Part 5 Distribution

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Part 5 Distribution Retailing
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Retailing and Retailers

• Retailing consists of the sale, and all
  activities directly related to the sale, of goods
  and services to ultimate consumers for personal,
  nonbusiness use
• A firm primarily engaged in retailing is called a
  retailer
• One can distinguish bricks-and mortar retailers
  (physical stores) from click-and-modem retailers
  (operate online)

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Retail Trade in the United States
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Distribution of Ret. Stores and Sales by of
Employees
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U.S. Retail Stores
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U.S. Retail Stores
? In general, retailers net profits average 2
to 3 of sales
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Physical Facilities

• Some firms engage in nonstore retailing by
  selling through catalogs or online, for example,
  but many firms rely on retail stores
• Retailers that operate physical stores must
  consider four aspects of physical facilities
• Location
• Size
• Design
• Layout
• A well known retail location is the shopping
  center

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Retailers Classified by Form of Ownership

• Corporate chain An organization of two or more
  centrally owned and centrally managed stores that
  generally handle the same line of products
• Independent retailer A company with a single
  store that is not affiliated with a contractual
  vertical marketing system
• Contractual vertical marketing system
  Independently owned firms join together under a
  contract specifying how they will operate (three
  types)
• Retailer cooperative Formed by a group of small
  retailers that agree to establish and operate a
  wholesale warehouse
• Voluntary chain Sponsored by a wholesaler that
  enters into a contract with interested retailers

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Retailers Classified by Form of Ownership
(continued)

• Franchise systems
• Franchising involves a continuing relationship in
  which a parent company provides management
  assistance and the right to use its trademark in
  return for payments from the owner of the
  individual business unit
• The parent company is called a franchisor,
  whereas the owner of the unit is called a
  franchisee, combination of both comprises a
  franchise system
• Two kinds of franchising
• Product and trade name franchising
• Business format franchising

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Retailers Classified by Form of Ownership
(continued)

• Franchise systems
• Advantages for the franchisor rapid expansion,
  franchisees often are highly motivated
• Advantages for the franchisee usage of the
  parent companys well-known trade name, various
  forms of management assistance (entrepreneurship
  with a safety net)
• But There are (of course) also problems!

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Retailers Classified by Marketing Strategy

• Whatever its form of ownership, a retailer must
  develop marketing-mix-strategies to succeed in
  its chosen target market(s)
• In retailing, the marketing mix emphasizes
  product assortment, price, location, promotion,
  and customer services designed to aid in the sale
  of a product
• There are several types of retailers that can be
  classified by marketing strategy

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Retailers Classified by Marketing Strategy
(continued)

• Department stores Seek differential advantage
  through a combination of distinctive, appealing
  merchandise and numerous customer services
• Discount stores Involve comparatively low prices
  as a major selling point combined with reduced
  costs of doing business
• Limited-line stores Breadth of assortment varies
  across limited-line stores
• Specialty stores Concentrate on a particular
  product line or even part of a product line

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Retailers Classified by Marketing Strategy
(continued)

• Off-price retailers Position themselves below
  discount stores with lower prices on selected
  product lines, a special type are factory outlets
  (? outlet centers)
• Category-killer stores Aim to capture a large
  portion of sales in a specific product category
  combination of low prices and many different
  sizes, models, styles, and colors of the products
• Supermarkets Feature several related product
  lines (moderately broad, moderately deep product
  assortments), a high degree of self-service,
  largely centralized checkout, and competitive
  prices

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Retailers Classified by Marketing Strategy
(continued)

• Convenience stores Address consumers increasing
  desire for convenience besides selected
  groceries and nonfoods, gasoline, fast foods, and
  selected services can be found in many
  convenience stores
• Warehouse clubs Combines retailing and
  wholesaling operations warehouse clubs are open
  only to members who pay an (annual) fee

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Nonstore Retailing

• Retailing activities resulting in transactions
  that occur away from a physical store are called
  nonstore retailing
• Types of nonstore retailing are
• Direct selling Personal contact between a sales
  person and a consumer away from a store that
  results in a sale two kinds of direct selling
  are door to door and party plan
• Telemarketing Refers to a sales person
  initiating contact with a prospective customer
  and closing a sale over the telephone
• Automatic vending the sale of products through a
  machine with no personal contact between buyer
  and seller

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Nonstore Retailing (continued)

• Types of nonstore retailing (continued)
• Online retailing When an enterprise uses its
  website to offer products for sale and then
  individuals or organizations use their computers
  to make purchases from this company, the parties
  have engaged in electronic transactions
• Direct marketing Uses advertising (direct mail,
  catalog retailing, televised shopping) to contact
  consumers who, in turn, buy products without
  visiting a retail store comprises all types of
  nonstore retailing other than direct selling,
  telemarketing, automatic vending, and online
  retailing