Retail Marketing Chapter 1

Retailing

A set of business activities that adds value to the products or services sold to consumers for their personal or family use.

Retailer

A business that sells products and services to consumers for their personal of family use.

Retailers create value

Providing an assortment, Providing services, Breaking Bulk and Holding inventory

Breaking Bulk

A function performed by retailers or wholesalers in which they receive large quantities of merchandise and sell them in smaller quantities.

Holding Inventory

A major value-providing activity performed by retailers whereby products will be available when consumers want them.

Retailer perform wholesaling and production activities

Vertical integration, Backward integration, Forward integration

Vertical Integration

An example of diversification by retailers involving investments by retailers in wholesaling or manufacturing merchandise.

Backward Integration

A form of vertical integration in which a retailer owns some or all of its suppliers.

Forward Integration

A form of vertical integration in which a manufacturer owns wholesalers or retailers.

Stakeholders

The broad set of people who might be affected by a firms actions, from current and prospective customers, top supply chain partners, to employees, to shareholders, to government agencies, to members of the communities in which the firm operates, to a general view of society.

Types of Stakeholders

Prospective customers

Supply chain partners

Employees

Shareholders

Government agencies

Members of the firms communities

Corporate social responsibility (CSR)

Voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders.

Conscious Marketing

A marketing approach that considers the well-being of all stakeholders, including society and the environment, while promoting ethical practices and long-term success.

Two types of Competitors

Intertype competition

Scrambled merchandising

Intertype competition

Competition between retailers that sell similar merchandise using different formats, such as discount and department stores.

Scrambled merchandising

An offering of merchandise not typically associated with the store type, such as clothing in a drugstore.

Retail strategy

1) The target market toward which a retailer plans to commit its resources. 2). The nature of the retail offering that the retailer plans to use to satisfy the needs of the target market. 30 The bases on which the retailer attempt to build a sustainable competitive advantage over competitors.

Retail Mix

The combination of factors used by retailer to satisfy customers needs and influence their purchase decisions.

Supply chain

A set of firms that make and deliver a given set of goods and services to the ultimate consumers.

Wholesaler

Firms that buy products from manufactures and resell them to retailers.

Intratype competition

Competition between the same type of retailers (ex: Krogers vs Safeway)

ethics

A system or code of conduct based on universal moral duties and obligations that indicate how one should behave.

Forward integration

A form of vertical integration in which a manufacturer own wholesaler or retailers.

Holding inventory

A major value- providing activity performed by retailers whereby products will be available when consumers want them.

Base of the pyramid

The 25% of the world’s population at the lowest end of the global income distribution, with combined spending power of approximately US$5 Trillion.

Conscious Retailing

entails a sense of purpose for the firm higher than simply making a profit by selling products and services.

Social Responsibility examples

TOMS Provides free shoes to residents of poor nations

Patagonia invented a reusable climbing piton that didn’t damage the rock

Ben & Jerry’s supports social justice movements

Roles in developed economies

Retail sales: $5.3 trillion in annual U.S. sales in 2019, 5.5% of the U.S GDP comes from retailing

Employment:Employ 26 million people

Role in developing economies

The base of the pyramid: 9% of the world population ives under $2 a day,

Difficult to communicate and complete transactions, lack access to mass media, the internet, or credit cards. Rural remote; high cost of transporting goods

Differences in distribution channels around the world

• U.S. has the largest retail market in the world (having scale economies to operate their own warehouses, eliminating the need for wholesalers)

• Indian distribution system has small stores operated by relatively small firms and a large independent wholesale industry.

• Infrastructure not well developed

• Supply chain costs are higher

• Modernizing with attention to e-commerce

• Chinese retail industry is highly fragmented

• Government has removed most restrictions on direct foreign investments

• China is the world’s fastest-growing retail market and leads the world in e-commerce sales.