CH 16: retailing and multichannel marketing

multichannel strategy
selling in multiple channels
ex. J.crew: online, in-stores (brick and mortar), and online
factors for establishing a relationship with retailers
1. choosing retailing partners
2. identifying types of individuals
3. developing a retail strategy
4. managing a multichannel strategy
Costco is ______
America’s third largest retailer
largest membership warehouse
kirkland brand (15% of products)
90% of members renew their membership yearly (1.5 billion dollars in membership fees)
choosing retail partners channel structure
– degree of vertical integration
– manufacturers brand
– power of manufacturer and retailer (unilever has alot of power)
choosing retail partners member characteristics
larger firms –>less likely to use supply chain intermediaries, can gain more control be more efficient and save money
Choosing retail partners distribution intensity (3 types)
intensive distribution intensity
selling product in as many retail outlets as possible (coca- cola)
exclusive distribution intensity
only grant certain rights to sell products in geographic areas/stores ex. birkenstocks, coach
selective distribution intensity
won’t let everyone sell stuff, lies between intensive and exclusive ex. apple ->macbook
limited non food (health and beauty aids), differentiates different types of foods
full line discount stores + supermarkets
ex. walmart, kmart, target
convenience stores
limited variety, good locations, small store, speedy checkout
presentation in a retail store
– employee type and density
– merchandise type and density
– fixture type and density
– sound
– odors
– visual factors
the set of business activities that add value to products and services sold to consumers for their personal or family use; includes products bought at stores, through catalogs, and over the internet, as well as services like fast food restaurants, airlines, and hotels
distribution intensity
the number of supply chain members to use at each level of the supply chain
stock keeping units (SKUs)
individual items within each product category; the smallest unit available for inventory control
limited assortment supermarkets
retailers that offer only one or two brands or sizes of most products (usually including a store brand) and attempt to achieve great efficiency to lower costs and prices
aka extreme value food retailers
ex. save a lot
warehouse clubs
large retailers with an irregular assortment, low service levels, and low prices that often require membership for shopper
ex. costco
department stores
– broad variety and deep assortment
ex. macy’s
full-line discount stores
retailers that offer low prices, limited service, and a broad variety of merchandise
– broad variety at low prices
ex. k-mart, target (but not supercenter)
specialty stores
a type of retailer that concentrates on a limited number of complementary merchandise categories in a relatively small store
-limited merchandise w/ service in small store
ex. coach, sephora
benefits of the internet and multichannel retailing
– deeper and broader selection
– personalization
– gain insights into consumer shopping behavior
– increase customer satisfaction and loyalty
– expand market presence
benefits of store channel
browsing, touching (vs. words describing), feeling, personal service, cash and credit, entertainment and social interaction, instant gratification, risk reduction
benefits of catalogs channel
convenience, information, safety
benefits of internet channel
broader selection, more info., personalization, touch and feel attributes (words)
customer relationship management
a specialty store that concentrates on health and personal grooming merchandise, through pharmaceuticals may represent more than 60 percent of its sales
specialty for pharmaceutical and health
ex. rite aid, CVS
category specialists
a retailer that offers a narrow variety but a deep assortment of merchandise
– discount with narrow but deep assortment
ex. home depot, pet smart, staples
big box retailers
discount stores that offer a narrow but deep assortment of merchandise (see category killer)
ex. walmart, staples
category killers
a specialist that offers an extensive assortment in a particular category, so overwhelming the category that other retailers have difficulty competing
extreme value retailers
a general merchandise discount store found in lower-income urban or rural areas
– fill line, limited, very low prices
ex. dollar general
off-price retailers
a type of retailer that offers an inconsistent assortment of merchandise at relatively low prices
ex. tjmaxx
services retailers
a firm that primarily sells services rather than merchandise ex. spas
exclusive co-brand
developed by national brand vendor and retailer and sold only by that retailer ex. lagerfield collection at macy’s, lily at target
mobile commerce (m-commerce)
communicating with or selling to a consumer through wireless handheld devices such as cellular phones
cooperative (co-op) advertising
an agreement between a manufacturer and retailer in which the manufacturer agrees to defray some advertising costs
share of wallet
the percentage of the customer’s purchase made from a particular retailer
online chats
instant messaging or voice conversation with an online sales representative
Paco Underhill
“American Shopper”
– butt brush theory
– humans walk the way we drive
– average amount of time spend in store
– dad’s in stores
– subtle ways of appealing to sexes
– destination items deep in store
butt brush theory
if a lady is shopping and bumps into something ->will bail->too claustrophobic
humans walk the way they drive
put more expensive items on the right
average amount of time spent in store
men: 3:30 mins to make purchase female: 8-9 mins
dad’s in stores
no willpower, little kids
subtle ways of appealing to the sexes
stores will do whole outfits for men, women like to mix and match, guys more impulsive at register
destination items deep in store
example gap denim will be in back of store
grocery store secrets
– bigger shopping carts
– creating a mirage of cheaper items by marking down staple items (ex. eggs, milk, toilet paper)
– meandering walkways and displays (ex. going straight to beer is awkward, forces you to wander)
– half aisles for the noncommittal
– sensory environment (bakery up front, lighting)
– most expensive items at eye level
– free food
science of spending
– you move in a predictable pattern (to the right)
– you can’t resist shiny things (evolutionary perspective->water->sparkle)
– shopping gets you high (release of dopamine)
– you can’t comprehend numbers (400 when its actually 499)
– tastes can be tricked by brand recognition (PBR in China)
people with short term memories are
better spenders
scrambled merchandising
offering several unrelated product lines in single store ex. books in Publix, walgreens (food and makeup)
Developing a retail strategy using Product
providing the right mix of merchandise and services
ex. publix bringing groceries to car
Developing a retail strategy using Price
price defines the value of both the merchandise and the service product
Developing a retail strategy using Promotion
retailers use a wide variety of promotions, both within their retail environment and through mass media
Developing a retail strategy using Place
convenience is key ingredient to success
– location: new bar in DT clemson
the proper location: the importance of the proper location
choosing a community – economic growth potential, competition, geography (traffic)
the proper location: the importance of choosing a site
freestanding store, shopping center, mall
advantages of shopping center and mall locations
– design attracts shoppers
– activities and anchor stores draw customers
– ample parking
– unified image
– sharing of common area expenses
disadvantages of shopping center and mall locations
– expensive leases
– failure of common promotion efforts
– lease restrictions
– hours of operation (can’t open store early)
– anchor store operation
– direct competitors
– consumer time limits (pick and choose stores)
choosing retailing partners
channel structure, channel member characteristics, and distribution intensity, CMI

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