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PPT
13-16
p. 400
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Describe the major retailer marketing decisions.
Retailer Marketing Decisions
Segmentation, Targeting, Differentiation, and
Positioning Decisions
Retailers must first segment and define their target markets
and then decide how they will differentiate and position
themselves in these markets. Too many retailers fail to
define their target markets and positions clearly.
In contrast, successful retailers define their target markets
well and position themselves strongly.
Product Assortment and Services Decision
Retailers must decide on three major product variables.
1. Product assortment should differentiate the retailer
while matching target shoppers’ expectations.
2. Services mix can help set one retailer apart from
another.
3. Store atmosphere is another important element in
the reseller’s product arsenal.
Price Decision
Most retailers seek either:
High markups on lower volume (most specialty
stores); or
Low markups on higher volume (mass
merchandisers and discount stores).
Other pricing decisions:
Everyday low pricing (EDLP)—charging constant,
everyday low prices with few sales or discounts.
“High-low” pricing—charging higher prices on an
everyday basis, coupled with frequent sales and
other price promotions to increase store traffic,
clear out unsold merchandise, create a low-price
image, or attract customers who will buy other
goods at full prices.
Learning Objective
2
p. 400
Figure 13.1:
Retailer Marketing
Strategies
p. 401
Photo: In-N-Out
Burger
p. 402
Photo: Restoration
Hardware
Troubleshooting Tip
The decisions retailers need to make will be easily
understood with a review of Figure 13.1. It is very
clear in this figure that the marketing mix elements
studied earlier in the text are being applied in a
retail environment. Explain how the type of retail
organization chosen affects the marketing mix, and
vice versa.
p. 403
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13-23
p. 404
Promotion Decision
Retailers use any or all of the promotion tools—
advertising, personal selling, sales promotion, public
relations, and direct and social media marketing—to reach
consumers.
Place Decision
Retailers often point to three critical factors in retailing
success: location, location, and location!
It’s very important that retailers select locations that are
accessible to the target market in areas that are consistent
with the retailer’s positioning.
Location options include:
Central business districts were the main form of
retail cluster until the 1950s.
A shopping center is a group of retail businesses
planned, developed, owned, and managed as a unit.
Regional shopping centers, or regional
shopping malls, are the largest and most
dramatic shopping center. They contain from
50 to over 100 stores, including two or more
full-line department stores.
Community shopping centers contain between
15 and 50 retail stores. It normally contains a
branch of a department store or variety store, a
supermarket, specialty stores, professional
offices, and sometimes a bank.
Neighborhood shopping centers or strip malls
generally contain between 5 and 15 stores.
They are close and convenient for consumers.
p. 404
Photo: CVS
p. 404
Key Term:
Shopping center
Power centers are huge unenclosed shopping
centers consisting of a long strip of retail stores,
including large, freestanding anchors.
Lifestyle centers are smaller open-air malls with
upscale stores, convenient locations, and non-retail
activities such as dining and a movie theater.
The most recent lifestyle centers often consist of
mixed-use developments with ground-floor retail
establishments and apartment or condominiums
above.
Review Learning Objective 2: Describe the major retailer
marketing decisions.
Assignments, Resources
Use Discussion Question 13-2 here
Use Critical Thinking Exercise 13-6, 13-7 and 13-8
here
Use Critical Thinking Exercises 13-8 here
Use Marketing by the Numbers here
Use Marketing Ethics here
Use Additional Projects 1 and 2 here
Use Small Group Project 2 here
Use Individual Project 1 here
Use Outside Example 2 here
p. 405
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13-24
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13-25
Discuss the major trends and developments in retailing.
Retailing Trends and Developments
Retailers operate in a harsh and fast-changing environment,
which offers threats as well as opportunities. To be
successful, retailers need to choose target segments
carefully and position themselves strongly.
Tighter Consumer Spending
Following many years of good economic times for
retailers, the Great Recession turned many retailers’
fortunes from boom to bust. Even as the economy has
recovered, retailers will feel the effects of changed
consumer spending patters well into the future.
Beyond cost cutting and price promotions, many retailers
have also added new value pitches to their positioning.
Learning Objective
3
p. 405
Photo: TGI Friday’s
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Instead of relying on cost-cutting and price reductions,
retailers should focus on building greater customer value
within their long-term store positioning strategies.
New Retail Forms, Shortening Retail Life Cycles, and
Retail Convergence
New retail forms continue to emerge to meet new situations
and consumer needs, but the life cycle of new retail forms
is getting shorter.
Many new types of retailing forms begin as low-margin,
low-price, and low-status operations. New retail forms are
always emerging. Recent forms include online retailing,
pop-up stores, and flash sales sites.
Retail convergence occurs when different types of retailers
now sell the same products at the same prices to the same
consumers. It means greater competition for retailers and
greater difficulty in differentiating the product assortments
of different types of retailers.
The Rise of Megaretailers
Megaretailers are shifting the balance of power between
retailers and producers. A small handful of retailers now
control access to enormous numbers of consumers, giving
them the upper hand in their dealings with manufacturers.
Growth of Direct, Online, Mobile, and Social Media
Retailing
Today, thanks to advanced technologies, easier-to-use and
enticing online sites and mobile apps, improved online
services, and increasing sophistication of search
technologies, online retailing is thriving. It currently
accounts for only about 8 percent of total U.S. retail sales,
but is growing at a much brisker pace than retail buying as
a whole. Last year’s U.S. online retail sales grew 14
percent over the previous year versus a 2.2 percent increase
in overall retail sales.
Showrooming occurs when shoppers check out
merchandise at stores but then buy it online. The flip side is
webrooming in which consumers first check out
merchandise online, then buy it in a store.
p. 406
Photo: Pop-up
Stores
p. 407
Key Term:
Showrooming
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13-30
p. 409
p. 410
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13-33
The Need for Omni-Channel Retailing
An increasing share of the growth in online sales will go to
omni-channel retailers—the marketers who can
successfully merge the virtual and physical worlds.
Growing Importance of Retail Technology
Many retailers now routinely use technologies such as
touch-screen kiosks, customer-loyalty cards, electronic
shelf labels and signs, handheld shopping assistants, smart
cards, and self-scanning checkout systems. Beacon
technology and virtual reality are the newest technologies
retailers are experimenting with to enhance the in-store
shopping experience.
Green Retailing
Today’s retailers are increasingly adopting environmentally
sustainable practices.
They are greening up their stores and operations,
promoting more environmentally responsible products,
launching programs to help customers be more responsible,
and working with channel partners to reduce their
environmental impact.
Green retailing yields both top- and bottom-line benefits.
Global Expansion of Major Retailers
Retailers with unique formats and strong brand positioning
are increasingly moving into other countries.
Many are expanding internationally to escape mature and
saturated home markets. Most U.S retailers are still
significantly behind Europe and Asia when it comes to
global expansion. International retailing presents
challenges as well as opportunities.
Review Learning Objective 3: Discuss the major trends
and developments in retailing.
p. 408
Photo:
Omni-channel
retailing; Foot
Locker
p. 410
Photo: Retail
Technology
p. 411
Photo: IKEA
Assignments, Resources
Use Online, Mobile, and Social Media Marketing
here
Use Real Marketing 13.2 here
Use Company Case here
Use Additional Project 3 here
Use Individual Project 2 here
Use Think-Pair-Share 3 and 4 here
Use Video Case here
Troubleshooting Tip
Non-store retailing should be familiar to students,
but perhaps not by this name. Many students may
not realize that they are visiting a retailer when they
buy their textbooks or download music from
Amazon.com or Apple’s iTunes.
p. 411
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13-36
p. 412
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13-38
Explain the major types of wholesalers and their
marketing decisions.
WHOLESALING
Wholesaling includes all activities involved in selling
goods and services to those buying for resale or business
use.
Wholesalers are those firms engaged primarily in
wholesaling activities.
Wholesalers buy mostly from producers and sell mostly to
retailers, industrial consumers, and other wholesalers.
Wholesalers add value by performing one or more of the
following channel functions:
Selling and promoting: Wholesalers’ sales forces
help manufacturers reach many small customers at a
low cost.
Buying and assortment building: Wholesalers can
select items and build assortments needed by their
customers, thereby saving the consumers much
work.
Bulk-breaking: Wholesalers save their customers
money by buying in carload lots and breaking bulk
(breaking large lots into small quantities).
Warehousing: Wholesalers hold inventories, thereby
reducing the inventory costs and risks of suppliers
and customers.
Learning Objective
4
p. 411
Key Terms:
Wholesaling,
Wholesaler
p. 412
Photo: Grainger
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Transportation: Wholesalers can provide quicker
delivery to buyers because they are closer than the
producers.
Financing: Wholesalers finance their customers by
giving credit, and they finance their suppliers by
ordering early and paying bills on time.
Risk bearing: Wholesalers absorb risk by taking
title and bearing the cost of theft, damage, spoilage,
and obsolescence.
Market information: Wholesalers give information
to suppliers and customers about competitors, new
products, and price developments.
Management services and advice: Wholesalers
often help retailers train their salesclerks, improve
store layouts and displays, and set up accounting
and inventory control systems.
Assignments, Resources
Use Think-Pair-Share 4 here
Use Think-Pair-Share 5 here
p. 412
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p. 414
PPT
Types of Wholesalers
Wholesalers fall into three major groups.
1. Merchant wholesalers are the largest single group of
wholesalers, accounting for roughly 50 percent of
all wholesaling. Merchant wholesalers include two
broad types:
a. Full-service wholesalers provide a full set of
services.
b. Limited-service wholesalers offer fewer
services to their suppliers and customers.
The different types of limited-service
wholesalers perform varied specialized
functions.
2. Brokers and agents differ from merchant whole-
salers in two ways:
They do not take title to goods.
p. 412
Key Term:
Merchant
wholesaler
p. 412-414
Table 13.3
Major Types of
Wholesalers
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They perform only a few functions.
A broker brings buyers and sellers together and
assists in negotiation.
Agents represent buyers or sellers on a more
permanent basis. Manufacturers’ agents (also called
manufacturers’ representatives) are the most
common type of agent wholesaler.
3. Manufacturers’ and retailers’ branches and
offices are wholesaling by sellers or buyers
themselves rather than through independent
wholesalers.
p. 414
Key Terms: Broker,
Agent,
Manufacturers’ and
retailers’ branches
and offices
Assignments, Resources
Use Discussion Question 13-4 here
Use Additional Project 4 here
Use Think-Pair-Share 6 here
Troubleshooting Tip
The description of the types of wholesalers is brief
but important. Examples will help tremendously,
even though most wholesalers, by their nature and
as discussed in the text, are virtually unknown to
consumers. Some students, however, might be
familiar with distributors who service grocery
stores and other retail outlets from summer jobs or
those held by family members. Table 13.3 will be
helpful in this discussion.
p. 414
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p. 415
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Wholesaler Marketing Decisions
Wholesalers now face growing competitive pressures,
more-demanding customers, new technologies, and more
direct-buying programs on the part of large industrial,
institutional, and retail buyers. As a result, they have taken
a fresh look at their marketing strategies.
Segmentation, Targeting, Differentiation, and
Positioning Decisions
Like retailers, wholesalers must segment and define their
target markets and differentiate and position themselves
effectively—they cannot serve everyone.
Marketing Mix Decisions
p. 415
Figure 13.2:
Wholesaler
Marketing
Strategies
p. 415
p. 416
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13-49
Wholesalers add customer value though the products and
services they offer.
They are often under great pressure to carry a full line and
to stock enough for immediate delivery. But this practice
can damage profits.
Price is also an important wholesaler decision.
Most wholesalers are not promotion minded.
Their use of trade advertising, sales promotion, personal
selling, and public relations is largely scattered and
unplanned.
Distribution (location) is important—wholesalers must
choose their locations, facilities, and Web locations
carefully.
Trends in Wholesaling
The industry remains vulnerable to one of the most
enduring trends of the last decade—the need for
ever-greater efficiency. Recent economic conditions have
led to demands for even lower prices and the winnowing
out of suppliers who are not adding value based on cost
and quality.
The distinction between large retailers and large whole-
salers continues to blur.
Wholesalers will continue to increase the services they
provide to retailers—retail pricing, cooperative advertising,
marketing and management information reports,
accounting services, online transactions, and others.
Review Learning Objective 4: Explain the major types of
wholesalers and their marketing decisions.
Use Discussion Question 13-5 here
p. 416
Photo: Sysco
