Lamb, Hair, McDaniel Chapter 14 Chapter 14 Marketing Marketing Channels Channels and and Retailing Retailing 2013-2014
Dec 16, 2015
Lamb, Hair, McDaniel
Chapter 14Chapter 14
Marketing Marketing Channels and Channels and
RetailingRetailing
2013-2014
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Explain what marketing channels and channel intermediaries are describe their functions and activities
Describe common channel and strategies, and the factors that influence their choice
Describe channel relationship types and roles, and their unique benefits and drawbacks
Explain the importance of the retailer within in the channel and within the national economy
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List and understand the different classifications and types of retailers, as well as their different operational models
Explain the major tasks involved in developing a retail marketing strategy
Discuss the roles of CRM and customer data in retailer decision making
Describe trends in retail and channel management
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6
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Explain what marketing channels and channel
intermediaries are, and describe their functions
and activities
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Marketing ChannelsMarketing Channels
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Marketing ChannelMarketing Channela set of interdependent organizations that
eases the transfer of ownership as products move from producer to business user or
consumer.
Channel Membersnegotiate with one another, buy and sell products,
and facilitate the change of ownership between buyer and seller in the course of moving the
product from the manufacturer into the hands of the final consumer
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Marketing Channel FunctionsMarketing Channel Functions
Specialization and division of labor Specialization and division of labor
Overcoming discrepancies Overcoming discrepancies
Providing contact efficiency Providing contact efficiency
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Specialization and Specialization and Division of LaborDivision of Labor
Creates greater efficiency
Provides lower production costs
Create time, place, form, and exchange utility
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Contact EfficiencyContact Efficiency
RetailerFirms in the channel that sell directly to customers
Retailers simplify distribution by cutting the number of transactions required by consumers, making an
assortment of goods available in one location
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Exhibit 14.1Exhibit 14.1How Marketing Channels Reduce the Number of Required How Marketing Channels Reduce the Number of Required TransactionsTransactions
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Channel IntermediariesChannel Intermediaries
MerchantWholesalerMerchant
Wholesaler
An institution that buys goods
from manufacturers, takes title to goods, stores them, and resells and ships them.
An institution that buys goods
from manufacturers, takes title to goods, stores them, and resells and ships them.
Agents andBrokers
Agents andBrokers
Wholesaling intermediaries who facilitate the sale of a product by representing channel members.
Wholesaling intermediaries who facilitate the sale of a product by representing channel members.
1
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Channel IntermediariesChannel Intermediaries
Merchant WholesalersMerchant
Wholesalers
Agents and
Brokers
Agents and
Brokers
Ta
ke T
itle to G
oo
dsT
ake
Title
to Go
ods
Do
NO
T T
ake T
itle to
Go
ods
Do
NO
T T
ake T
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ods1
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Factors Suggesting Type of Factors Suggesting Type of Wholesaling Intermediary to UseWholesaling Intermediary to Use
Product characteristicsProduct characteristics
Buyer considerationsBuyer considerations
Market characteristicsMarket characteristics
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Channel Functions Channel Functions Performed by IntermediariesPerformed by Intermediaries
Contacting/Promotion
Negotiating
Risk Taking
Researching
Financing
Physically distributing
Storing
Sorting
FacilitatingFunctions
FacilitatingFunctions
TransactionalFunctions
TransactionalFunctions
Logistical Functions
Logistical Functions
1
Describe common channel and strategies,
and the factors that influence their choice
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Channel StructuresChannel Structures
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Exhibit 14.2Exhibit 14.2Marketing Channels for Consumer ProductsMarketing Channels for Consumer Products
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Exhibit 14.3Exhibit 14.3Channels for Business and Industrial ProductsChannels for Business and Industrial Products
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Alternative Channel Alternative Channel ArrangementsArrangements
Multiple or dual distribution
Strategic channel alliances
Nontraditional channels
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Factors Affecting Channel Factors Affecting Channel ChoiceChoice
Producer FactorsProducer Factors
Product FactorsProduct Factors
Market FactorsMarket Factors
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Market FactorsMarket Factors
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Product FactorsProduct Factors
Product FactorsThat Affect ChannelChoices
Product FactorsThat Affect ChannelChoices
Product Complexity Product Complexity
Product StandardizationProduct Standardization
Product Life CycleProduct Life Cycle
Product DelicacyProduct Delicacy
Product PriceProduct Price
2
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Producer FactorsProducer Factors
Producer FactorsThat Affect ChannelChoices
Producer FactorsThat Affect ChannelChoices
Producer Resources Producer Resources
Number of Product LinesNumber of Product Lines
Desire for Channel Control
Desire for Channel Control
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Levels of Distribution IntensityLevels of Distribution Intensity
IntensiveIntensiveA form of distribution aimed at having a product available in every outlet
A form of distribution aimed at having a product available in every outlet
SelectiveSelectiveA form of distribution achievedby screening dealers to eliminate all but a few in any single area
A form of distribution achievedby screening dealers to eliminate all but a few in any single area
ExclusiveExclusiveA form of distribution that established one or a few dealers within a given area
A form of distribution that established one or a few dealers within a given area
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Levels of Distribution Intensity
IntensiveAchieve mass marketselling. Convenience goods.
Many
Selective
Exclusive
Work with selected intermediaries. Shopping and some specialty goods.
Work with singleintermediary. Specialty goods and industrial equipment.
Several
One
Intensity Level Objective Number of
Intermediaries
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Describe channel relationship types and roles, and their unique
benefits and drawbacks
Types of Channel Relationships
3
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Benefits Hazards
Arm’s Length Relationship
Fulfills a one time or unique need; low involvement/risk
Parties unable to develop relationship; low trust level
Cooperative Relationship
Formal contract without capital investment/long-term commitment; “happy medium”
Some parties may need more relationship definition
Integrated Relationship
Closely bonded relationship; explicitly defined relationships
High capital investment; any failure could affect every channel member
Types of Channel Relationships
Global Channel RelationshipsGlobal Channel Relationships
3
Global Channel Development
Global Channel Development
Channel policies differ
Channel policies differ
Gray marketing channels
Gray marketing channels
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Social Influences in ChannelsSocial Influences in Channels
PartneringPartnering
ConflictConflict
LeadershipLeadership
ControlControl
PowerPower
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Channel Power, Control, Channel Power, Control, and Leadershipand Leadership
ChannelPower
ChannelPower
A channel member’s capacity to control or influence the behavior of other channel members
A channel member’s capacity to control or influence the behavior of other channel members
ChannelControl
ChannelControl
A situation that occurs when one marketingchannel member intentionally affects another member’s behavior
A situation that occurs when one marketingchannel member intentionally affects another member’s behavior
Channel Leader
Channel Leader
A member of a marketing channel that exercises authority/power over the activities of other members
A member of a marketing channel that exercises authority/power over the activities of other members
3
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Channel ConflictChannel Conflict
Conflicts may occur if channel members:
Have conflicting goals
Fail to fulfill expectations of other channel members
Have ideological differences
Have different perceptions of reality
3
By COOPERATING, channel members can speed up inventory replenishment, improve
customer service, and reduce the total costs of the marketing channel.
Channel PartneringChannel Partnering
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the joint effort of all channel members to create a channel that serves customers and creates a competitive advantage.
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Explain the importance of the retailer within in the channel
and within the national economy
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The Role of RetailingThe Role of Retailing
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RetailingRetailing
All the activities directly related
to the sale of goods and services
to the ultimate consumer for
personal, non-business use.
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The Role of Retailing The Role of Retailing
U.S. retailers employ nearly 15 million people
Retailers account for 10.8 percent of U.S. employment
Retailing accounts for 10 percent of U.S. businesses
Retailers account for two-thirds of the U.S. GDP
Industry is dominated by a few giant organizations, such as Walmart
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List and understand the different classifications
and types of retailers, as well as their different operational models
Classification of Retail Operations
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Classification Classification of Retail Operationsof Retail Operations
OwnershipOwnership
Level of ServiceLevel of Service
Product AssortmentProduct Assortment
PricePrice
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Exhibit 14.4Exhibit 14.4Types of Stores and Their CharacteristicsTypes of Stores and Their Characteristics
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Assort-ment Price Gross
Margin
Broad
Narrow
Broad
Med-Narrow
Medium
Med-Broad
Med-Broad
Broad
Med-Narrow
Narrow
Mod-High
Mod-High
Moderate
Mod High
Moderate
Mod Low
Mod Lo-low
Low-very low
Low
Low-High
Mod High
High
Low
Mod High
Low
Mod Low
Mod Low
Low
Low
Low-High
Type of Retailer
Specialty Store
Supermarket
Convenience Store
Drugstore
Full-line Discounter
Specialty Discounter
Warehouse Clubs
Off-price Retailer
Restaurant
Service Level
Mod Hi-High
High
Low
Low
Low-Mod
Mod-Low
Mod-Low
Low
Low
Low-High
Department Store Broad
Broad
Medium
Mod-High
Moderate
Moderate
Mod High
LowSupermarket
Drugstore
Mod Hi-High
Low
Low-Mod
Department Store
IndependentRetailers
IndependentRetailers
Chain StoresChain Stores
FranchisesFranchises
Owned by a single person or partnership and not part of a larger retail institution
Owned by a single person or partnership and not part of a larger retail institution
Owned and operated as a group by a single organizationOwned and operated as a group by a single organization
The right to operate a business or to sell a product
The right to operate a business or to sell a product
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Classification Classification of Ownershipof Ownership
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Level of Service
Full Full ServiceService
Self Self ServiceService
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Product AssortmentProduct Assortment
Classification based on BREADTHBREADTH and DEPTHDEPTH of product lines.
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PricePrice
Gross Margin
The amount of money the retailer makes as
a percentage of sales after the cost of goods
sold is subtracted.
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Major Types of Retail Major Types of Retail OperationsOperations
Department StoresDepartment Stores
Specialty StoresSpecialty Stores
SupermarketsSupermarkets
DrugstoresDrugstores
Convenience StoresConvenience Stores
Discount StoresDiscount Stores
RestaurantsRestaurants5
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Types of Retail OperationsTypes of Retail Operations
Department Store
Department Store
A store housing several departments under one roof.Each department is headed by a buyer, or department head who selects merchandise.
A store housing several departments under one roof.Each department is headed by a buyer, or department head who selects merchandise.
Specialty Store
Specialty Store
A retail store specializing in a given type of merchandise.
A retail store specializing in a given type of merchandise.
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Types of Retail OperationsTypes of Retail Operations
SupermarketSupermarket
Large, departmentalized, self-service retailer. Specializes in food. Some use scrambled merchandising.
Large, departmentalized, self-service retailer. Specializes in food. Some use scrambled merchandising.
DrugstoreDrugstoreA retail store that stocks pharmacy-related products and services as its main draw.
A retail store that stocks pharmacy-related products and services as its main draw.
Convenience Store
Convenience Store
A miniature supermarket, carrying only a limited line of high-turnover convenience goods.
A miniature supermarket, carrying only a limited line of high-turnover convenience goods.
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Categories of Categories of Discount StoresDiscount Stores
Full-LineDiscounters
Specialty Discount Stores
WarehouseClubs
Off-PriceRetailers
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RestaurantsRestaurants
• Straddle the line between retail and service establishments
• Sell tangible products (food, drink) but also services (food prep, food service)
• Many could be considered specialty retailers
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Nonstore RetailingNonstore Retailing
Automatic VendingAutomatic Vending
Direct RetailingDirect Retailing
Direct MarketingDirect Marketing
Electronic RetailingElectronic Retailing
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Automatic VendingAutomatic Vending
Is the use of machines to offer goods for sale.
Vending is the most pervasive retail business in the United States, with 11.5
MILLION vending machines selling billions or dollars worth of goods
annually.
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Direct RetailingDirect Retailing
Door-to-DoorDoor-to-Door
Office-to-OfficeOffice-to-Office
Home Sales PartiesHome Sales Parties
5
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Types of Direct MarketingTypes of Direct Marketing
Catalogs and Mail OrderCatalogs and Mail Order
Direct MailDirect Mail
TelemarketingTelemarketing
Electronic RetailingElectronic Retailing
Shop-at-Home NetworksShop-at-Home Networks5
Top E-Tailers by Sales VolumeTop E-Tailers by Sales Volume
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America's Top Ten Retail Businesses
Rank Company Web Sales Volume
(in billions)
1 Amazon.com Inc. $48.08
2 Staples Inc. $10.6
3 Apple Inc. $6.66
4 Walmart.com $4.9
5 Dell Inc. $4.6
6 Office Depot Inc. $4.1
7 Liberty Media (owns QVC) $3.76
8 Sears $3.6
9 Netflix Inc. $3.2
10 CDW $3.0
Beyond the Book
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The Basic Forms of FranchisingThe Basic Forms of Franchising
Product and Trade Name Franchising
Product and Trade Name Franchising
Dealer agrees to sell in products provided by a manufacturer or wholesaler.
Dealer agrees to sell in products provided by a manufacturer or wholesaler.
BusinessFormat
Franchising
BusinessFormat
Franchising
An ongoing business relationship between a franchiser and a franchisee.
An ongoing business relationship between a franchiser and a franchisee.
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Top 10 FranchisorsTop 10 Franchisors
1. 1. Hampton HotelsHampton Hotels2. 2. SubwaySubway3. 3. 7-Eleven7-Eleven4. 4. ServProServPro5. 5. Days InnDays Inn6. 6. McDonald’sMcDonald’s7. 7. Denny’sDenny’s8. 8. H&R BlockH&R Block9. 9. Pizza HutPizza Hut10. Dunkin Donuts10. Dunkin Donuts
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List the major tasks involved in developing
a retail marketing strategy
Retail Marketing Strategy
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Retail Marketing StrategyRetail Marketing Strategy
Develop a Retailing Mix
Define & Select a Target Market
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Defining a Target MarketDefining a Target Market
STEP 1:Segment the Market
STEP 1:Segment the Market
DemographicsDemographics
GeographicsGeographics
PsychographicsPsychographics
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Choosing the Retailing MixChoosing the Retailing Mix
STEP 2:Choose the Retailing Mix
STEP 2:Choose the Retailing Mix
ProductProduct
PromotionPromotion
PersonnelPersonnel
PlacePlace
PricePrice
PresentationPresentation
6
Exhibit 14.6Exhibit 14.6The Retailing MixThe Retailing Mix
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Choosing the Retailing MixChoosing the Retailing Mix
Product Offering
The mix of products offered to the
consumer by the retailer; also
called the product assortment or
merchandise mix.
6
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Retail Promotion StrategyRetail Promotion Strategy
Public RelationsPublic Relations
PublicityPublicity
Sales PromotionSales Promotion
AdvertisingAdvertising
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The Proper LocationThe Proper Location
Economic growth potential
Economic growth potential
CompetitionCompetition
GeographyGeography
Choosing a Community
6
The Proper LocationThe Proper Location
Land costsLand costs
Zoning RegulationsZoning Regulations
Public Transportation
Public Transportation
MallMall
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Socioeconomic characteristics
Socioeconomic characteristics
Traffic flowsTraffic flows
Choosing a Specific Site
Choosing the Type of Site
Freestanding StoreFreestanding Store
Shopping CenterShopping Center
6
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Retail Prices
QualityImage
High PriceHigh Price Low Price Low Price
Good ValueSingle Price Point
6
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Presentation Presentation of the Retail Storeof the Retail StoreEmployee type and densityEmployee type and density
Fixture type and densityFixture type and density
SoundSound
OdorsOdors
Visual factorsVisual factors
Merchandise type and densityMerchandise type and density
6
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PersonnelPersonnel
Suggestion SellingSuggestion Selling
Trading UpTrading UpTwo Common
SellingTechniques
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Channel and Retailing Channel and Retailing Decisions for ServicesDecisions for Services
Prioritize customer service by focusing on four areas:•Minimizing wait times•Managing service capacity•Improving service delivery•Establishing channel-wide network coherence
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The Relationship between Retailer The Relationship between Retailer Decision Making and Customer DataDecision Making and Customer Data
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Discuss the roles of CRM and customer data in retailer
decision making
7
Retailing and CRMRetailing and CRM
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Data
Retailers gain insight to who
purchases product
Build stronger relationships with
customers
CRM Database
7
Describe trends in retail and channel
management
New Developments in Retailing
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New Developments in RetailingNew Developments in Retailing
M-commerceM-commercePurchasing goods through mobile devices.
Purchasing goods through mobile devices.
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8
Online retailers offer greater variety of options for delivery, including one-use package
delivery boxes.
Chapter 14 VideoNew Balance Hubway
New Balance Hubway is a bike sharing system in the Boston area that uses automated stations to provide a bike service to people looking to go short distances. In this clip, employees discuss how the retailing model works for Hubway, and how the difference between brick and mortar and e-business models allowed them to succeed in the Boston area.
CLICK TO PLAY VIDEO
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Part 4 VideoScripps Networks Interactive
Distribution Decisions
Scripps Networks Interactive owns the content on popular networks such as Food Network, DIY, and the Cooking Channel. Deciding how to best get their content (both digital and solid products) into different locations takes some careful thought, and various decision makers discuss the process in this video clip.
CLICK TO PLAY VIDEO
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