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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.
8
Quiz Yourself
1 __________ reduce costs and maintain low prices by buying opportunistically from manufacturers
with excess inventory, offering limited assortments of household goods and groceries, as well as
health and beauty aids.
a. Category killers
b. Specialty stores
c. Factory outlets
d. Extreme-value retailers
e. Convenience stores
2 Jordan directs her salespeople to increase the company's share of wallet. Jordan is directing her
salespeople to
a. focus on increasing sales to their best customers.
b. focus on male consumers, and not female consumers.
c. sell more store brands and fewer private-label products.
d. become omnichannel salespeople.
e. expand retailing elasticity.
Chapter Case Study: Making Macy’s Meaningful: Moves by the Retail Chain to
Maintain Its Competitiveness
1 In which channels is Macy’s attempting to appeal to consumers?
2 What is Macy’s plan to attract Millennials?
• Macy’s has implemented a $400 million renovation effort for its flagship New York City store,
testing out various options that might attract more of the market of shoppers between the ages of
3 Do you shop at Macy’s? Why or why not?
Student answers will vary.
4 Using the factors for choosing retail partners outlined in the chapter, do you believe that Eva's line of
green cosmetics should attempt to get placement in Macy’s?
Department stores like Macy’s would be an excellent retail channel for Eva’s line of environmentally
friendly cosmetics.
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.
9
Since Eva is just starting out, providing an exclusive territory to Macy’s helps ensure enough inventory to
provide the buying public an adequate selection. By granting exclusive territories, Eva guarantees Macy’s
5 Develop a strategy for Macy’s to promote Eva's line of green cosmetics
Each Macy’s store will feature a “store within a store” concept called Eva’s. Each mini store will be in a
prominent location in the center core of Macy’s. It will have the signature look designed by Eva and the
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: exclusive, selective, and intensive. It is
important to point out that the type of distribution is ALSO dependent upon the retail outlets or
omnichannels that agree to stock the product. Products with high involvement of decision making such as
cars, HD TVs, and 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 Internet retailer sets and evaluate the benefits. Have them repeat
this process for the same retailer’s store and catalogs.
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.
10
Connect Activities
Activity
Type
Learning Objectives 17-
01
02
03
04
05
06
Types of Retailers
Click & Drag
X
Retailing: Staples, Inc.
Case Analysis
X
M&M’s: Multichannel Marketing
Video Case
X
X
Nordstrom Rack: Retail Strategy
Video Case
X
X
X
X
Making Macy’s Meaningful
Case Analysis
X
X
X
Is Big-Box Retailing Right for your Product?
Video Case
X
X
X
X
ISeeIt Video Case: Retail Strategy
Video Case
X
X
X
Types of Retailers
▪ Activity Type: Click & Drag
▪ Learning Objectives: 17-04
▪ Difficulty: Medium
▪ Activity Summary: The student is asked to categorize different retail chains according to the type of
retailers they represent.
Activity
▪ Introduction: Manufacturers need to understand the general characteristics of retailers to determine
the best channels for their product. There are many types of retailers and each type has its own
unique characteristics and set of challenges. The following activity reviews examples and
characteristics of food retailers and general merchandise retailers.
▪ Concept Review: Food retailing has changed dramatically in the past 20 years. The conventional
supermarket no longer dominates the food retailing landscape. The fastest growing sectors of the
food retail market are supercenters, warehouse clubs, convenience stores, and extreme value food
retailers.
General merchandise retailers focus on the distribution of household and lifestyle items. The major
types of general merchandise retailers are department stores, full-line discount stores, category
specialists, specialty stores, home improvement centers, off-price retailers, and extreme value
retailers.
Retailing: Staples, Inc.
▪ Activity Type: Case Analysis
▪ Learning Objectives: 17-06
▪ Difficulty: Medium
▪ Activity Summary: This case describes multichannel retailing initiatives undertaken by Staples.
Students answer questions relating chapter concepts to the case.
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.
11
Activity
▪ Introduction: Originally opened in 1986 by executive-turned-entrepreneur Tom Stemberg, Staples
has reached sales of greater than $23 billion. By evolving its original mission of slashing the costs
and reducing the hassle of running an office, Staples has become the world's largest office products
company. Review the discussion of Staples and its multichannel integration strategy and answer the
questions that follow.
▪ Concept Review: Retailing sits at the end of the supply chain, where marketing meets the consumer.
Regardless of how good a firm's strategy is or how great the product or service is, if it is not available
when and where the customer wants it, it will not sell. To function in multiple channels, retailers must
organize their operations carefully to ensure an integrated customer experience.
Follow-Up Activity
For some historical perspective, share this article with the class. It is a New York Times article from 1988
describing the new (at the time) trend of office supply superstores. Note all the names of superstore
chains that no longer exist; also note that the small office supply/stationery stores they mention have also
mostly vanished, unable to compete on price.
http://www.nytimes.com/1988/06/18/business/big-discount-stores-shake-up-retailers-of-office-
supplies.html
Staples wasn’t the first category specialist—for example, Home Depot was founded in 1978—but the
article makes it clear that, at the time, the concept wasn’t familiar to everyone.
Also, note that this was written six years before the start of the commercial Internet.
M&M’s: Multichannel Marketing
▪ Activity Type: Video Case
▪ Learning Objectives: 17-04, 17-06
▪ Difficulty: Medium
▪ Activity Summary: This case describes multichannel marketing initiatives undertaken by M&M’s.
After the video ends, students are asked questions about the video and related course concepts.
Activity
▪ Introduction: The traditional method for Mars, Inc., to get its merchandise to the final consumer is
through retailers. However, there are other options for delivery that have relative advantages from not
only the retailer's perspective, but from the manufacturer's and customer's perspective as well. Mars,
Inc. wants to take advantage of synergies that come from providing products through multiple
channels. As the video plays, answer the questions that appear on the screen.
▪ Concept Review: Retailing is the final touch point in the supply chain that acts as the primary
interface with the consumer. Regardless of how strong a firm's marketing strategy is, if the product or
service is not available when and where the customer wants it, the product or service will not sell. To
have better control over their interactions with consumers, many manufacturers have evolved their
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.
12
placement strategies to include multiple channels as distribution outlets to reach their customers. This
includes using stores, catalogs, and the Internet to sell merchandise and reach customers.
▪ Video: The video is presented to the student below the introductory information. The video plays
embedded on the page, after which questions are presented.
Follow-Up Activity
Visit the personalized M&M’s website in class (http://www.mymms.com/) and start creating an order. For
example, you might create one in your school colors, with the course number inscribed, or something
similar. Note the pricing, and also the limitations, and use this to talk about mass customization.
Nordstrom Rack: Retail Strategy
▪ Activity Type: Video Case
▪ Learning Objectives: 17-03, 17-04, 17-05, 17-07
▪ Difficulty: Medium
▪ Activity Summary: This case reviews the retail strategy followed by Nordstrom Rack. After the video
ends, students are asked questions about the video and related course concepts.
Activity
▪ Introduction: Since 1973, Nordstrom Rack has been the off-price division of fashion retailer
Nordstrom. Nordstrom Rack has been successful in applying the four Ps to its retail strategy. The
stores stock high-quality merchandise from well-known brands at discounted prices, creating the
“treasure hunt”: the search through ever-changing merchandise for “things customers didn’t know
they had to have when they walked in.” Nordstrom Rack also sells its products on its website
nordstromrack.com, and on a flash sale site called HauteLook.
▪ Concept Review: Retailing is the final touch point in the supply chain that acts as the primary
interface with the consumer. Regardless of how strong a firm's marketing strategy is, if the product or
service is not available when and where the customer wants it, the product or service will not sell.
Retailers focus on the four Ps to create their strategy. In addition, retailers may use multiple channels
to reach their customers. This often includes online approaches, such as websites, mobile apps, and
social media presence.
▪ Video: The video is presented to the student below the introductory information. The video plays
embedded on the page, after which questions are presented.
Follow-Up Activity
▪ Discuss the “treasure hunt” idea introduced in the video in more detail. Which benefits of in-store
shopping are related to the appeal of the “treasure hunt”?
▪ In small groups, ask the students to use the situational factors influencing consumer behavior (from
Chapter 6) to compare and contrast consumer experiences in Nordstrom and Nordstrom Rack. In
what situations might a consumer choose one store or the other, given that both stores sell the same
brands?
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.
13
▪ Explore the idea of “flash sale” stores like HauteLook. The following article discusses why flash sale
sites were initially popular, and why the business model does not look as robust today.
o http://www.businessoffashion.com/articles/intelligence/trouble-flash-sales
Making Macy’s Meaningful
▪ Activity Type: Case Analysis
▪ Learning Objectives: 17-02, 17-04, 17-05
▪ Difficulty: Medium
▪ Activity Summary: This case discusses strategies undertaken by Macy’s to build sales in an
increasingly challenging retail category. Students read the case and then apply chapter concepts to
the case information.
Activity
▪ Introduction: Macy’s, long a leading department store in the U.S., is trying a variety of new tactics to
attract shoppers to its stores in the face of a sales decline. The goal of this exercise is to test your
understanding of retail strategy by analyzing these initiatives, applying retail strategy frameworks from
the text. This activity is important because managers must understand how to serve customers in the
competitive retail environment, especially given increasing competition from online retailers.
Follow-Up Activity
Ask students to research how Macy’s is doing. Since this case was written, Macy’s has closed several
stores and is facing continuing problems. Here are two articles that were current at the time of this writing:
• http://money.cnn.com/2017/01/04/news/companies/macys-job-cuts-stock/
• http://nypost.com/2017/02/01/macys-sale-rumored-as-long-time-ceo-steps-down/
Is Big-Box Retailing Right for Your Product?
▪ Activity Type: Video Case
▪ Learning Objectives: 17-02, 17-03, 17-04, 17-06
▪ Difficulty: Medium
▪ Activity Summary: In an unusual business case study investigating a failure instead of a success,
this video discusses unsuccessful attempts by Vosges Haut-Chocolat to work with two large retail
chains. After the video ends, students are asked questions about the video and related course
concepts.
Activity
▪ Introduction: Vosges Haut-Chocolat, a luxury chocolate brand, introduced a mid-market brand called
Wild Ophelia to appeal to a different customer segment. Unfortunately, dealings with two large
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.
14
retailers interested in selling the product did not go well. The video explains what went wrong. This
activity is important because marketers often underestimate the challenges of selling a product
through a mass market retailer. While the opportunities can be huge, marketers must remember the
importance of choosing appropriate retailers to sell a product. The goal of this exercise is to test your
understanding of the issues involved in selecting retail partners.
▪ Video: The video is presented to the student below the introductory information. The video plays
embedded on the page, after which questions are presented.
Follow-Up Activity
Discuss the types of channel relationships exemplified in the video, and Vosges’ lack of power with these
large channel partners. Visit Vosges’ website and find out where it currently distributes Wild Ophelia
chocolates.
ISeeIt Video Case: Retail Strategy
▪ Activity Type: Video Case
▪ Learning Objectives: 17-03, 17-04, 17-05
▪ Difficulty: Medium
▪ Activity Summary: This video case explores retail strategy for a coffee shop.
Activity
▪ Introduction: Retailing is an important marketing activity that helps match products and services that
are created by businesses to the consumers who desire them. To create value (and charge a higher
price), retailers add value by offering products that consumers desire and are willing to pay for,,
providing access at the right time and place, making the purchase process easier, or having the
ability to customize products and services. The same holds true for the Coffee Collective. When
Martha was establishing her college-crowd focused atmosphere, she needed to identify retail items
that her customers wanted and expected to see. This includes the constant evaluation and
adjustment of retail offerings—such as the addition of single-serve organic dog biscuits—to make
sure that she is meeting the needs and expectations of her customers. She knows that she must
have an effective retail strategy that fits her business model and partner with suppliers that carry
products that fit with her target market.
▪ Video: The video is presented to the student below the introductory information. The video plays
embedded on the page, after which questions are presented.
