MAR3023 EXAM 3M

marketing channel

consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.

* make flow of goods, from a producer through intermediaries and to buyers- possible.

channel strategy

creates utility for customers

* time: *conveience* & speed
* convenience: making products available for consumption when a customer wants to buy it (all day breakfast menu)
* speed: getting product to consumer in timely manner
* Place: convenience & prestige of location
* convenience: having multiple locations/ easily accessible (vending machines)
* prestige: how exclusive or upscale a location is (for important people only)

3 categories of functions performed by channels of distribution

1. logistical functions
2. transactional functions
3. facilitating functions

logistical functions

perform number of functions that deal with movement and storage of goods

(physical movement of products from manufacturers to consumers)

**logistics**: involves activities that focus on getting the right amount of right product to right place at the right time and the lowest possible cost.

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logistical management

practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirement.


1. describes flow of the product from raw materials to consumption
2. describes decisions that must be made in cost-effective manner
3. all of these must be done while still delivering customer service and meeting customer requirement.

bullwhip effect

refers to tendency for supply chain managers at different levels of the supply chain to exaggerate the need to increase or decrease inventory in response to variations in customer demand.

total logistic cost

includes expenses associated with transportation, material handling, warehousing, inventory, stock-outs, order processing, and return goods handling.

( important to perform in-depth study of each of them to see how they respond to changes in other costs)

inventory costs generally rise as transportation costs falls

shipping in larger quantities cause transportation costs to fall but inventory costs to rise

will reach minimum at a point at which neither transportation cost nor inventory costs are at minimum.

logistic functions: assorting

channel members deliberately decide on the selection of goods that the channel will offer

* build retail assortments that will be of maximum value and convenience for customers (involving breaking bulk, or separating a large pallet of a product into smaller units)

logistic functions: transporting

transportation is the heart and soul of logistics

* uses trucks, trains, boats
* third party logistics (or contracts with outside vendors (FEDEX, UPS) to physically move products

logistic functions: warehousing and material handling

deals with storing and maintaining goods after they are produced

MH: a key part of warehouse operations, involving moving goods over short distances into, within, and out of warehouse and manufacturing plants.

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cross-docking

streamline material handling

a setup in which one side of the warehouse has loading docks for trucks to bring in the products from manufacturers and the other side has loading docks to be put on trucks to go to stores. separate loading docks for each store.

happens in three processes:


1. receiving
2. sorting
3. shipping

reduces the amount of the time inventory has to sit in storage

logistic function: order processing

facilitated by the emergence of EDI (electronic data interchange) which combines proprietary computers and telecommunication technologies to exchange electronic invoices, payments, and information among suppliers, manufactures, and retailers. (can link a retail checkout counter to suppliers and manufacturers.

logistic function: inventory management

two prominent inventory management methods are as follow

* just in time (JIT) inventory management involves scheduling shipments of inventory so that they are available just in time for use.
* advantage: inventory costs are reduced.
* Vendor-management inventory (VMI) and inventory management system in which retailers turn over parts of its inventory stocking decisions to its suppliers. (accomplished through tradition EDI systems or on the internet through softwares systems)

Transactional functions: Selling

manufacturers sell to wholesalers who sell to retailers who sell to consumers.

* salesperson in a retail store sells product directly to customers: this is a transactional function of a channel member.

Transactional functions: risk taking

retailers assume risk when they buy products with the intent to sell them

* no way that retailers can be absolutely sure that it will sell all of the products it acquire for resale

Facilitating functions: financing

channel members sometimes offer consumer financing. for example, many department stores offer their own credit card.

Facilitating functions: market research

feeds information through the channel about how things can be done better, what modifications would be useful, and which new products should be introduced.

* market research can be provided by an industry alliance group or contract to another company.

supply chain

sequence of firms that performs that activities required to create and deliver a good or service to consumers or industrial users.

* includes suppliers who provide the producers with raw materials and parts.

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supply chain management

integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide values to consumers.

* recognizes that partners at all levels are important to firm’s ability to provide value and to the supply chain as a whole and ultimately to customers.
* utilizes sophisticated information technology.
* focuses primarily on the flow of information that goes along with goods.

key difference between supply chain management and logistics

supply chain management takes on a broader scope of activities than logistics

* subsume logistics, meaning that channel distributions are included in supply chain management.

Supply chain management & marketing strategy

company’s supply chain management strategy and its marketing strategy are interrelated


1. understand the customer (tells how efficient or responsive the supply chain must be)
2. understand the supply chain (know what supple chain does well)


1. harmonize the supply chain with the marketing strategy (works well with both customer need and overall marketing strategy)

three core dimensions of supply chain partners

1. efficiency
2. responsiveness
3. resilience

customer service

ability of logistic management to satisfy users in terms of time, dependability, communication, and convenience

Customer Service: Time

refers to order cycle time or replenishment time, the delay between ordering an item and when it is received and ready to use or sell

minimizing lead time in order to reduce inventory costs as well as simplifying the process of reordering and receiving products

quick response and efficient consumer response delivery systems are inventory management system designed to reduce the retailer’s lead time for receiving merchandise and thereby lowering a retailers inventory investment, improving customer service levels, and reducing logistics expenses.

Customer Service: Dependability

lead time is consistent and that delivery is safe and complete

* replenishment of good is consistent which enables planning

Customer Service: Communication

between buyers and sellers helps in monitoring customer service and anticipating future needs

**blockchain tech:** decentralized digital system for recording, documenting, and facilitating transactions across all supply chain participants.

Customer Service: Convenience

buyers should have to exert only a minimum level of efforts to do business with the sellers.

**VMI (vendor managed inventory)** a tool that suppliers use to determine the product amount and assortment that the customer needs and automatically delivers the appropriate item to ensure buyer satisfaction.

Three degrees of channel coverage

**Intensive:** wants product offered in every place a consumer could conceivably get them

intensively distributed tend to be low-cost products that customer purchase frequently (vending machine snacks)

* sense of convenience (supermarket, gas station)

**Selective**: in just few locations (cosmetic or beauty brands) (may choose only high population)

**Exclusive**: through just one outlet per geographic territory (trek bicycles only has one store per geographic location) (luxury products) (high end fashion and apparel brands)

Two Types of Channels

1. **Direct**: those in producers and the ultimate consumer interact directly (direct mail, manufactures websites, telephone sales) no middlemen such as wholesaler or retailers.


1. **Disintermediation**: the term for when a manufacturer bypasses a channel intermediary and sells directly to the customer. (manufact has more control and more access to knowledge) (may not want to cover intermediate functions as efficiently or effectively as channel partners)
2. **Indirect**: rely on intermediaries (wholesalers and retailers) to reach the ultimate consumer

dual distribution

arrangement wherein a firm reaches different buyers by employing two or more different ytpes of channels for the same basic products (general electric uses both retail stores and direct sales to reach home builders) (mixed or hybrid strategy)

strategic channel alliances

uses one firm’s marketing channel to sell another firm’s products (starbucks sells ready to drink coffee product by using pepisco distribution network)

digital marketing channel

employ the internet to make goods and services available for conumption or use by customer or business buyers (uses both traditional and electronic intermediaries)

* book publisher might sell to traditional book wholesaller who then sell it to virtual retailer like amazon who finally sell to ultimate consumer.

direct to consumer marketing channel

allows consumers to buy products by interactin with various advertising media without a face-to face meeting with a salesperson (mail orders, direct mail, catalogs, telemarketing, home shopping are all examples of direct marketing channels

multichannel marketing

(omnichannel marketing) is the blending of different communication and delivery channels that mutually reinforce attracting, retaining, and building relationships with customers who shop and buy in traditional intermediaries and online.

BOPUS capability (buy online and pick up in store)

BORIS (buy online and return in store)

Two categories of channel members (also known as intermediaries or middlemen)

Wholesalers: intermediaries that sell to other business (merchant wholesaler, agent, and manufacturer-owned wholesalers)

Retailers: companies that sell, rent, or provide goods and services to ultimate consumers for personal, family, or household use

merchant wholesalers distributors

constitute the vast majority of all wholesalers, not owned by manufacturers, and they take title and physical possession of the product they distribute.

* **distributor** (general merchandise wholesaler): full-function wholesaler. perform all functions we expect channel to perform including stocking, carrying inventory, providing service after sales, offering credits, doing market research, training employees, and offering a catalog.
* Full service comes in two:
* general (full line) perform malfunction and carry broad assortment of merchandise
* specialty (limited line) perform all functions of channel but carry only narrow range of merchandise

merchant wholesaler: Jobber (limited)

wholesaler that does not perform all of the function we expect form a channel, perform some subset of these functions but physical possession and ownership are always involved. (racking shelves, delivering raw materials or commodity goods, sales calls, cataloging, maintaining inventory, and offering open account privileges)

limited-service merchant wholesalers

1. **rack jobbers:** retain title to product they put on their shevles and billr etailers only for what is sold (e.g. hosiery)
2. **cash and carry:** takes title only to a limited product assortment and sell only to those who pay cash and furnish their own transportation (E.g. groceries)
3. **drop shippers (desk jobbers)** own merchandise but never physically touch it. theyr receive orders and have the producers deliver directly to the customers (used for bulky, hard to transport products like coal)
4. **truck jobbers:** small warehouse where they stock trucks with goods to ship to retailers, they usually handle perishable or fast moving items such as dairy product

agents

(also called brokers) are wholesalers that look more like salespeople than wholesalers. dont take title of goods nor do they take physical possession of them, so they never see or touch the good. they simply represent the company, take orders ,negotiate transactions, and transfer the orders back to manufact

* earn money from commission or fees for service
* **manufacturer’s agent:** work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory: generally perform transactional functions as an extension of the producer in the territory
* **selling agent:** represent a single producer and are responsible for the producer’s entire marketing function. small producers use selling agents, particularly in the textile, food, apparel, and home furnishing industries
* **broker**: independent firms or individuals whose principal functions is to bring buyers and sellers together to make sales. no ongoing relationships with buyers and sellers. exception id food broker who works permanently for producers in grocery shopping.

manufacturer-owned wholesalers

can be divided into two categories based on whether they at any point take possession of the inventory


1. **sales branch:** manufacturer-owned equivalent of a distributor, as it carries inventory and performs all the functions of a channel.
2. **sales office:** manufacturer-owned equivalent of an agent, performs only a sales function and doesn’t carry any inventory.

direct channel: channel from producer to industrial user

indirect: intermediary between producer and the industrial user

intermediary takes one of two forms:

* agent: essentially the sales force for the producer
* industrial distributor: performs a variety of marketing channel functions, including selling, stocking, and delivering a full product assortment, as well as financing

retailer

companies that sell, rent, or provide goods and services to ultimate consumers for personal, family or household use

* different types include specialty stores, departments stores, power retailers, and discounters
* non-store: vending machines, door-to-door sales, e-retailers.

contractual system

legal agreement binds the parties to certain obligations and functions. defines the relationships between the buyers and sellers

* franchising: corporate franchisor contracts with an individual franchisee to sell its products in a given territory.
* **advantages**: franchisor receives both initial franchise fee and royalties on all of the franchisee’s sales. allow franchisor’s business to expand. franchisee more likely to succeed because it piggy backs off brand equity. basically allowing it to use franchisor’s resources.
* **disadvantages**: francisor loses control over business. can create conflict. francisee loses control over his or her business. must run business in line with decisions of the franchisor. costs a lot to open franchise.

administered system

size and influence of one channel member is the basis for acheiving coordination between subsequent levels of the marketing channel (p&g is able to get supermarkets to cooperate in displaying, promoting, and pricing its products. can give more power to large firms like walmart which can negotiate in order to control activities in its channel.

vertically integrated channel

is one in which single company owns more than one channel member. all owned by the same company


1. forward: channel members move down the channel and toward the consumer (pepsi acquired all of its north american bottles)
2. backward: channel member moves up the channel towards the manufacturer( netflix began as distributor but then decided to produce its original series)
* increase control over its channel of distribution, no negotitation therefore no channel conflict
* requires significant investment

vertical marketing system

professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximize marketing impact.


1. corporate vertical marketing system
2. contractual vertical marketing system
3. administered vertical marketing system .

corporate vertical marketing system

combines stages of production and distribution under a single ownership. can be done through either forward integration (a producer buying retail shops) or backward integration (producer buying industrial suppliers) increases capital investment and fixed costs so it is risky.

contractual vertical marketing sytem

integrates the effort of independent production and distribution firms to obtain greater efficiency and marketing impact than they could achieve by operating alone. most popular version of vertical marketing system.


1. **wholesaler sponsored voluntary chains:** achieves economies of scale and volume discounts through a contractual relationship with small independent retailers and wholesalers
2. **retailer-sponsored cooperatives** are formed by small independent retailers who cooperatively operate a wholesale facility
3. **franchising: contractual arrangement** between a parent company and an indiviudal or firm that allows the franchisee to operate a certain type of business under an established name and according to specific rules.


1. **manufacturer-sponsored retail franchise system** (car manufacturers and car dealerships)
2. **manufacturer-sponsored wholesales system** (soft drink producers and soft drink bottlers)
3. **service sponsored retail franchise** (holiday inn)
4. **service sponsored franchise** (H&R block tax service)

administered vertical marketing systems

use the size and influence of one channel member to coordinate successive stage of production and distribution. e.g walmart can get its manufacturers to cooperate because it is such a large buyer.

channel conflict

disagreement between channel members which arises when one channel member believes another member is engaging in behavior that prevents it from acheiving its goals.


1. vertical conflict: wholesaler vs retailer
2. horizontal conflict: retailer vs retailer

Reasons for vertical conflict

1. disintermediation: channel member bypasses another members and sells or buys the products directly
2. disagreements over the distribution of profit margins
3. manufacturer’s belief that retailers are not giving its product enough attention.

key trade-off in choosing a channel type is between

cost and control

6 practices that FTC scrutinized under Sherman Act and Clayton Act

1. **dual distribution:** manufacturer distributes product through its own vertically integrated channel while competing with independent wholesalers or retailer that also sell its product
2. **vertical integration:** producer sues forward or back to gain more control over channel
3. **exclusive dealing:** tells intermediary that it can only sell producer’s products
4. **tying arrangeme**nt: producers require an intermediary to buyer other goods in order to purchase products. full-line forcing is a kind of tying arrangement in which the producer requires an intermediary that wants to carry one product to buy its entire line of products as well.
5. **refusal to deal:** producer refuses to deal with existing channel members to reduce competition
6. **resale restrictions:** producers tries to stipulate where and to whom items may be resold.

channel captains

the most important channel member, controls the activity of the channel by coordinating, directing, and supporting other channel members. usually the firm that has the most power to influence other channel members.

four forms of influence of channel captains

1. economic influence (e.g. walmart)
2. expertise (e.g. knowledgeable hospital supply company
3. identification (ralph lauren a well-known brand)
4. legitimate influence (e.g franchisor/franchisee relationship)

Reasons to use intermediares

makes market more efficient by reducing the number of transactions required to match supply with demand. add value to product or service along the way

* must fulfill buyers interest
* **1. information:** in store displays, personal selling, and demonstration
* **2. convenien**ce: physical proximity, low time requirements, easy to find
* **3. variety:** breadth and depth of products and brands
* **4. pre- or post sales services:** installation, delivery, and credit services.

channel dynamics

characterized by a lot of power struggles and conflicts.

* channel members realized that cooperations would be more effective than competition.
* firms began to emphasize the importance of long term relationships between manufacturers and retailers

relationship marketing

emphasizes long-term relationships with suppliers, distributors, and customers.

* long term
* emphasis on mutual satisfaction
* interaction quality
* interdependent

transaction marketing

* short term
* emphasis on price
* product quality
* arms length (refers to manufacturers and retailers not sharing information that could improve their efficiency and profits.

channel add value

**old view**: represent it as pipeline that moved goods from the manufacturers to the consumer. implies that the product comes out of the channel in the same condition it went in.

**new view:** channel is a value-added chain. implies that e very step in the channel ads value to the product for customers. products that comes out of the marketing channel is different from the product that enters it.

reverse logistic

process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistributions, or disposal.

* reduces operating costs while simultaneously reducing waste in landfills.
* e.g. hewlett packard has reduced its operating costs and made the environment cleaner by implementing a reverse logistic system. (Designs changes in the company ink jet cartridges have significantly increase its use of recycled plastic.

retailing

includes all activities involved in selling, renting, and providing goods and services to ultimate consumer for personal, family, or household use.

\-portion of the distribution channel in which customer and the product come together.

provides value.

provide time, place, form, and possession utility.

retail ecommerce sales growth is about 8& and it is becoming increasingly large percentage of total retail sales.

ways retailers add value to marketing channel

* providing assortment: accumulate merchandise from many manufacturers and provide many different types of products. ensures that consumers have a selection of items from which to choose.
* retailer’s ability to determine what consumers want, so that it can provide the correct assortment. having a wide assortment of the right goods is what attracts customers and can give a company a leg-up on its competition.
* many large retailers tailor assortments to region they are located in (academy sports and outdoor stores that are in northern state provides deeper selection of cold-weather clothes).

scrambled merchandising

offering several unrelated product lines in a single store.

* idea is that customers will then hopefully purchase products from other categories from the store. (home depot offers tools but also dish soaps toliet papers).

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hypermarket

large stores (>200,000 square feet) offer consumers everything in a single outlet, eliminating the need to shop at more than one location.

u.s (smaller version called supercenters which combine elements of retail stores with grocery stores)

* breaking bulks: manufacturers tend to produce in large quantities. breaking up large lots allows consumers to buy in smaller quantities.
* holding inventory: consumers do not want to have to store large quantities of the things they purchase. retailers maintain inventory and make sure products are available to customers when they need them (failure can leave customers extremely unhappy)
* shrinkage: cost due to breakage (refers to shoplifting, employee theft, spoilage, product damage etc)
* providing other services: sometimes offer other services that augment the value of the product (repair, photo processing, pharmacy, check cashing, health centers, tax consulting.

intertype competition

competition between dissimilar types of retail outlets, makes retailers job more difficult.

form of ownership

distinguishes retail outlets based on whether individual, corporate chains, or contractual system owns the outlet.


1. **independent retailer:** individually owned by single person (e.g. bakery) makes up majority of u.s retailers
2. **corporate chain:** number of oulets commonly owned (e.g. walmart) using technology to manage inventory and changes price rapidly
3. **contractual system:** number of outlets that are independently owned but come together as a chain. (franchise) allow individuals stores to reap the benefits of common identity and enhanced buyer power while still maintaining individual ownerships.

level of services

describes degree of service provided to the customer.


1. **self service:** self service kiosks at hotels and airport (customer does most of the work)
2. **limited service:** outliet provides the most but not all. (e.g. walmart provides credit and merchandise return but does not do clothing alterations)
3. full service: outlet provides wide variety of services to customers (e.g. nordstorm is known for its fullservice and personal attention to customers)

merchandise line

refers to how many different types and varieties of product a stores carries (vary by depth or breadth)

* **depth of product line:** firm carries large assortment of each items (specialty outlet: limited line or single line stores that focus on just a small number of product lines) (category killers are specialty discount outlets that focus on selling one type of product at competitive prices e.g. best buy)
* **breadth of product lines:** refers to the variety of different items a store carries (general merchandise stores are retailers that carry a broad product line with limited depth (e.g. Macy’s)

6 types of non store retailing

least active and retailer involvement to greatest:


1. automatic vending: traditionally been used for the distribution of sodas and snacks but can sell other things like electronic or organic food. vast consumers believe that vending machines offer value at least equivalent to that of in store purchase.
2. direct mail and catalogs: decrease the costs of getting new customers, facilitate segmentation and targeting, and make buying fast and convenient for the customers. use of catalogs is on the rise, and catalogs retailers are increasingly targeting key customers by sending specalized catalogs to market niches identified through databases.
3. television home shopping: watch channels on which product are advertised so they can call in or use internet to place order.
4. online retailing: use internet to search for, evaluate, and buy products from. the comfort of their own homes. becomes increasing interactive (customize your own BMW)
5. telemarketing: involves using telephone to interact with a dn sell directly to consumers. more than 235 million americans sign up for dont call registry.
6. direct selling: involves in-home or in-office personal selling, someitmes called door-to-door retailing.

three variables that make up a retail strategy

position, location, and image

retailer’s position

consist of where it positions in its store

* geographical position (physical)
* position in the minds of consumers (based on the mix of merchandise it offers)
* based on its merchandise mix. and the level. of service it offers to its customers.
* can be classified through a retail positioning matrix: that describes retail outlets on two dimensions, breadth of selection (range of product categories sold through each outlet) and value-added (from factors such as depth of selection, service, location, product reliability, or prestige.

common types of general merchandise retailers

* **discounters (mass merchants)** offer broad, shallow selection of goods at a low price and with a low level of service (wlamart and target)
* off price retailers (dollar general, tj maxx have positioning strategy of low-price leadership)
* **department stores (anchor stores)** offer braod, average to deep selection of items at moderate to high prices and they have a higher level of service than discounts stores (macy, nordstorm which have sales associates that are qualified to help customers select)
* **specialty stores:** offer narrow average to deep selection of items at higher prices but with higher level of services. (the gap. the limited, foot locker)
* **power retailers (Category killers)** offer narrow deep selection of items at low price with variable levels of service (home depot, best buy, office depot) called category killers because they eliminate some of the less-efficient specialty stores and mom and pop stores that previously existed in the market.

macro factors: location

* **economic climate:** attractiveness of locating a store in a particular area is affected by the economic conditions in that area (may look at trends)
* **demographic/psychographic profile)** uses census data to determine what the population in a given area is like, and their psychographics to determine the activities, interests, and opinions of people who live there
* **competition**: must ask whether the area is already entrenched with competitors because they don’t want to directly compete with them head-to-head (grocery industry in florida is considered competitive war among supermarket chains)
* **business climate:** must examine the attitude that the government adn the population in an area have towards business in general and toward retailers specifically. retailers should consider how regulartory aspects and the community support for local businesses as opposed to national chains will affect its ability to acheive success in a particular area

micro factors: location

* **accessibility**: how easy or difficult it is for consumer to get to the specific location for a stores.
* **visibility**: an important factor, particularly in attracting impulse buyers, is how visible the retail facility is. when roads are not well-traveled , appropriate signage must be used.
* **traffic congestion:** it is a hassle to navigate traffic congestion in the surrounding area is also important. difficulty getting to a store can make customers frustrated and unhappy upon arrival.
* **parking availability:** how easy it is to find parking nearby a potential location is another consideration for retailers, especially if they have to build a parking garage.
* **rent**: you get what you pay for with a retail facility, retailers pay more rent for better locations, higher visbility such as corner lots (have high rents)
* **cannibalization:** when two stores from the same retail chain are located too close to one another they may reduce each others sales)
* **retailers** should consider whether the labor market in an area can supply the employees needed to staff the store.

atmospherics

refer to environmental factors within a store (such as signage, lighting, and scents) stores images goes beyond these dimensions

store image

combination of the functional. and psychological aspects of a store that communicates something to consumers; not only atmospheric but also things like brand image that a store encompass the following dimensions:

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store image and atmospheric encompass the following dimensions

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* **store layout:** etailers want their layouts to be convenient and appealing, also want to be able to display a wide variety of items (navigability, lines of sight, and traffic patterns into account when determining store layout. (can contribute to customer’s perceptions of the store)
* **merchandise display:** must determine whether a store should pack items on shelves, put them on racks, or display them on mannequins, and whether its inventory should be crowded (cluttered and cramped) or curated (sparse and refined) (e.g. apple only puts handful of items on its shelves to convey sense of luxury and simplicity)
* **fixtures and signatures:** should be up to date and fit with overall image (baby needs and beer & wines)
* **lighting and color:** retailers use lighting to elicit a desired response from consumers (study found bright and cool lighting prompts customers to evaluate a store as more pleasant and lively, whereas soft and warm lighting was perceived as more upmarket
* **music and scents:** create particular moods for retailers (cinnabon places ovens near the front of its stores and bake cinnamon rolls. sales dropped when they didn’t)

retailing mix

includes the following activities related to managing the store and merchandise inside:


1. retail pricing
2. store location
3. retail communication
4. merchandise

Retailing mix: retail pricing

retailer must set the markup- how much to add the retailers cost to arrive at the final selling price (set original markup and then reduces it to a maintained markup)

* difference between final amount the retailer receives and its cost is called his gross margin
* if product isn’t selling well, it get markdown.
* walmart uses everyday low pricing to eliminate markdowns (specialty stores, drugstores, convenience stores have high price images, online stores, mass merchants have low price image)
* **off-price retailing:** involves selling brand-names merchandise at lower-than-regular prices. retailers are able to set low prices because they buy excess inventory from manufacturers at price below wholesales
* warehouse clubs (e.g. sams club)
* outlet stores( gap factory stores)
* single-price (dollar tree)

retailing mix: store location

retailers must decide how many retail outlets to operate and where to locate them. newer types of store locations include wall units, kiosks, and carts.

* **central business:** oldest setting. community downtown area. become less important
* **regional shopping centers:** 50-150 stores. attracts customers who live or work within 5 to 10 miles. contain two or three anchor stores
* **community shopping centers:** retail locations that typically have one primary stores (usually a department store branch) 20 to 40 smaller outlets. population of consumers who are 10-20 minutes drive from shopping center
* **strip malls:** cluster of stores that serve people who live only a 5-10 minutes dirve away (gas station, grocery , pharmacy)
* **power centers:** huge shopping stripes with multiple anchors or national stores)

retailing mix: retail communications

retailer must decide on retail image the way in which the store is defined in the shopper’s mind. convey through functional elements (store layout, price range, product depth & breadth) psychological attribute (sense of excitement or style) ambiance (lighting, color, music, scent)

**shoppers marketing:** use of brand communication such as display, coupons, and samples to influence a customer’s behavior while shopping in a store.

retailing mix: merchandise

retailers must manage the breadth and depth. of product offerings, keeping in mind customer needs and product alternatives

**category management:** is an approach to managing the assortment of merchandise in which a manager (e.g. a manager in charge of shoes in a department store) is assignment the responsibility for selecting all products that customers in a market segment might view as substitutes for each other.

objective is to maximize sales and profit in the category.

net sales per square foot

measure frequently used to compare stores or to compare departments within a store.

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Net Sales per Square Foot = Net Sales/ Square footage of store or department

Net Sales = Total Sales - Returns

stockturn rate

measure of how fast items move onto and off of the shelves. important measure for low-margin businesses, like supermarkets and discount warehouse.

can be used to compare product and brands within the store, and it gives retailers information on how quickly product needs to be replenished. (identifies slow moving products) (one with higher stockturn rate is most profitable)

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Stockturn rate= cost of goods sold/ average inventory (At cost)

Average inventory = beginning inventory+ Ending inventory/ 2

Same-store Sales growth

basic measure of retail store performance, which adjust for expansion in the growth of the overall chain (sales overall may be growing for a retail chain but sales at individual store within it are stagnant)

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Same-store sales = total sales - sales from new store

GROWTH IN 1 YEAR:

Same-store growth(year1) = total sales (year1) - sales from new stores (year1) - total sales (year 1) / total sales (year0)

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wheel of retailing

describes how new forms of retail outlets enter the market.

* concepts say that retailers usually enter as low-status, low-profit stores and then add service that cause price and status to rise until another low-end retail store enters the market.

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retail life cycle

process of growth and decline experienced by both retail outlets and products.


1. **early growth:** retail outlet takes off. market share is high. profit is low
2. **accelerated development:** market share and profit growth. competition enters market. retailers expand to more outlets and jockey for market share.
3. **maturity stage:** retailers engage in price discounting to maintain their market share.
4. **decline stage:** market share and profit falls rapidly as retailers have an increasingly difficult time keeping their customers.

3 current trends in retailing

1. **prioritizing safety and convenience:** COVID-19 pandemic prompted trends in the retailing industry, including consumer’s desire for retailers to provide speed, convenience, touchless technology, and safety. retailers responde with local fulfillment hub (quick delivery or pickup) contactless delivery, new protocols for about masks, social distancing, and sanitizer use.
2. **growth of multichannel retailing:** multichannel retailers utilize and integrate a combination of traditional store formats and non-store formats such as catalogs, televisions, and online retailing.


1. influence effect referts to the way in which different communication and delivery channel complement one another.
3. **increasing use of data analytics:** data from scanners, loyalty cards systems, and even wearable technology can be used to understand how consumer shops, \[provide personalized promotions, and advertising message. maintaining appropriate inventory levels and manage prices effectively.

brand management

reflects the manufact POV and has goal of maximizing profit performance of brand

category management

reflects teh retailers perspective and has the goal of maximizing the profit performance of the entire mix of brands in a product category, not just a specific brand within a cateogy

recreational shopping

refers to the fact that many consumers get some sort of intrinsic satisfaction from being in a shopping environment, which is difficult to capture online.

retailtainment

combination of retailing and entertainment (waterpark, movie threatre, indoor ski)

omnichannel retailing

involves the integration of all the different marketing channels to create synergy for customers. attempts to leverage various channels to add value to the customer’s shopping experience.

guest speaker: cece shulz

* encourages student to pursue a retail minor
* urge student to treat retail minor like a portfolio of commitments or activities
* retail you: weekly seminar, retail networking, retail case competition (high as 25,000 prize) career advising, and student membership, internship guidance.

price

refers to the money or consideration received in exchange for the products being sold.

* what the seller gets in return for giving the customer the value associated with the product (rent, tuition, interest)

barter

refers to the practice of exchanging goods and services for other goods and services

administered pricing

a system in which prices. are predetermined, consumer does not participate in setting the sales price; simply pays the state price and does not haggle

participative pricing

a system where consumers participate in setting the price through haggling

* often use through B2B transaction,
* important not to charge too much for product, will lower demand and reduce market share.
* leaving money on the table by not maximizing revenue undercuts a firm’s ability to better compete in the marketplace reinvesting profits into creating improved products

General Price Equation

Price= List price - incentives and allowances + extra fee