978-1305769786 Chapter 15 Solution Manual

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DISCUSSION STARTERS

Discussion Starter 1: RFID and the Future of Retailing

ASK: Can you name one physical location within a retail setting that incurs significant cost and creates

consumer frustration?

One cost center for all types of retailing is the checkout area. Speedy and efficient checkout depends on

accurate pricing and data entry. With the growth of RFID technology, grocers and other retailers can

imagine a future where checkout lines are much shorter, even nonexistent. Customers simply walk

through a scanner, swipe their credit cards, and go. This would reduce labor costs for the retailer and

increase value for the consumer by providing a faster shopping experience.

Discussion Starter 2: Retailing or Direct Selling

ASK: Read the following product examples. Determine whether retailing or direct selling is a more

appropriate channel for each example.

1. Insurance

2. Soft drinks

3. Razor blades

4. Weight reduction programs

5. Detergent

6. Aircraft

7. DVDs

Answers:

Discussion Starter 3: Where do you shop and why

ASK: Where are some of your favorite places to shop for clothes and groceries?

Have students give a couple of reasons as to why they shop at particular stores. Some of the factors may

include price, quality, location, customer service, and product selection. It is likely that students will

with a certain product or service or otherwise on a password-protected website for classroom use.

3. Discuss how the characteristics of the retail establishment, such as location and store image,

have an impact on the consumer’s perception of your product.

This question asks students to discuss how the characteristics of the retail establishment, such as

location, store image, and scrambled merchandising, have an impact on the consumer’s

4. Are direct marketing or direct selling methods appropriate for your product and target

market?

appropriate for his or her product and target market.

5. If your product will be sold to another member in the marketing channel, discuss whether a

merchant wholesaler, agent, or broker is most suitable as your channel customer.

The student will have to decide whether a merchant wholesaler, agent, or broker is most suitable

1. What value is added to a product by retailers? What value is added by retailers for producers

and ultimate consumers?

Retailers add value to products in several ways. Image enhances the value of the product. Through its

location, a retailer facilitates comparison shopping. A product’s value is increased when the retailer

2. What are the major differences between discount stores and department stores?

Discount stores are self-service, general merchandise outlets which regularly offer brand-name

merchandise at low prices. Department stores are large retail organizations characterized by wide

product mixes. These two types of retail outlets differ in several respects. First, discount stores are

with a certain product or service or otherwise on a password-protected website for classroom use.

brand names.

6. Discuss the major factors that help to determine a retail store’s image. How does atmosphere

add value to products sold in a store?

A retail store’s image is a functional and psychological picture in the consumer’s mind. A store must

project an image acceptable to its target market. Seven factors contribute to a retail store’s image:

a. Atmospherics are physical elements in a store’s design that appeal to consumers’ emotions and

encourage them to buy

b. Reputation for integrity

7. How is door-to-door selling a form of retailing? Some consumers believe direct-response orders

bypass the retailer. Is this true?

8. If you were opening a retail business, would you prefer to open an independent store or to own

a store under a franchise arrangement? Explain your preference.

There are advantages to both owning an independent store and owning a store under a franchise

arrangement. Under a franchise arrangement, a supplier grants a dealer the right to sell products in

9. What services do wholesalers provide to producers and retailers?

For producers, wholesalers serve as an extension of the producer’s sales force. Wholesalers also

10. What is the difference between a full-service merchant wholesaler and a limited-service

merchant wholesaler?

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with a certain product or service or otherwise on a password-protected website for classroom use.

A merchant wholesaler is an independently owned business that takes title to goods, assumes risks

associated with ownership, and generally buys and resells products to other wholesalers,

organizational customers, or retailers. Full-service merchant wholesalers perform the widest possible

range of wholesaling functions, whereas limited-service merchant wholesalers provide fewer

functions and specialize in just a few functions.

11. Drop shippers take title to products but do not accept physical possession of them, whereas

commission merchants take physical possession of products but do not accept title. Defend the

logic of classifying drop shippers as wholesale merchants and commission merchants as agents.

Drop shippers are classified as wholesale merchants because they take title and assume risk of

12. Why are manufacturers’ sales offices and branches classified as wholesalers? Which

independent wholesalers are replaced by manufacturers’ sales branches? By sales offices?

Manufacturers’ sales offices and branches are classified as wholesalers by the U.S. Census of

COMMENTS ON THE CASES

VIDEO CASE 15.1: L.L. BEAN: OPEN 24/7, CLICK OR BRICK

Summary

L.L. Bean’s outdoorsy image and innovative products, combined with a century-old reputation for

standing behind every item, have made its stores popular shopping destinations around the world and

around the Web. The company creates over 50 catalogs targeting different consumers, which facilitates

shopping via the phone and the online store. The company’s flagship store in Freemont, Maine, provides

a variety of customer services as well as pleasant atmosphere that includes a café. The L.L. Bean online

store offers a vast inventory that can be shipped directly to a customer or to their local store.

Questions for Discussion

1. What forms of direct marketing does L.L. Bean employ? Which additional forms of direct

marketing should L.L. Bean consider using?

Direct marketing is the use of the telephone, Internet, and nonpersonal media to communicate product

3. Do you think L.L. Bean’s website will ever entirely take the place of its mail-order catalog?

Why or why not?

Student answers will vary based on how they feel about actual paper materials. However, L.L. Bean’s

with a certain product or service or otherwise on a password-protected website for classroom use.

STRATEGIC CASE 6: IKEA MAKES THE MOST OF ITS MARKETING

CHANNELS

Summary

The multiple marketing channels of IKEA, a global furniture and housewares retailer, are discussed

in this strategic case. In the past 60 years, IKEA has expanded to 42 countries with over 345 stores.

IKEA’s brick–and-mortar stores give consumers the opportunity to view many different products and

sample rooms to assist in deciding what to buy. IKEA is able to lower costs by packaging all of their

furniture into flat boxes and having their consumers put their items together on their own. IKEA is

rapidly growing in China by reducing prices and changing the product mix to remain competitive in

the market. IKEA also has developed a mobile app that allows consumers to browse products and see

what those products would actually look like in their house. By focusing on enhancing brick-and–

mortar stores as well as increasing and improving e–commerce technology, IKEA will continue to

increase sales and market share.

Questions for Discussion

1. Would you recommend that IKEA continue printing and mailing catalogs or should it

switch to an online-only catalog? Explain your answer.

Students who recommend continuing to print and mail catalogs may say that these printed

materials allow customers to study the merchandise and their features and benefits on their own

schedule and whenever convenient, whether near an Internet-connected device or not. Customers

can turn the pages and see products in context, and imagine how the products would look in their

2. If you were in charge of choosing IKEA’s next U.S. store location, what factors would you

consider in making your decision?

Students’ answers will vary. Some of the factors they may mention include: Availability of

sufficient space for the store and for adjacent parking; access to vehicular traffic and other

3. How much channel power does IKEA possess? What are the implications for the role it

plays in the channel?

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As explained in the case, IKEA possesses considerable channel power because it designs and

manufactures many of the products sold in its stores. This power allows IKEA to influence the

well.

4. What are the main logistical issues IKEA must address to be able to make 100 percent of its

products available for online purchase and delivery?

Inventory management is a key logistical issue if IKEA wants 100 percent of its products

available for online purchase and delivery. Customers who shop in stores will take their

purchases off the shelves and go home with the merchandise. However, those who shop online