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Chapter 17 - Retailing and Omnichannel Marketing Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
1
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
3
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
4
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?
Chapter 17 - Retailing and Omnichannel Marketing Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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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
Chapter 17 - Retailing and Omnichannel Marketing Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
6
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.
Chapter 17 - Retailing and Omnichannel Marketing Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
7
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.
