PartSixDistributionDecisions17RetailingandDirectMarketingCopyright©HoughtonMifflinCompany.Allrightsreserved.17|2Objectives1.Tounderstandthepurposeandfunctionofretailersinthemarketingchannel2.Toidentifythemajortypesofretailers3.Tounderstanddirectmarketingandtwootherformsofnonstoreretailing4.Toexaminemajortypesoffranchisingandthebenefitsandweaknessesoffranchising5.ToexplorestrategicissuesinretailingCopyright©HoughtonMifflinCompany.Allrightsreserved.17|3ChapterOutline•TheNatureofRetailing•MajorTypesofRetailStores•DirectMarketing•OtherTypesofNonstoreRetailing•Franchising•StrategicIssuesinRetailingCopyright©HoughtonMifflinCompany.Allrightsreserved.17|4TheNatureofRetailing•Retailing–Transactionsinwhichultimateconsumersarethebuyers•Retailers–Organizationsthatpurchaseproductsforthepurposeofresellingthemtoultimateconsumers•Retailersaddvalue—shoppingconvenience,services,andpurchasingassistancetocustomers•Retailerscreateutility—time,place,possession,andform–Successinretailingcomesfromhavingastrongcustomerfocuscoupledwithdesiredlevelsofservice,productquality,andinnovation.Copyright©HoughtonMifflinCompany.Allrightsreserved.17|5Copyright©HoughtonMifflinCompany.Allrightsreserved.17|6MajorTypesofRetailStores•General-MerchandiseRetailers–Aretailestablishmentthatoffersavarietyofproductlines–Departmentstores•Largeretailorganizationscharacterizedbywideproductmixesandorganizedintoseparatedepartmentstofacilitatemarketingeffortsandinternalmanagement–Discountstores•Self-service,generalmerchandisestoresofferingbrandnameandprivatebrandproductsatlowpricesCopyright©HoughtonMifflinCompany.Allrightsreserved.17|7MajorTypesofRetailStores(cont’d)•General-MerchandiseRetailers(cont’d)–Supermarkets•Large,self-servicestoresthatcarryacompletelineoffoodproducts,alongwithsomenonfoodproducts–Superstores•Giantretailoutletsthatcarryfoodandnonfoodproductsfoundinsupermarkets,aswellasmostroutinelypurchasedconsumerproductsCopyright©HoughtonMifflinCompany.Allrightsreserved.17|8MajorTypesofRetailStores(cont’d)•General-MerchandiseRetailers(cont’d)–Hypermarkets•Storesthatcombinesupermarketanddiscountshoppinginonelocation–Warehouseclubs•Large-scale,members-onlyestablishmentsthatcombinefeaturesofcash-and-carrywholesalingwithdiscountretailingCopyright©HoughtonMifflinCompany.Allrightsreserved.17|9MajorTypesofRetailStores(cont’d)•General-MerchandiseRetailers(cont’d)–Warehouseshowrooms•Retailfacilitiesinlarge,low-costbuildingswithlargeon-premiseinventoriesandminimalservices–Catalogshowrooms•Aformofwarehouseshowroomwhereconsumerscanshopfromacatalogandproductsarestoredoutofbuyers’reachCopyright©HoughtonMifflinCompany.Allrightsreserved.17|10MajorTypesofRetailStores(cont’d)•SpecialtyRetailers–Traditionalspecialtyretailers•Alsocalled“limited-line”and“single-line”retailers•Carryanarrowproductmixwithdeepproductlines(e.g.,petsupplies)•Havehighercostsandhighermargins•Providemoreproductselection(first-linebrands),productexpertise,andhighlevelsofpersonalserviceCopyright©HoughtonMifflinCompany.Allrightsreserved.17|11MajorTypesofRetailStores(cont’d)•SpecialtyRetailers(cont’d)–Off-priceretailers•Buymanufacturers’seconds,overruns,returns,andoff-seasonmerchandiseforresaletoconsumersatdeepdiscounts•Chargelessthandepartmentstoresforcomparablemerchandiseandofferfewcustomerservices•Haveestablishedlong-termrelationshipswithsuppliersforcontinuingsuppliesofreduced-pricegoods–Categorykillers•ConcentrateonamajorproductcategoryandcompeteonthebasisoflowpricesandproductavailabilityCopyright©HoughtonMifflinCompany.Allrightsreserved.17|12DirectMarketing•DirectMarketing–Theuseoftelephoneandnonpersonalmediatointroduceproductstoconsumers,whothencanpurchasethemviamail,telephone,ortheInternet–Atypeofnonstoreretailing•NonstoreRetailing–ThesellingofproductsoutsidetheconfinesofaretailfacilityCopyright©HoughtonMifflinCompany.Allrightsreserved.17|13DirectMarketing(cont’d)•CatalogMarketing–Atypeofmarketinginwhichanorganizationprovidesacatalogfromwhichcustomerscanmakeselectionsandplaceordersbymail,telephone,ortheInternet•Consumeradvantagesareefficiencyandconvenience•Marketeradvantagesarelowerlocation,facility,selling,andoperatingcosts.•Disadvantagesareinflexibilityandlimitedselectionandlocalserviceavailability.Copyright©HoughtonMifflinCompany.Allrightsreserved.17|14DirectMarketing(cont’d)•Direct-ResponseMarketing–Atypeofmarketingthatoccurswhenaretaileradvertisesaproductandmakesitavailablethroughmailortelephoneorders•Telemarketing–Theperformanceofmarketing-relatedactivitiesbytelephoneCopyright©HoughtonMifflinCompany.Allrightsreserved.17|15DirectMarketing(cont’d)•TelevisionHomeShopping–Aformofsellinginwhichproductsarepresentedtotelevisionviewers,whocanbuythembycallingatoll-freenumberandpayingwithacreditcard•OnlineRetailing–RetailingthatmakesproductsavailabletobuyersthroughcomputerconnectionsCopyright©HoughtonMifflinCompany.Allrightsreserved.17|16OtherTypesofNonstoreRetailing•DirectSelling–Themarketingofproductstoultimateconsumersthroughface-to-facesalespresentationsathomeorintheworkplace•Partyplans:hosting