters: the fastest growing retail
category, are large stores (150,000–220,000
square feet) that combine a supermarket with
a full-line discount Store.. By offering broad
assortments of grocery and general
merchandise products under one roof,
supercenters provide a one-stop shopping
experience.
c.Warehouse Clubs: large retailers (at least
100,000–150,000 square feet) that offer a
limited and irregular assortment of food and
general merchandise with little service at low
prices for ultimate consumers and small
businesses.
d. Convenience Stores: provide a limited
variety and assortment of merchandise at a
convenient location in 2,000–3,000 square
foot stores with speedy checkout. Milk, eggs,
and bread once represented the majority of
their sales, but now the majority of sales
come from gasoline and cigarettes.
2. General merchandisers include:
e.Department Stores: carry a broad variety and
deep assortment, offer customer services, and
organize their stores into distinct departments
for displaying merchandise.
f. Full-Line Discount Stores: offer a broad
variety of merchandise, limited service, and
low prices.
g. Specialty Stores: concentrate on a limited
number of complementary merchandise
categories and provide a high level of service
in relatively small stores. Specialty stores
tailor their retail strategy toward very specific
market segments by offering deep but narrow
assortments and sales associate expertise.
h. Drugstores: specialty stores that
concentrate on pharmaceuticals and health
and personal grooming merchandise.
i. Category Specialists: discount stores that
offer a narrow but deep assortment of
merchandise.
16-2: Developing a Retail Strategy
Using the Four Ps: Product
Ask students: What is the most important thing
that retailers do?
Answer: They provide assortments to customers.
Group activity: Divide the class into groups. Tell
them that the classroom represents a new store.
Have them identify a target market.
Ask them to decide what they are going to put
into the store. Have them consider both variety
(number of categories) and assortment (number
of SKUs within a category.)
16-3: Price Group activity continued: Now have them
decide the general price range for their store, and
justify their recommendation.
This video discusses the drop in Walmart’s
profits.
Video: “Wal-Mart’s Profit Falls 15% on Higher
Costs”
Ask students: Why are Walmart’s profits
dropping?
Ask students: What global factors are affecting
Walmart’s profits?
16-4: Promotion Discuss how promotions affect consumers’
perceptions of value, patronage intentions,
purchase, loyalty, and share of wallet devoted to a
particular retailer, both individually and in
combination.
Group activity continued: Tell the students they
have a fixed amount to spend on promotion,
including personal selling.
How would they divide up their promotional
dollar? Justify their recommendation.
16-5: Place In retailing, there are two aspects to “place.” The
first is location, and the second is supply chain
management.
Both are important. Location is important
because it is one of consumers’ most important
criteria in choosing a retailer and it is a very
long-term investment.
Group activity continued: Have students choose
a location and justify it.
Also, have them describe how they would design
their supply chain, i.e., use of wholesalers versus
distribution centers; direct store delivery versus
delivery to distribution centers; traditional
warehouses versus cross-docking, etc.
16-6: Walmart Faces Biggest
Civil Rights Suits
This video brings up some additional concerns
for retailers.
Walmart has had many issues with the way they
treat their employees.
Ask students if they are aware of any other
issues.
Note: Please make sure that the video file is
located in the same folder as the PowerPoint
slides.
16-7: Benefits of Stores for Consumers Ask students what they like to buy in stores vs.
catalog vs. online.
Ask students: Have you ever started shopping
online, and then visited the store to make the
actual purchase?
What kind of product did you buy using this
method?
16-8: Benefits of the Internet and
Omnichannel Retailing
Shopping over the Internet provides the
convenience offered by catalogs and other
nonstory formats.
However, the Internet, compared with store and
catalog channels, also has the potential to offer a
greater selection of products and more
personalized information about products and
services in a relatively short amount of time.
It also offers sellers the unique opportunity to
collect information about how consumers shop—
information that they can use to improve the
shopping experience across all channels.
16-9: How Does the Internet Improve
Multichannel Shopping?
The Internet can supply research.
Ask students: What information might Home
Depot gather from web visits and how they
would use it?
Students might mention that they will search for
products that the company does not currently
stock.
They might see products that consumers browse
often but purchase little. For instance, they might
look for lamps quite often but this is a low seller
for Home Depot.
What is it about the product that makes people
come looking and leave not buying?
16-10: Retailers Can Do More Online… This is NOT the online model but other way
retailers can add value through the web —they
can use it for PR and for delivering messages to
the consumer that they are not able to deliver
within the stores.
This web link is to a Zafu.com online video
regarding their CSR.
16-11: Perceived Risk in Internet
Shopping
Ask students When are you nervous to enter
your credit card information online?
How do they determine if a site is credible?
How do they feel about privacy?
16-12: Effective Omnichannel Retailing Consumers desire a seamless experience when
interacting with omnichannel retailers.
16-13: Check Yourself 1. Like other marketers, retailers perform
important functions that increase the value of
the products and services they sell to
consumers. These functions are classified into
the four Ps: product, price, promotion, and
place.
2. The relative advantages of the most
traditional retail channels are browsing,
touching, and feeling products, personal
service, cash and credit payment,
entertainment and social experience,
immediate gratification, and risk reduction.
3. Consumers desire a seamless experience
when interacting with multichannel retailers.
However, providing this seamless experience
for customers is not easy for retailers.
Because each of the channels is somewhat
different, a critical decision facing
multichannel retailers is the degree to which
they should or are able to integrate the
operations of the channels.
Additional Teaching Tips
This chapter explores the issues manufacturers consider when choosing retail partners. Students
evaluate the types of retailers available for distributing products and learn how manufacturers
and retailers work together to develop strategies.
The core component of this chapter is distribution intensity of: exclusive, selective, and
intensive. It is important to also point out that the type of distribution is ALSO dependent upon
the retail outlets or multi-channels that agree to stock the product. Products with high
involvement of decision making such as cars, HD TVs, appliances take up space in the
showroom and retailers do have a choice on whether they want to give up that space to your
brand or another manufacturer’s. Good channel relationships are key especially when it comes
to the retailer who will make decisions on how the product is presented to the target market.
The benefit to the manufacturer provided by using different channels is key and the application
questions in the chapter also give students an opportunity to apply these concepts.
Stores Catalogs Internet
Browsing Convenience Broader selection
Touching and feeling Information More information
Personal service Safety Personalization
Cash and credit Touch and feel attributes
Entertainment and social
interaction
Instant gratification
Risk reduction
This chapter is a good opportunity to stress CRM and the importance of retaining existing
customers. It is also a good chapter to mention customization of the product and the importance
of an integrated marketing effort.
Online Tip: Have students compare and contrast Internet retailer sets and evaluate the benefits.
Have them repeat this process for the same retailer’s store and catalogs.