978-1259709074 Chapter 17 Part 1

Chapter 17 – Retailing and Omnichannel Marketing Marketing 6th

McGraw-Hill Education.

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Chapter 17

Retailing and Omnichannel Marketing

Tools for Instructors

• Brief Chapter Outline

• Learning Objectives

• Extended Chapter Outline with Teaching Tips

• Answers to End of Chapter Learning Aids

• Chapter Case Study

• Additional Teaching Tips

• Connect Activities

Brief Chapter Outline

Choosing Retailing Partners

Identify Types of Retailers

Developing a Retail Strategy Using the Four Ps

Benefits of the Internet and Omnichannel Retailing

Chapter Case Study: Making Macy’s Meaningful: Moves by the Retail Chain to Maintain Its

Competitiveness

Learning Objectives

LO17-1 Discuss the four factors manufacturers should consider as they develop their strategy for

working with retailers.

When they initiate the decision process for choosing retail partners, manufacturers determine how likely it

is that certain retailers would carry their products and whether target customers expect to find their

products for sale at those retail locations. Next, manufacturers need to identify types of retailers that

would be appropriate locations for their products. After identifying likely and appropriate retailers,

LO17-2 Outline the considerations associated with choosing retail partners.

Manufacturers often start by noting the basic channel structure, which includes the level of vertical

integration, the relative strength of the retailer and the manufacturer, and the strength of the brand. They

LO17-3 List the three levels of distribution intensity.

Intensive distribution intensity means the product is available virtually everywhere, in as many places as

will agree to carry it. In an exclusive distribution intensity strategy, the manufacturer allows only one

LO17-4 Describe the various types of retailers.

Chapter 17 – Retailing and Omnichannel Marketing Marketing 6th

McGraw-Hill Education.

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Retailers generally fall into one of three categories: food retailers, general merchandise retailers, or

service retailers. Each of the categories consists of various formats, including supermarkets,

supercenters, warehouse clubs, convenience stores, department stores, discount stores, specialty

LO17-5 Describe the components of a retail strategy.

To develop a coordinated strategy—which represents a key goal for an effective channel partnership

Ps in conjunction: product, place, promotion, and price.

LO17-6 Identify the benefits of omnichannel retailing.

The various types of retail channels—stores, catalogs, and the Internet—all offer their own benefits and

limitations, including those related to availability, convenience, and safety, among others. If a retailer

adopts an omnichannel strategy, it can exploit the benefits and mitigate the limitations of each channel

Extended Chapter Outline with Teaching Tips

I. Choosing Retailing Partners

A. Channel Structure

B. Customer Expectations

C. Channel Member Characteristics

D. Distribution Intensity

1. Intensive Distribution

2. Exclusive Distribution

3. Selective Distribution

Progress Check: Several questions are offered for students to check their understanding of core

concepts.

1. What issues should manufacturers consider when choosing retail partners?

Answer: When choosing retail partners, manufacturers must look at the basic channel structure,

2. What are the differences among intensive, exclusive, and selective levels of distribution intensity?

Chapter 17 – Retailing and Omnichannel Marketing Marketing 6th

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Answer: Intensive distribution strategy is designed to place products in as many outlets as

possible. Manufacturers also might use an exclusive distribution policy by granting exclusive

II. Identify Types of Retailers

A. Food Retailers

1. Supermarkets

2. Supercenters

3. Warehouse Clubs

4. Convenience Stores

5. Online Grocery Retailers

B. General Merchandise Retailers

1. Department Stores

2. Full-Line Discount Stores

3. Specialty Stores

4. Drugstores

5. Category Specialists

6. Extreme-Value Retailers

7. Off-Price Retailers

C. Service Retailers

Progress Check: Several questions are offered for students to check their understanding of core

concepts.

1. What strategies distinguish the different types of food retailers?

Answer: The different types of food retailers include supermarkets, supercenters, warehouse

clubs, convenience stores, and online grocery retailers. Perishables including meat, produce,

baked goods, and dairy products account for almost 54 percent of supermarket sales and

typically have higher margins than packaged goods do. By offering broad assortments of grocery

2. What strategies distinguish the different types of general merchandise retailers?

Answer: Department stores are retailers that carry a broad variety and deep assortment of

merchandise, offer customer services, and organize their stores into distinct departments for

displaying merchandise. Full-line discount stores are retailers that offer a broad variety of

Chapter 17 – Retailing and Omnichannel Marketing Marketing 6th

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manufacturer’s suggested retail price (MSRP).

3. Are organizations that provide services to consumers retailers?

Answer: Services retailers, or firms that primarily sell services rather than merchandise, are a

III. Developing a Retail Strategy Using the Four Ps

A. Product

B. Price

C. Promotion

D. Place

IV. The Internet and Omnichannel Retailing

A. Deeper and Broader Selection

B. Personalization

1. Personalized Customer Service

2. Personalized Offering

C. Expand Market Presence

D. Integrated CRM

E. Brand Image

F. Pricing

G. Supply Chain

Progress Check: Several questions are offered for students to check their understanding of core

concepts.

1. What are the components of a retail strategy?

Answer: Like other marketers, retailers perform important functions that increase the value of the

product, price, promotion, and place.

2. What are the advantages of traditional stores versus Internet-only stores?

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Answer: The relative advantages of the most traditional retail channels are browsing, touching,

3. What challenges do retailers face when marketing their products through multiple channels?

Answer: Consumers desire a seamless experience when interacting with omnichannel retailers.

However, providing this seamless experience for customers is not easy for retailers. Because

Answers to End of Chapter Learning Aids

Marketing Digitally

1 How do JCrew.com and Gap.com provide value to their customers beyond the physical

products that they sell? Why would a customer purchase online instead of going to the store?

Under what circumstances would the customer prefer a store-based experience?

Multichannel retailers sell merchandise in more than one retail channel (i.e. store, catalog, and Internet);

the question asks students to consider why.

Both Jcrew.com and Gap.com use a multichannel strategy that includes their website and retail store

locations, and physical catalogs that the consumer can receive through the mail to sell its products.

Consumers tend to buy more from multichannel retailers, the company can collect information about

2 Select a familiar omnichannel retailer. Evaluate its website in terms of how well it provides

value to its customers. Do you believe that offering multiple selling channels to customers

enhances their shopping experience? How does it help the retailer? Explain your answer.

This question allows the student to evaluate omnichannel retailers as well as customer service.

Student answers will vary. Students should evaluate the website in terms of how well it provides value to

Marketing Applications

1 Does Reebok pursue an intensive, an exclusive, or a selective distribution intensity strategy?

Would you suggest any changes to this strategy?

Reebok likely uses a selective distribution strategy. A selective distribution lies between the intensive and

exclusive distribution strategies; companies that engage in selective distribution use a few selected

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2 Assume that AG, the designer jeans company, has decided to sell expensive wristwatches for

men and women. What factors should it consider when developing its strategy for choosing

retail partners?

This question challenges the student to consider aspect of the retail store that may impact the brand’s

image. The retail partners should be chosen selectively so that the retail outlet matches the brand image

3 Some argue that retailers can be eliminated from the distribution channel because they only

add costs to the final product without creating any value-added services in the process. Do

you agree with this perspective? Are consumers likely to make most purchases directly from

manufacturers in the near future? Provide justification for your answers.

Students must offer an opinion of the future of retailers and therefore should think about the ways in

which retailers add value and whether manufacturers could provide such value. Students also might

address the relative power of retailers in the value chain currently as compared with the past. Retailers

could not be eliminated from the distribution channel, because they provide value-added services that

justify their associated additional costs. Such value-added services include aggregating disparate

stay.

4 Assume you have been given some money but told that it must be invested in a retailer’s

stock. In which type of retailer would you choose to invest? Which specific retailer? Provide a

rationale for your answers.

This question leads the student to think of the successful aspects of retail outlet and potential growth

opportunities.

5 Provide examples of how manufacturers work with retailers to jointly plan and implement the

four Ps.

Manufacturers and retailers do work jointly to develop the four Ps. The manufacturer is concerned with

how the brand and product is presented in the marketplace and the retailer is concerned with driving

sales and building a product assortment that is favorable to the customer. The two should work together

to effectively implement a marketing mix that meets the needs of both parties.

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6 Why have so many brick-and-mortar retailers adopted a omnichannel strategy?

This allows the student to evaluate online stores and the importance of an omnichannel strategy.

Brics-and-mortar retailers are adopting a multichannel strategy to allow a broader opportunity for

7 You can purchase apparel at a discount store, specialty store, category specialist, off-price

retailer, department store, or Internet-only store. From which of these types of stores do you

shop? Explain why you prefer one type of store over another.

A discount store offers a broad variety of merchandise, limited service, and low prices. A specialty store

concentrates on a limited number of complementary merchandise categories and a high level of service

in relatively small stores.

Off-price retailers offer an inconsistent assortment of brand-name merchandise at low prices. Department

8 Should Tana, a young entrepreneur who is launching a new line of environmentally friendly

(green) cosmetics, sell through a physical store, catalog, or Internet? Explain two key benefits

of each channel for her business.

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

9 Name a retailer from which you have received personalized service, product, or promotion

offerings online. What form of personalization did you receive? Did the personalization

influence your purchase decision? Explain why or why not.

Student answers will vary.