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END OF CHAPTER MATERIAL
Discussion Questions
13-1 Define omni-channel retailing and explain its connection to shopper marketing. (AACSB:
Communication)
Answer:
These days, shopper marketing and the “point of purchase” go well beyond in-store buying. They
involve consumers working across multiple channels as they shop. Influencing consumers’ buying
decisions calls for omni-channel retailing, creating a seamless cross-channel buying experience that
integrates in-store, online, and mobile shopping. Today’s consumers are increasingly omni-channel
13-2 How would you describe the process of devising a workable retail marketing mix? (AACSB:
Communication)
Answer: A retail marketing mix involves considering the traditional marketing mix in terms of the
retail environment. It also means considering the range of products or services that are being offered.
13-3 Distinguish between a warehouse club and a factory outlet. What is distinctive about them?
(AACSB: Communication)
Answer: A warehouse club is usually a no-frills environment that sells both food and non-food
products in bulk at discount prices. They may focus on specific types of products, but more often they
A factory outlet tends to be operated by manufacturers to sell their returns or production overruns at
13-4 Does a business need agents and brokers? (AACSB: Communication; Reflective Thinking)
Answer:
They may if the service that they offer is different, and it may depend on the nature of the market. A
broker brings buyers and sellers together and helps to facilitate negotiations. At no point do brokers
13-5 In January 2017, UK retailer Tesco bought the wholesaler Booker. Why would they do this?
(AACSB: Communication; Reflective Thinking)
Answer: This was a deal worth in excess of $4.6 billion, but it meant
a better range of food for both retail and wholesale customers.
Tesco’s entry into the non-consumer market (Booker supplies independent retailers, caterers, and
Critical Thinking Exercises
13-6 You need a new pair of jeans and you have several retail options. From Table 13.1, choose three
different major store retailer types and select a specific store for each type chosen. Visit each store
and describe each store’s segmentation and positioning strategy and retail marketing mix—product,
price, place, and promotion. How do the product assortments differ? What is each store’s pricing
approach? What promotional tools are used? Discuss store locations. (AACSB: Communication;
Reflective Thinking; Use of IT)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an
13-7 In a small group, present a plan for a new retail store. Who is the target market? Describe the
merchandise, atmospherics, price points, services provided, location, and how you would promote
your retail store. Describe how you will differentiate your store from competitors. (AACSB:
Communication; Reflective Thinking)
Answer:
Student answers will vary. Addressing all these questions will aid students in understanding the
number of decisions that retailers must make when deciding to open a new store. Until they put
Some stores, such as Abercrombie & Fitch, target teens and young adults and design their stores to
appeal to this segment. Trendy clothing, vivid graphics, loud music, “pushing the envelope,” and dark
13-8 Identify a retailer that is currently struggling. Discuss why it is having difficulties and suggest ways
to turn things around. (AACSB: Communication; Reflective Thinking)
Answer:
Students should not have a problem finding retailers that are struggling. The chapter discusses
challenges facing Sears. Other examples include Best Buy, Kohl’s, Kmart, Macy’s and Gap (see
For another source on struggling retailers, see “Tale of 4 Struggling Retailers,” available at
http://triblive.com/business/headlines/7307011-74/stores-aeropostale-company#axzz3YSMLnLBW;
Apparel retailers targeting teens are shuttering many stores as well. Abercrombie & Fitch and
Aeropostale are discussed in the previous sources, and the following source also discusses another
APPLICATIONS AND CASES
Online, Mobile, and Social Media Marketing: Skipping the Checkout Line
The convenience of running to the store for a few grocery items can be hampered by long checkout lines.
The creative geniuses at Selfycart solved this issue by developing an app that allows shoppers to browse,
scan, and pay for products in participating stores using their mobile devices without waiting in line.
Selfycart’s technology continues to change, including a virtual shopping cart, shopping lists, historical
purchase information, list sharing, and a coupon portal that virtually clips coupons. Selfycart also
developed a daily deal section that offers discounts and special offers specific to each store. Selfycart will
eventually introduce online ordering, so consumers can add products to a virtual shopping cart, pay, and
arrange store pick-up at a specified time. Selfycart continues to discover new ways to create value for its
users. Suddenly, skipping the line is an extremely appealing prospect!
13-9 Investigate the Selfycart app. What benefits and challenges will stores face in introducing Selfycart
or any other mobile checkout app. (AACSB: Communication; Use of IT; Reflective Thinking)
Answer:
Benefits include creating value for the customer resulting in customer retention – quick checkout and
no lines. Stores will have a history of customer purchases and the ability to build promotions and
13-10 If Selfycart or a similar mobile checkout app was available at your grocery store, would you use it?
What benefits would you gain by using this new technology? Discuss the challenges you would face.
(AACSB: Communication; Reflective Thinking)
Answer:
Students’ answers about using the app will depend on their comfort with new technology. The
benefits and challenges for customers are some of the same faced by retailers. Challenges include
On the other hand, using the app is free. Other benefits include avoiding checkout lines and storing
information such as special promotions, shopping lists, receipts, and payment mechanism.
Marketing Ethics: Footloose and Tax-Free
In the United Kingdom, in the summer of 2013, there were mass protests against several global brands
operating in the country. Starbucks, Google, Amazon, and Vodafone immediately came under fire. Shortly
afterward, the Arcadia Group, Boots, and Fortnum & Mason were singled out for attention. The reason:
they were all avoiding paying UK taxes on UK sales. Everything they were doing was legal, however; it
was tax avoidance, not tax evasion. Starbucks, despite sales of almost $500 million, had paid no
corporation tax. It was instead paying royalties to a Dutch sister company, buying coffee beans in
Switzerland, and paying extortionate interest on loans to other parts of the business. Meanwhile, Amazon,
enjoying sales of $5.5 billion, had somehow contrived to pay less than $3 million in tax. Similarly,
Google, with a turnover of $640 million, had paid under $10 million in tax. How is this legally achieved?
The first tried-and-tested method is to locate facilities in low-tax jurisdictions, as when Starbucks located
its coffee wholesaling business in Switzerland. Google’s UK operation is actually based in the Republic
of Ireland and Bermuda. The second method is known as transfer pricing. By locating factories, services,
and distribution in low-tax countries, the business is able to bill the subsidiary in a high-tax country. In
effect, the money is siphoned out of the high-tax country into a low-tax one.
13-11 Why do global businesses use such strategies? Are the financial benefits greater than the loss in
customer confidence and trust? (AACSB: Communication; Reflective Thinking)
Answer:
This is very much a moral debate rather than a legal one as these global companies are not breaking
any laws. However, a case can be made that they are breaking the spirit of the law. Starbucks actually
offered to pay a small amount of “tax” on a voluntary basis. The effect of so-called tax shaming was
obviously significant to them. In avoiding tax, the companies ran the risk of having their reputations
13-12 Consider the Marketplace Fairness Act of 2013, which would enable state governments in the
United States to collect sales taxes from online retailers. Discuss the impact this act will have on
small retailers. (AACSB: Communication; Ethical Reasoning; Reflective Thinking)
Answer:
By enabling US state governments to collect sales taxes from online retailers with no physical
presence in their state, the act was intended to level the playing field between small retailers and
online retailers.
Marketing by the Numbers: Inventory Management
Stock turnover is a way to measure stock performance. It is an indication of the number of times the stock
has been replaced over a given period of time. This is a measurement of sales performance too, as the
higher the rate, the better the stock, and the business, is performing. If the rate is low, then the stock is
taking some time to sell; as the business has cash tied up in the stock, its cash flow is affected. In order to
work out stock turnover, it is necessary to calculate the value of the opening stock and the value of the
closing stock over a period of time.
13-13 Refer to Appendix 2, “Marketing by the Numbers,” and determine the average stock of a business
with an opening stock of $24,000 and a closing stock of $36,000. (AACSB: Communication; Analytical
Thinking)
Answer:
Average stock value
¿(opening+closing stock )×0.5 .
The calculation is
$24,000+$36,000 ×0.5=$30,000
.
13-14 If a company has sold goods worth $210,000, what is the stock turnover ratio? Is this a good or bad
ratio in your opinion? (Objective 3) (AACSB: Written and Oral Communication; Reflective
Thinking)
Answer:
Stock turnover ratio =
Cost of goods sold
Average stock holding
The calculation is
$210,000
$30,000 =7×.
Students should state that this will depend on the industry. Walmart, for example has a stock turnover
7=52
COMPANY CASE NOTES
Bass Pro Shops: Creating Nature’s Theme Park for People Who Hate to Shop
Synopsis
Outdoor-products megaretailer Bass Pro Shops has built an empire by seemingly breaking the rules of
retail. With more than 90 retail stores throughout the United States and Canada, the privately-held
Springfield, Missouri-based company reeled in $4.3 billion in revenues last year—nearly $50 million per
store—making it the nation’s number one outdoor-products retailer. Going against common retail
wisdom, Bass Pro Shops stores are enormous and packed to the rafters with overhead. Even more daring,
the chain has achieved retail success by targeting customers who hate to shop. The typical Bass Pro Shops
customer is a reclusive male outdoorsman who yearns for the great outdoors but detests jostling crowds
and shopping. Bass Pro Shops has accomplished this impossible task by executing a two-hook strategy:
delivering unparalleled variety of product under one roof and creating a retail experience that basically
amounts to a natural history theme park.
Teaching Objectives
The teaching objectives for this case are to:
1. Classify a retailer according to the different retailer types.
2. Understand how segmentation, targeting, differentiation, and positioning apply to retailers.
3. Learning the connection between segmentation/targeting and the retail marketing mix.
4. Analyze a retailer’s success factors.
Discussion Questions
13-18 Define Bass Pro Shops’ targeting strategy. Does the chain provide a truly differentiated experience?
Based on the four types of targeting strategies outlined in the text, there is no question that Bass Pro
Shops (BPS) executes a differentiated strategy. Some might argue that because its primary customer
is the “reclusive male outdoorsman who yearns for the great outdoors but detests jostling crowds and
shopping,” BPS really pursues more of a concentrated strategy. However, BPS actually targets
numerous different consumer segments:
Reclusive male outdoorsman. This is a huge category, and not all are created equal. BPS
seems to further segment this core customer segment and target sub-segments of it by
focusing on these factors:
oActivities – hunting, fishing, camping, and other outdoor activities not mentioned in the case like hiking,
oGeographic – not mentioned in the case, but BPS carries different kinds of gear and apparel depending
oDemographic – again, not mentioned in the case, but BPS certainly carves up the male outdoorsman into
The second part of this question, does BPS truly provide a differentiated experience, there might be
more than one take on this. Based on the answer given so far, BPS clearly differentiates its marketing
mix across numerous segments. But relative to the competition, some might say that BPS and
Cabela’s are far too similar to qualify as truly different from one another. However, consider a few
factors:
BPS is heavier on fishing; Cabela’s is heavier on hunting.
Neither company builds stores right next to each other. Thus, they have differentiated
BPS has a better store-owned brand strategy, including its boat division/brands.
Last but not least, as of the writing of this case, BPS has purchased Cabela’s for $5.5
billion (announced October 3, 2016). As of the writing of this note, BPS asserts that both
13-19 Describe how Bass Pro Shops became the nation’s leading outdoor retailer based on the retail
marketing mix.
Product – Inventory across numerous outdoor activities in more variety (breadth and depth) than any
other retailer. Store brands.
13-20 It terms of the major types of retailers, how would you classify Bass Pro Shops?
Amount of Service – limited service
13-21 Why is Bass Pro Shops succeeding while Cabela’s is floundering?
This question should lead to a healthy discussion on factors that contribute to marketing success
since these two companies are so similar. (Ask students how many have been to both retailers. Then
Store brands –BPS has likely made better use of the store brand strategy. In fact, it may be
that BPS’s early strategy of vertical integration through developing what essentially amounts
Somewhat different customer types – is fishing more lucrative than hunting? There is no way
More entertainment – While Cabela’s incorporates eating and activities into its retail
experience, its food services are contained within a snack bar area within its stores. Cabela’s
These may be the primary differences. It is difficult to identify other aspects of the retail marketing
mix that account for BPS’s success and Cabela’s struggles. What may be more likely are the factors
that lie below the surface that are not readily observable to the casual observer, such as management
styles, corporate culture, financial strategies, accounting practices, negotiating on price/cost with
suppliers, etc. BPS may even have better IT and distribution systems. But these aspects are beyond
the scope of this case.
13-22 Is it a good idea for Bass Pro Shops to acquire Cabela’s? Explain.
Student answers will vary. Whether BPS keeps the two chains as independently operating brands
under one ownership or combines the two into one outdoor retail chain, there are clearly benefits for
Teaching Suggestions
It is clear that the core customer for BPS is the male outdoor enthusiast. However, start by asking how
many of the female students have been to a BPS Outdoor World store (or a Cabela’s). Ask them to share
their reasons for going and their experience while there. Use this as a springboard into the retail strategy
that will unfold through the discussion of the questions.
This case also works well with the marketing strategy chapter (Chapter 2), the products and brands
chapter (Chapter 8), and the competitive advantage chapter (Chapter 18).
Go to mymktlab.com for the answers to the following Assisted-graded writing questions:
13-23 What is retail convergence? Has it helped or harmed small retailers?
13-24 Describe the types of shopping centers and identify specific examples in your community or a
nearby city.
ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES
Projects
1. Go to a local power center. Make a list of all the stores located there. Which of these stores serve
as the anchor and which stores are dependent on the anchor? (Objective 2)
2. Visit a local discount store (Walmart, Target, etc.) and a local off-price store (T.J.Maxx, Stein
Mart, etc.). Examine the product mix and pricing strategies of these stores. Who would you say is
the target market of each? Why? (Objective 2)
3. Who are the major wholesalers that service the restaurants in your town? What are the principle
functions they serve? (Objective 4)
Small Group Assignments
1. Form students into groups of three to five. Each group should read Real Marketing 13.2:
Omni-Channel Retailing: Creating a Seamless Shopping Experience. Each group should then answer
the following questions and share their answers with the class. (Objective 3)
a. Based on this reading, who is targeted by digitizing the in-store retail experience? Consider the
examples as groups discuss this.
b. What are the advantages of this shift in the customer experience? Are there any drawbacks to this
approach?
c. What other retail companies could you see moving toward this level of digitization in the
shopping experience?
d. Picture yourself as a consumer. Are you a “showroomer?” On which products have you tried this
tactic? How successful were you? Explain.
e. Besides the strategies listed in this story, what other ideas can you think of that brick-and-mortar
stores might try to stem the tide of consumers walking out of their stores, headed for the nearest
online retailer?
f. Do you believe that stores like Best Buy or Target, which rely on “atmosphere” to sell their
products, are doing the customer an injustice? After all, isn’t the product itself the most important
part of the purchase decision? Explain your reasoning.
2. Form students into groups of three to five. Each group should read the opening vignette on Walmart.
Each group should then answer the following questions and share their answers with the class.
(Objective 2)
a. Do you believe that Walmart engages fairly with its competitors in the marketplace? Defend
your answer.
b. What specific advantages does Walmart’s distribution system provide the company?
c. Besides offering low prices, what does Walmart do better than its competitors to attract
customers?
Individual Assignments
1. Reread Real Marketing 13.1: Costco: Merchandising Magic That Competitors Can’t Match. Then
answer the following questions. (Objective 2)
a. How is Costco beating Sam’s Club at its own low-price game?
b. Why do people go to Costco and “treasure hunt,” especially when they don’t need to focus on
saving money?
c. If “atmosphere” is so important in attracting and keeping customers, how do warehouse clubs
like Costco and Sam’s Club succeed? Explain your reasoning.
2. Review the concept of retail convergence. Identify stores in your area that fit this concept. Do you
believe all those stores can succeed longer-term? Justify your answer. (Objective 3)
Think-Pair-Share
Consider the following questions, formulate an answer, pair with the student on your right, share your
thoughts with one another, and respond to questions from the instructor.
1. How would you define retailing? How does it fundamentally differ from wholesaling? (Objective
1)
2. What is a category killer? Why do you believe they have become so popular in recent years?
(Objective 1)
3. Cite at least three examples of retail convergence. What advantages and disadvantages do the
converged organizations have? (Objective 3)
4. What are the functions of wholesalers? Can these be replaced? If so, how? (Objective 4)
5. What are the differences between merchant wholesalers, brokers and agents, and manufacturers’
agents? (Objective 4)
Outside Examples
1. Traditional department stores have had a hard go of it in recent years. It seems as though they
keep seeing their business being siphoned off by either the specialty stores or the discounters.
Review Table 13.1. If you were hired by Macy’s (the nation’s largest department store) to advise
them on a strategy to stop the bleeding-off of their clientele, how would you advise them?
(Objective 1)
Possible Solution:
Student answers will vary. It is important for department stores to decide who they really are. One
of the major stumbling blocks of recent years has been they have tried to be all things to all
2. Consider both Walmart (www.walmart.com) and Amazon (www.amazon.com). In what ways do
these two companies compete? Compare them using the variables of the marketing mix. Which
do you believe has the upper hand? Why? (Objective 2)
Possible Solution:
Product. Although both companies carry a tremendous assortment of product from a standpoint
of absolute numbers, Amazon wins. Walmart’s assortment of products caters more to the
Price. Walmart touts the mantra of “Low Prices Every Day.” Although this is an admirable tag
Promotion. Walmart spends a fortune on consumer advertising, everything from television to
Place. Physically, Walmart is just about everywhere. With more than 2,500 stores in the United
States, there is at least one Walmart in just about every town of any significant size. Amazon, on
