CH 1 - Retail Marketing

Retailing

Business activities selling goods/services to the final consumer for personal or household use

The “Place” P

Retailing represents the distribution (Place) element of the marketing mix

Retail Philosophy

A strategy based on understanding principles, having a focused plan, and prioritizing customer needs

The Sorting Process

Retailers collect goods from many manufacturers and offer them in small quantities to various brand customers

Customer Value

A subjective perception of whether a product is “worth it” based on results, process quality, and price

Race to the Bottom

When firms compete solely on price, leading to diminished profit margins

Price Perception

The idea that how a customer feels about a price is just as important as the actual cost (e.g., Walmart is perceived as cheapest even when it isn’t)

Paradox of Choice

Too many options lead to analysis paralysis, making customers less likely to buy anything

Reducing Choice

Retailers should offer fewer options when products are complex or customers want a quick, easy decision

Core Customer

The specific customer segment a firm prioritizes because of their long- term value

Customer Persona

A pseudo- fictional character used by retailers to represent and understand a specific customer segment

The “Unbanked” Customer

Consumers who only use cash; a segment Walmart dominates because Amazon lacks physical infrastructure for them.

Gen Z & Physical Stores

Surprisingly, Gen Z prefers brick and mortar stores more than millennials or Gen X

Experience over Possession

Gen Z is more likely to pay for experiences (like concerts or food) than physical products

The Gig Economy

A Gen Z preference for access over ownership, such as leasing apartments or furniture rather than buying

“Real- Time” Customers

Gen Z tends to be impulsive and often waits until the last minute to shop

Distribution Channel

The flow of business and goods between a manufacturer and the final consumer

Direct-to-Consumer (DTC)

When manufacturers sell straight to the user, cutting out wholesalers and retailers

DTC Benefits

Greater control over brand image, higher customer satisfaction, and maintained quality standards

DTC Weaknesses

High infrastructure costs and the risk of upsetting existing retail partners

Exclusive Distribution

Selling through only one or few retailers; results in the smoothest relationships

Intensive Distribution

Selling through as many outlets as possible; results in volatile relationships

Selective Distribution

Selling through a moderate number of retailers

Multichannel Retailing

Reaching consumers through multiple independent formats like a website, a physical store, and a catalog

Omnichannel Retailing

A fully integrated shopping experience across all available digital and physical channels

SWOT Analysis

A tool to evaluate internal Strengths/ Weaknesses and external Opportunities/Threats

Controllable Variables

Elements a retailer can manage, such as store hours, pricing, and merchandise

Uncontrollable Variables

External factors like the economy, competition, and government laws

Direct Selling

An aggressive sales format often involving in-home demonstrations (ex. Cutco)

Retail Positioning

How a retailer distinguishes itself from competitors in the mind of the consumer