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RETAIL MKTG&MGMT MIDTERM (CHAP 4,5,6)

Terms in this set (42)

ownership forms
-independent
-chain
-franchise
-leased department
-consumer cooperative
-vertical marketing system
Independent retailers
-businesses that are privately owned
-70% retailers are family owned and operated
-2.2 mil independent US retailers
Independent Retailers (Advantages & Disadvantages)
Advantages:
-flexible with formats/location/strategy
-complete control over costs
-personal image

Disadvantages:
-labor intensive
-dependent on owner
-lack of economic scale and bargaining power
Chain Retailers`
-operate multiple stores under one common ownership or corporation
(kate spade)
Chain Retailers (Advantages/Disadvantages)
Advantages:
-cost efficient
-efficiently maintained by computers, warehouse sharing, etc.
-defined management philosophy

Disadvantages:
-limited flexibility
-high investment costs
-complete managerial control
Franchising
-contractual agreements between franchisor and franchisee that gives the rights to sell goods and services provided by company
-franchisee pays initial fee and monthly % of gross sales in exchange for exclusive rights to sell goods in area
Franchise product/trademark
-franchisee operates independently
-agrees to sell products/services and operate under franchise name
Franchise Business Format
-franchisee receives assistance with: location, quality control, accounting systems, startup practices, management training
-common for restaurants, real estate
Structural Agreements in Retail Franchising
Manufacturer-Retailer
Wholesale Retailer
Service Sponsor retailer
Wholesale retailer franchising agreements
-voluntary: wholesaler sets up franchise and grants franchises to individual retailers
-cooperative: group of retailers set up franchise system and share ownership and operations of a wholesaling organization
Franchise Advantages/Disadvantages
Advantages:
-low capital required
-exclusive rights
-training for franchisees
-less costly per unit (paying for goods and services bc buying power of all franchises)

Disadvantages:
-royalties based on sales, not profit
-over saturation can occur (too many franchises)
-contract confinement
Leased Departments
-a department in a retail store that is rented to an outside party
-proprietor is responsible for all aspects of its business and pages % of sales to store as rent
Common leased departments for department stores
-cosmetics/fragrance
-beauty salon/spa/blowout bar
-fine jewelry
-furs
-photography studio
-optical
Vertical Marketing Systems
the main members of a distribution channel (manufacturer, wholesaler, retailer) wrk together as a unified group in order to meed consumer needs
Types of Vertical Marketing Systems
-Independent Channel Systems
-Partially Integrated Channel Systems
-Fully Integrated Channel Systems
Independent Channel Systems
functions:
-manufacturer, wholesaler, retailer
ownership:
-independent manufacturer, independent wholesaler, independent retailer
Partially Integrated Channel System
functions:
-manufacturer, wholesaler, retailer
operations:
-2 channel members own all facilities and perform all functions
Fully Integrated Channel System
functions:
-manufacturer, retailer, wholesaler
operations:
-all production and distribution functions are performed by one channel member
retailer Strategy Mic
A strategy mix is the firm's particular combination of:
-store location
-operating procedures
-prices
-store atmosphere
-customer service
-promotional methods
Achieving Destination Store Status
-examples are Trader Joes, IKEA, etc.
-combination of low-high price, innovative and exclusive merch, superior customer service, wide and deep merch strategy
Cost Containment
-process of controlling the expenses required to operate an organization or perform a project within pre-planned budgetary constraints.
-important management function that helps keep costs down to only necessary and intended expenses in order to satisfy financial targets
Methods of cost containment
-standardizing store procedures, layouts, size, products
-using plainer fixtures and displays
-self service operations
scrambled merchandising
when a retailer offers a mix of products that are unrelated to the company's original focus
Retail Life Cycle
-introduction
-growth
-maturity
-decline
How retail institutions are evolving?
Mergers, diversification, downsizing
Mergers
combinations of separately owned firms
Diversification
retailers become active in businesses outside their normal operations (ex. nordstrom rack)
Downsizing
unprofitable stores are closed or bought out (ex. Macys closing 100 stores)
Non store retailing
-retailing strategy that is non store based
-exceeds $410 bil annually
-80% comes from direct marketing
-ecommerce is fastest growing area
non-traditonal retailing
includes formats that do not fit into stores and non store based categories:
-video kiosks
-airport retailing
Direct Marketing
-the business of selling products or services directly to the public, e.g., by mail order or telephone selling, rather than through retailers.
-leading countries include: japan, great britain, italy, france, germany
Characteristics of Direct Marketing Customers
-35-55 years old
-married
-upper middle class
-desire convenience
-desire unique items and good prices
database retailing
-collection, storage, usage of relevant customer info
-name, address, birthday, background, shopping interests, purchase behavior
Executing a Direct marketing strategy (beginning to end)
1. business definition
2. generating customers
3. media selection
4. presenting the message
5. customer contract
6. customer response
7. order fulfillment
8. measure results/maintain data base
Outcome Measures of Direct Marketing
-an overall response rate
-the average purchase amount
-value of list brokers
-the sales volume by product category
Direct Selling
personal contact with consumers in their homes or phone solicitation
Reasons NOT to shop online
-lack of trust
-fear
-lack of security
-lack of personal communication
-shipping costs
Web Strengths
Using the web:
-info
-entertainment
-interactive communications
Shopping online:
-selection
-prices
-convenience
-fun
Multi channel retailing
- when a company provides numerous ways for customers to purchase goods and services.
-This marketing strategy could include selling through traditional outlets such as catalogs, brick-and-mortar stores, mail, and telephone
-channels are viewed as complementary, not competitive
Principles of multichannel retailing
-use same product identification in all channels
-price goods same in all channels
-cross promote goods/services
Video Kiosks
freestanding, interactive, electronic computer terminal that displays products sometimes located in stores
Airport Retailing
large group of prospective shoppers, duty free, difficult to replenish, long operating hours, strong sales in gift/travel items
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