Marketing Chapter 3 Homework A multichannel retailer is a retailer that sells merchandise

Chapter 03 – Multichannel Retailing

CHAPTER 3

MULTICHANNEL RETAILING

ANNOTATED OUTLINE

INSTRUCTOR NOTES

I. Retail Channels for Interacting with

Customers

• Retailers are categorized by their offering

(food, general merchandise or services) and

then by the channel(s) they use to reach

their customers whether store- or nonstore-

based (electronic, mobile, catalog/direct

mail, direct selling, TV home shopping,

vending machine, etc.).

See PPT 3-3,3-4, 3-5, 3-6, 3-7

Ask students to provide examples of retailers

who use multiple channels. What are the

various channels used by each? Do the

students giving these examples use all the

channels used by the retailer? If so, how and

when?

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A. Store Channel

• Stores offer a number of benefits that

customers cannot get when shopping

through catalogs and the Internet. These

benefits include:

• Personal Service. Store sales associates

still have the capability of providing

meaningful, personalized information.

Customers for durable goods, such as

appliances, report that salespeople are the

most useful information source.

• Entertainment and Social Experience.

In-store shopping can be a stimulating

experience for some people, providing a

break in their daily routine and enabling

consumers to interact with friends. All

nonstore retail formats are limited in the

degree to which they can satisfy these

entertainment and social needs.

PPT 3-8 provides a summary of the unique benefits

of stores, catalogs, and the Internet.

PPT 3-9 covers the unique benefits provided by the

store channel.

Ask students to describe their favorite

entertainment elements of the store shopping

experience. Which retailers do they believe

incorporate these entertainment elements very

well?

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advantage of allowing customers to get the

merchandise immediately after they buy it.

require the immediate gratification factor? For

which merchandise categories is immediate

gratification not such a big deal?

and be used effectively.

B. Catalog Channel

• Convenience. Catalogs, like all nonstore

formats, offer the convenience of looking

at merchandise and placing an order any

day at any time from almost anywhere.

See PPT 3-10

C. Internet Channel

• In addition to the convenience and security

of shopping from home or work at any

time, the electronic channel has the

potential for offering a greater selection of

products and more personalized

information about products and services.

These benefits include:

See PPT 3-11, 3-12

Discuss the advantages shopping on the Internet

has over shopping in a store. Shopping through a

catalog.

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brands easily.

• Also, information on the electronic channel

database can be frequently updated and

will always be available. The cost of

adding information to an electronic channel

is likely to be far less than the cost of

continually training thousands of sales

associates.

• Personalization. The most significant

potential benefit of the Internet channel is

its ability to personalize the information for

each customer economically. The Internet

offers the opportunity to provide

“personal” service at a low cost.

know anything about the product, or how to

describe the experience and the types of

information they were able to find.

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create a personal homepage that is tailored

to that customer’s individual needs.

• Using a cookie (a small computer program

that provides identifying information

installed on your hard drive), the retailer

can provide personalized product

information, recommendations or reviews.

navigate through a store or catalog would

be quite difficult; however, collecting data

as customers navigate through a Web site

D. Using the Internet to Improve Multichannel

Shopping Experience

One common phenomenon in Internet retailing is

known as “abandoned shopping carts.” This

occurs when customers select items from the

E. Comparison of Electronic and Mobile Phone

Internet Channels

• Due to the rapid growth of domestic and

international broadband, the use of tablets

and smartphones is increasing.

PPT 3-13

Ask students how much they use their smartphone

or tablet for shopping? Most Millenials use their

smartphone or tablet to comparison shop or search

for information and then make purchases on their

consistent with the information they

II. Challenges Facing Multichannel Retailers

• Consumers want a seamless experience:

Whether they solicit a sales associate for

provide.

A. Multichannel Supply Chains and

Information Systems

PPT 3-14

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develop new transportation strategies.

• Most retailers don’t have distribution

B. Centralized versus Decentralized

Multichannel Retailing

• A critical decision facing multichannel

channel.

PPT 3-14

C. Consistent Brand Image across Channels

PPT-3-15

Ask students to discuss a retailer that has a

D. Merchandise Assortment and Pricing

• Different assortments are often appropriate

for different channels. As previously

mentioned, the Internet is usually able to

PPT 3-15

Ask students how important touching and feeling

III. Shopping in the Future

• The seamless interface across channels that

See PPT 3-17

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customers in the future may experience is

illustrated through a scenario.

systems.

A. Shopping Experience

• The scenario described illustrates the

See PPT 3-18

IV. SUMMARY

• Traditional store-based and catalog

retailers are adding electronic channels

and evolving into integrated, customer-

ANSWERS TO SELECTED “GET OUT AND DO ITS”

khaki pants. Evaluate your shopping experience at each site. Compare and contrast the sites

and your experiences on the basis of characteristics you think are important to consumers.

Students should consider the six reasons consumers like to purchase online:

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3. INTERNET EXERCISE Assume that you are getting married and planning your wedding.

for planning your wedding. What features of the sites do you like and dislike? Indicate the

specific services offered by these sites that you would use.

Engaged couples can plan for their ceremony, reception and honeymoon online with

4. INTERNET AND SHOPPING EXERCISE Pick a merchandise category like microwave

ovens, power drills, digital cameras, blenders, or coffee makers. Compare a retailer’s

offering in its local store and its Internet site. What are the differences in the assortments

offered through its store and Internet channel? Are the prices the same or different? What has

the retailer done to exploit the relationship between the channels?

5. INTERNET AND SHOPPING EXPERIENCE Access the websites of Home Depot and

Macy’s using your mobile phone and computer. What are the differences in the ease of

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ANSWERS TO DISCUSSION QUESTIONS AND PROBLEMS

1. Why are store-based retailers aggressively pursuing sales through an electronic

channel?

Stores have realized several distinct benefits of an electronic channel that overcome their

traditional limitations. First, an electronic channel enables stores to expand nationally and

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2. From a customer’s perspective, what are the benefits and limitations of stores?

Catalogs? Retail web sites?

Stores allow customers the benefits of a high sensory experience when browsing and

shopping. Customers can touch and feel products and seek information from qualified sales

However, catalogs provide very little pre-sales information that the customer may desire

about the product. While some of this information may be obtained over the phone, in most

cases, the customer may only encounter an order taker with limited knowledge at the other

end of the phone line. Customers can see better pictures than over the computer screen, but

sometimes critical information may not be available. Returns are cumbersome, since the

customer would have to repackage the product and may have to drop it off at the post or UPS

delivery location. Moreover, catalogs provide limited assortment.

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However, the consumer may be wary of unknown retailers over the Internet, fearing that the

order may not be fulfilled or that the delivery promises may not be kept or the product

quality may not be as advertised. Also, customers find their risks to be high, especially when

they have to provide personal and credit card information over the Internet. Consumers may

find that less pre-sales information is available for products that require touching-and-feeling

before purchase. Also, the costs of making a bad decision are high, especially since Internet

retailers vary in terms of their return policies (some charging a hefty restocking fee).

4. Why are the internet and catalog channels so popular for gift giving?

Buying gifts from electronic retailers and catalogs offers the benefit of saving customers the

5. Should a multi-channel retailer offer the same assortment of merchandise for sale, at

the same price, on its websites and in its stores? Why or why not?

Customers are likely to expect pricing consistency across all of the retailer’s channels. In

general, a multichannel retailer should attempt to offer the same assortment of merchandise,

at the same prices, across all channels. By ensuring parity between the store, catalog, and/or

web site, the retailer sends a uniform message about its quality, prices and reputation to the

consumer.

6. Which of the following categories of merchandise do you think could be sold most

successfully through an Internet channel: jewelry, TV sets, computer software, high–

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fashion apparel, pharmaceuticals, health care products such as toothpaste, shampoo,

and cold remedies? Why?

Lower end costume jewelry can and is sold effectively by nonstore retailers. It is because

this merchandise can be presented well and accurately in a catalog and on television, or even

over the Internet.

Pharmaceuticals have experienced higher than average sales growth through nonstore

retailers recently. It is however, difficult to determine what the ultimate nonstore retailer

sales potential will be for pharmaceuticals. The population is getting older, thereby

increasing the demand for many pharmaceutical products. But many pharmaceutical

products require a prescription. At the moment, the practices of some Internet retailers of

prescription pharmaceuticals are being called into question because in some cases it is too

easy for patients to get prescriptions from a physician to be filled on line.

Chapter 03 – Multichannel Retailing

7. Assume you are interested in investing in a startup Internet retailer that targets people

who enjoy outdoor recreation such as hiking, rock climbing, and kayaking. What

merchandise and information would you offer on the site? What type of an entity do

you think would be most effective in running the site: a well known outdoors person, a

magazine targeting outdoor activity, or a retailer selling outdoor merchandise such as

Patagonia or REI. Why?

The focus of the site, particularly if run by a retailer, is to sell outdoor equipment. The

equipment therefore would be the focal point of the site and would be organized around

8. What are the advantages to customers of accessing the Internet through a mobile device

or a computer when browsing a website? When learning special promotions?

Accessing the Internet through a mobile device is convenient for customers because

consumers can access their smartphone almost immediately. Mobile sites are especially

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9. When you shop online for merchandise, how much time do you spend browsing versus

buying? When you shop in a store for merchandise, how much time do you spend

browsing versus buying?

Both store and Internet channels provide ample opportunities for browsing behaviors.

Students’ answers will likely vary significantly as some will indicate browsing on one of the