Retailing and Direct Marketing

1
Retailing and Direct Marketing

• Dr. John T. Drea
• Professor of Marketing
• Western Illinois University

2
Retailing

• Defined all activities directly related to the
  sale of goods and services to the ultimate
  consumer for personal, nonbusiness use.

http//www.worldfranchising.com/ListFee.htm
3
Types of Retailers
4
Focus on Specific Types of Retailers

• Specialty store a narrow product assortment with
  a distinctive personality, high margins, high
  levels of service, and a well-defined target
  market. (The Limited, Spencers, The Gap)
• Department store higher levels of service (?),
  greater margins, broad assortment. It is a
  collection of specialty shops under one roof
  (Marshall Field, Famous-Barr, Dillards,
  Bloomingdales are examples)
• Success keys for specialty shops and department
  stores Know your customers, and provide services
  that are valued by customers.

5
Focus on Specific Types of Retailers

• Full-line discounters broad assortments, reduced
  services, lower prices, higher volume (ex
  Wal-Mart)
• Supercenters very broad assortment of all goods
  consumers buy routinely (food, clothing,
  housewares, pharmaceuticals, toys, medicine,
  lawn/garden, gasoline, plus services like dry
  cleaning, banking, etc. (ex Meijer, Super
  Wal-Mart). A larger version (200K ft2) is a
  hypermarket.
• Discount Specialty (aka Category Killers
  single-line mass merchandisers, narrow but deep
  assortments, low prices, high volume (Toys R Us)
• Success Keys Need high sales volume, control
  operating costs.

6
Focus on Specific Types of Retailers

• Warehouse membership clubs offer a limited select
  of brand names, cash and carry, and often require
  a larger volume of an item to be purchased.
  (Costco, Sams Club, etc.)
• Off-price retailers purchases product with cash
  and does not have return privileges, which
  reduces cost. Price is 25 or more below
  departments. Stock may contain irregulars and
  close-outs. A retailer owned by a manufacturer
  is a factory outlet.

7
Focus on Specific Types of Retailers

• Convenience-oriented retailers
• Convenience stores limited assortments of common
  items, high margins on many items, may use lower
  margins on an item (gas) to build traffic
• Automatic vending limited assortments, but can
  target specific markets through location. High
  margins.
• Direct marketing purchasing at home via mail,
  TV, Internet. Margins vary - Internet facilitates
  price comparisons. (QVC, Internet, infomericals,
  1-800 offers)

8
Retailing Keys

• Consider your customers needs - matching
  features/services provided to benefits sought.
• Recognize overbenefiting - providing
  features/services not desired (drives up costs
  and prices)
• Recognize underbenefiting - not providing
  features/services desired (provides niche
  opportunities)
• Bundling providing additional products/services
  at a price lower than offering each separately.
• Unbundling taking services normally sold
  together and separating them, thereby lowering
  prices to consumers

9
Retailing Keys

• Matching the benefit offered to the target
  market.
• Its not always about price.
• Are you a destination store or browsing store?
• Building store traffic is key
• Remember the seven steps for analyzing consumer
  behavior?