Скачать презентацию INTRODUCTION TO RETAILING Nature of Retailing Course Скачать презентацию INTRODUCTION TO RETAILING Nature of Retailing Course

76a411c86b69a025c2bdbcf2f106780f.ppt

  • Количество слайдов: 77

INTRODUCTION TO RETAILING Nature of Retailing INTRODUCTION TO RETAILING Nature of Retailing

Course Objectives By the end, we should be able to: Define Retailing and its Course Objectives By the end, we should be able to: Define Retailing and its various forms. Describe the functions of each of the factors in a retailing mix strategy Outline the characteristics of Service Retailers. Differentiate between store based retailers and Non store retailers. Apply knowledge of Retail Trading Area (RTA) to design and justify a business plan. Apply skills for Visual Merchandising and for effective selling 1

THE NATURE OF RETAILING THE NATURE OF RETAILING

RETAILING: - What comes to mind 1 st? ? CBZ Bank Ltd. 1 -4 RETAILING: - What comes to mind 1 st? ? CBZ Bank Ltd. 1 -4

DEFINITIONS RETAILING ◦ is the business activity of selling goods and services to the DEFINITIONS RETAILING ◦ is the business activity of selling goods and services to the final consumer ◦ all the activities involved in the sale of products to final consumer. RETAILER ◦ is a business which sells goods and services to consumers for their personal or family use. ◦ is the final business in a Distribution Channel that links manufacturers to consumers.

According to Kotler (1996) “ Retailing includes all the activities involved in selling goods According to Kotler (1996) “ Retailing includes all the activities involved in selling goods or services to the final consumers for personal, non – business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing”. • retailing is derived from retaillier (a french word), which means to cut off a piece or to break bulk.

v Manufacturers make products and sell them to retailers or Wholesalers. v Wholesalers buy v Manufacturers make products and sell them to retailers or Wholesalers. v Wholesalers buy products from manufacturers & resell these products to retailers while retailers resell them to consumers. v Traditionally: Manufacturer Wholesaler Retailer Final Consumer

RETAIL vs. WHOLESALE OPERATIONs Ø RETAILERS: Sell smaller product quantities on a more frequent RETAIL vs. WHOLESALE OPERATIONs Ø RETAILERS: Sell smaller product quantities on a more frequent basis • Store facilities open to the general public • Higher per unit price due to individual unit sale • Ultimate consumers makes initial sales contact • Considerable emphasis placed on store atmosphere •

While WHOLESALERS… • • • sell larger product quantities on a less frequent basis While WHOLESALERS… • • • sell larger product quantities on a less frequent basis over-the-counter sales seldom made to general public lower per unit price due to bulk package sales representatives make initial sales contact little or no emphasis on facility atmospherics

RETAILING IS: Øeducational, exciting Ødynamic, demanding Øsmall town, big city Ølocal, regional, national, international RETAILING IS: Øeducational, exciting Ødynamic, demanding Øsmall town, big city Ølocal, regional, national, international Øthe management of change Øthe most imp link in the distribution channel Øa major economic force Øa significant area for career opportunities ØIs not limited to supermarkets, chain stores etc but sails thru across most sectors including banking, transport, insurance, telecomms etc.

Characteristics of retailing It offers direct interaction Sales volume is comparatively large in quantities Characteristics of retailing It offers direct interaction Sales volume is comparatively large in quantities Customer service Has different forms Location and layout are critical factors More employment opportunities

Economic significance of retailers Retailing’s economic value is represented by: 1. Employment creation: Some Economic significance of retailers Retailing’s economic value is represented by: 1. Employment creation: Some figures in the U. S: 3. 1 million retail establishments Retail sector accounts for 1 out every 5 jobs 2. The total amount of money exchanged in retail sales. Total annual sales: US$3. 3 trillion Nearly US$11, 000 per capita

 Utilities provided by retailers create value for customers. Retailers attempt to satisfy consumer Utilities provided by retailers create value for customers. Retailers attempt to satisfy consumer needs by having the right merchandise, at the right price, at the right place, when the consumer wants it i. e. Offers Time, place, possession, and form utilities

 ◦ Retailing raises the standards of living of people through the sorting process. ◦ Retailing raises the standards of living of people through the sorting process. The sorting process increases variety so that consumers can enjoy from a wider choice of products. Moreover the products are brought closer to the consumers & one stop shopping is enhanced. All leisure activities are provided by retailers.

 Retail activities contributes to Gross Domestic Product. Gross domestic product is the total Retail activities contributes to Gross Domestic Product. Gross domestic product is the total market value of all goods and services produced in a country in a given year.

 ◦ They contribute to Government revenue by paying taxes. Such taxes include Value ◦ They contribute to Government revenue by paying taxes. Such taxes include Value Added Taxes (VAT), Pay As You Earn (PAYE), duty & Corporate tax. Government Revenue is important for Economic Development. Retailers help in the regeneration of towns , districts & regions. Growth point - town – city

Global Economic Impact of Retailing Four of the 30 largest businesses in the U. Global Economic Impact of Retailing Four of the 30 largest businesses in the U. S. are retailers. In 1997, Wal-Mart’s $119 billion in sales surpassed the gross domestic product of Finland for the same year. Sears, Wal-Mart, Kmart, and JC Penny together employ more than 1. 6 million people. Wal-Mart has 603 stores outside the U. S. , including joint ventures in China and Korea. ** Research FURTHER on the economic significance of RT in Zimbabwe

Functions performed by Retailers in the distribution channel 1. PROVIDING AN ASSORTMENT OF GOODS Functions performed by Retailers in the distribution channel 1. PROVIDING AN ASSORTMENT OF GOODS AND SERVICES -To maximise efficiency , many manufacturers would like make one basic type of item & sell the entire of inventory to as few buyers as possible, yet many final consumers want to choose from a variety of goods & services & purchase a limited quantity. Retailers collect an assortment of goods & services from various sources , buy them in large quantities & offer to sell them in small quantities to consumers. This is the sorting process’

-As a result , each manufacturer or wholesaler become more efficient , and final -As a result , each manufacturer or wholesaler become more efficient , and final consumers are pleased with the selection available to them. -This enables buyers to do one stop shopping & also exercise choice from a variety of goods available.

2. Bulk Breaking -To reduce transportation costs, manufacturers & wholesalers typically ship cases of 2. Bulk Breaking -To reduce transportation costs, manufacturers & wholesalers typically ship cases of frozen dinners or cartons of blouses to retailers. -retailers then offer the products in small quantities tailored to individual consumers’ & household consumption patterns. This is called breaking bulk.

3. Inventory Holding -Retailers keep inventory so that products will be available when consumers 3. Inventory Holding -Retailers keep inventory so that products will be available when consumers want them, & thus consumers can keep as much smaller inventory of products at home because they know the retailers will have the products available when they need more. -By maintaining an inventory , retailers provide a benefit to consumers by reducing the cost of storing products. -Consumers can thus use their monies for Investment purposes instead of holding inventory.

4. Providing Services -Retailers provide services that make it easier for customers to buy 4. Providing Services -Retailers provide services that make it easier for customers to buy and use products. -They offer credit to consumers. -Also, they provide additional information about products to consumers. -Retailers provide customer services such as gift wrapping, delivery, & installation.

6. Communication -Retailers also have a function of communication both with their manufactures & 6. Communication -Retailers also have a function of communication both with their manufactures & wholesalers. -Communication with customers is enhanced via advertisements , salespeople & store displays, where consumers are informed about the availability and characteristics of goods & services , store hours , sales & so on. -Manufacturers , Wholesalers & others are informed about: a) sales forecasts b) delivery delays to retailers c) Customer complaints d) Defective items e) Inventory turnover ( By style, colour , size)

5. Completion of Transaction - - Retailers strive to fill orders promptly & accurately 5. Completion of Transaction - - Retailers strive to fill orders promptly & accurately The final link to the consumer / enduser

7. RT also assist small wholesalers & manufacturers by: - transportation -storage facilities - 7. RT also assist small wholesalers & manufacturers by: - transportation -storage facilities - Branding & brand management -promotions e. g. through advertising -Pre-paying for merchandise

JOB SKILLS NEEDED IN RETAILING 2. Operations 1. Merchandising ü warehousing ü buying ü JOB SKILLS NEEDED IN RETAILING 2. Operations 1. Merchandising ü warehousing ü buying ü supplier managementü receiving ü delivery ü selling ü relationship building ü security ü customer service ü advertising & promotion ü store management ü display building

JOB SKILLS NEEDED IN RETAIL 3. Sales Promotion ü advertising ü display ü publicity JOB SKILLS NEEDED IN RETAIL 3. Sales Promotion ü advertising ü display ü publicity ü sales promotion activities 4. Control ü asset management ü Credit ü auditing ü data processing 5. Personnel ü recruiting ü selecting ü training ü compensation ü union issues

RETAIL CHALLENGE: QUIZZ! You are given the job to head a committee to select RETAIL CHALLENGE: QUIZZ! You are given the job to head a committee to select a new president (CEO) for a retail chain. Rank the following criteria on a scale of 110(where 10 is high) on the importance of each criteria in evaluating candidates. 1. hard work 6. initiative 2. analytical skills 7. leadership 3. creativity 8. organization 4. decisiveness 9. risk taking 5. flexibility 10. stress tolerance

THE RETAILER AS AN IMAGE CREATOR Retailing is an image creating activity!! Image is THE RETAILER AS AN IMAGE CREATOR Retailing is an image creating activity!! Image is a mental picture that forms in the human mind as a result of many different stimuli Retail image is the impression, personality, or mental picture that is called to mind when a consumer is asked to describe a particular retail organization Retail image is created by many components!!

THE COMPONENTS OF A RETAIL IMAGE q q q q product factors service factors THE COMPONENTS OF A RETAIL IMAGE q q q q product factors service factors price factors location factors atmosphere factors layout and display factors communication factors

RETAIL IMAGES ARE IMPORTANT BECAUSE 1. Simplify the consumer’s decision making and shopping process. RETAIL IMAGES ARE IMPORTANT BECAUSE 1. Simplify the consumer’s decision making and shopping process. 2. Attract shoppers who have a self image close to the retailer’s image. 3. Help segment consumer markets and improve targeting. 4. Differentiate the retailer from competing retailers and other businesses.

THE RETAIL CHALLENGE IS TO OFFER THE RIGHT MERCHANDISING BLEND § § § § THE RETAIL CHALLENGE IS TO OFFER THE RIGHT MERCHANDISING BLEND § § § § the right product in the right quantities in the right place at the right time at the right price by the right appeal with the right service

RETAILERS VS. THE MARKETING CONCEPT Retailers strive to sell customers what they want rather RETAILERS VS. THE MARKETING CONCEPT Retailers strive to sell customers what they want rather than what the retailer has bought Retailers who adopt the marketing concept are neither exclusively customer driven or profit driven, they seek a workable balance between these two goals. Relationship marketing and retention retailing are also important concepts in retailing

RETENTION RETAILING IS IMPORTANT Research shows that: 1. Most customers do not complain 60 RETENTION RETAILING IS IMPORTANT Research shows that: 1. Most customers do not complain 60 – 90% switch stores/brands 2. Cost 5 times more to attract a new customer than it does to retain an existing one 3. Customers become more valuable over time due to: ü less wasted retail effort as retailer knows the customer and what s/he wants ü greater price advantage as customer is less price sensitive ü lower transactional cost ü lower communication costs

QUOTE FROM SAM WALTON FOUNDER OF WALMART “For my whole retail career, I have QUOTE FROM SAM WALTON FOUNDER OF WALMART “For my whole retail career, I have stuck to one guiding principle…give your customers what they want, and customers want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience. You love it when you visit a store that somehow exceeds your expectations, and you hate it when a store inconveniences you, or gives you a hard time, or just pretends you’re invisible. ”

The Wheel of Retailing q Mc. Nair (1958) proposed the Wheel of Retailing theory The Wheel of Retailing q Mc. Nair (1958) proposed the Wheel of Retailing theory to explain a retail evolution pattern, which he had observed in European and U. S. retail operations. q Hypothesis that each new type of retailer gains a competitive foothold by offering lower prices than current retailers, while maintaining profits through reduction of services q Once established, more services are introduced and prices rise. It then becomes vulnerable to new, lower price competitors

THE Wheel of Retailing… Trading-up Phase -Moderate to high prices -Elaborate facilities -Increase in THE Wheel of Retailing… Trading-up Phase -Moderate to high prices -Elaborate facilities -Increase in skills - service-conscious consumers Entry Phase -Low prices -Limited facilities -Limited service - Price-sensitive consumers Vulnerability Phase -High prices -Excellent facilities -Excellent service -Declining ROI - Upscale consumers 37

The Retail Accordion q Hollander (1966) proposed the Retail Accordion theory, which explained retail The Retail Accordion q Hollander (1966) proposed the Retail Accordion theory, which explained retail evolution as a cyclical trend in terms of the number of merchandise categories (i. e. , product assortment). q In this theory, at the beginning of operation, a retail institution carries a broad assortment of but does not carry a deep assortment (i. e. , various styles within one product classification).

 At this early stage, the retail institution is a general store. As time At this early stage, the retail institution is a general store. As time passes, the retail institution becomes specialized by carrying a limited line of merchandise with a deep assortment. At this point, the retail institution is a specialty store. The accordion theory is unclear about the competitive importance of providing wide assortments for various target customer groups.

The Retail marketing mix strategy Retail marketing mix is the term used to describe The Retail marketing mix strategy Retail marketing mix is the term used to describe the various elements and methods required to formulate and execute retail marketing strategy. Retail managers must determine the optimum mix of retailing activities and co-ordinate the elements of the mix. The aim of such coordination is for each store to have a distinct retail image in consumers’ mind. The mix may vary greatly according to the type of market the retailer is in, and the type of product/services.

The mix planning The retail marketing mix is the vehicle through which a retailer’s The mix planning The retail marketing mix is the vehicle through which a retailer’s marketing strategy is implemented and, in planning the mix, retailers should be guided by three basic principles: 1. The mix must be consistent with the expectation of target customers; 2. Elements must be consistent with each other to create synergy; and 3. The mix must be responsive to competitive strategy.

The 1. 2. 3. 4. 5. 6. retailing mix summarizes: Goods and services Physical The 1. 2. 3. 4. 5. 6. retailing mix summarizes: Goods and services Physical distribution Communications tactics chosen by a store. Pricing Customer service Store atmospherics

 A retailer develops a marketing strategy based on the firm’s goals and strategic A retailer develops a marketing strategy based on the firm’s goals and strategic plans ◦ Two fundamental steps: Selecting a target market Developing a retailing mix to satisfy the chosen target market

The retail marketing mix 14 44 The retail marketing mix 14 44

Selecting a Target Market v. Retailers analyze demographic, geographic, Behavioural and psychographic profiles to Selecting a Target Market v. Retailers analyze demographic, geographic, Behavioural and psychographic profiles to segment and select potential markets ◦ Demographic- Dividing the market according to population structural variables such as age, sex, income distribution, education e. t. c ◦ Geographic-Dividing the market based on location. Can be based on climate, regions, communities, densities e. t. c ◦ Psychograhic- based on life styles and personality characteristics. : Social: Culture, subculture, class A, B, C, Pschographic: Personality, buying patterns, motivation, attitudes and opinions. 14 45

 Behavioural- The key behavioural bases for segmenting consumer markets are benefits sought, purchase Behavioural- The key behavioural bases for segmenting consumer markets are benefits sought, purchase behaviour, usage and perception and beliefs.

Merchandising Strategy ◦ Planograms: Diagrams of how to exhibit selections of merchandise within a Merchandising Strategy ◦ Planograms: Diagrams of how to exhibit selections of merchandise within a store ◦ Category management: Retailing strategy which views each product category as an individual profit center, and the retailer manages the performance and growth of the entire category

 When merchandising, products of the same category may be shelved together, closer to When merchandising, products of the same category may be shelved together, closer to each other for easy comparison by customers.

14 -49 The Battle for Shelf Space results to: ◦ Stock keeping unit (SKU): 14 -49 The Battle for Shelf Space results to: ◦ Stock keeping unit (SKU): specific product offering within a product line that is used to identify items within the line ◦ Slotting allowances: fees paid by manufacturers to secure shelf space from retailers for their products

14 -50 Customer Service Strategy ◦ Retailers must decide on the variety of services 14 -50 Customer Service Strategy ◦ Retailers must decide on the variety of services they make available for shoppers Examples include gift wrapping, electronic shopping, delivery and installation Objectives are to enhance shopper comfort and attract and retain customers

14 -51 Pricing Strategy ◦ Markup: The amount a retailer adds to a product’s 14 -51 Pricing Strategy ◦ Markup: The amount a retailer adds to a product’s cost to determine its selling price Determined by the services the retailer performs and the inventory turnover rate ◦ Markdown: The amount by which a retailer reduces a product’s original selling price.

 Location/Distribution Strategy ◦ Planned shopping center: A group of retail stores planned, coordinated, Location/Distribution Strategy ◦ Planned shopping center: A group of retail stores planned, coordinated, and marketed as a single unit ◦ Four types of planned shopping centers: 1. Neighborhood – “strip mall” 2. Community malls 3. Regional Malls 4. Power – stand-alone stores, single trading area MUCH WILL BE COVERED IN RTA 14 -52

14 -53 Promotional Strategy ◦ Retailers use a variety of promotional techniques to establish 14 -53 Promotional Strategy ◦ Retailers use a variety of promotional techniques to establish store images and communicate information about their stores ◦ Selling up: retail selling technique in which salespeople try to persuade customers to buy higher-priced items than originally intended. ◦ Suggestive selling: involves salespeople attempting to broaden a customer’s original purchase by adding related items, promotional products, and/or holiday or seasonal merchandise

Classifying Retail Outlets Classifying Retail Outlets

Retail outlets can be classified in several ways: -- Form of ownership. Who owns Retail outlets can be classified in several ways: -- Form of ownership. Who owns the outlet. -- Level of service. The degree of service provided to the customer. -- Merchandise line. How many different types of products a store carries and in what assortment.

Classifying retail outlets METHOD OF CLASSIFICATION DESCRIPTION OF RETAIL OUTLET Form of ownership Independent Classifying retail outlets METHOD OF CLASSIFICATION DESCRIPTION OF RETAIL OUTLET Form of ownership Independent retailer Corporate chain Franchise Level of service Self-service Limited service Full-service Merchandise line Depth • Single line • Limited line Breadth • General merchandise • Scrambled merchandise

Forms of retail outlets 1. 2. Store-based retailers Non-store based retailers Forms of retail outlets 1. 2. Store-based retailers Non-store based retailers

§ § Store-based Retailers operate from a fixed location that requires consumers to travel § § Store-based Retailers operate from a fixed location that requires consumers to travel to the store to view and select merchandise and/or services. Non-store-based Retailers attempt to reach the consumer at home, work, or any place other than a store where they might be susceptible to purchasing.

FORMS Of STORE-BASED Retailers Food Retailers Supermarkets Supercenters Warehouse Clubs Convenience Stores General Merchandise FORMS Of STORE-BASED Retailers Food Retailers Supermarkets Supercenters Warehouse Clubs Convenience Stores General Merchandise Retailers • • Department Stores Full-Line Discount Stores Specialty Stores Category Specialists Extreme Value Retailers Off-Price Retailer Drugstores Services Retailing • • • Banks Insurance firms Health sector Warehousing Transport Advertising etc

ASSIGNMENT…. Research on the various store-based retailers outlined and various others in terms of: ASSIGNMENT…. Research on the various store-based retailers outlined and various others in terms of: ◦ How they operate ◦ Their keys to success ◦ Their Variety, assortment, level of service / customer involvement, location etc ◦ Functions/advantages & disadvantages / costs ◦ Trends / new developments

Service Retailing Firms that primarily sell services rather than merchandise and are a large Service Retailing Firms that primarily sell services rather than merchandise and are a large and growing part of the retail industry. Examples: banks, hospitals, doctors, legal clinics, entertainment firms, and universities CBZ Bank Ltd. 1 -61

THE Merchandise/Service Continuum THE Merchandise/Service Continuum

Warehouse club A warehouse club is a retail store, usually selling a wide variety Warehouse club A warehouse club is a retail store, usually selling a wide variety of merchandise, in which customers are required to buy large, wholesale quantities of the store's products, which makes these clubs attractive to both bargain hunters and small business owners. The clubs are able to keep prices low due to the no-frills( nonessential features are excluded) format of the stores. In addition, customers may be required to pay annual membership fees in order to shop.

CHALLENGES IN SERVICES RETAILING… Major challenge due to characteristics of services: ◦ ◦ INTANGIBILITY CHALLENGES IN SERVICES RETAILING… Major challenge due to characteristics of services: ◦ ◦ INTANGIBILITY INSEPARABILITY HETEROGINITY PERISHABILITY

Forms of Non-store Retailing Active customer involvement High Direct selling Telemarketing On-line retailing Direct Forms of Non-store Retailing Active customer involvement High Direct selling Telemarketing On-line retailing Direct mail and catalogs Television home shopping Automatic vending Low Active retailer involvement High

Non-store Retailers… 1 -66 Non-store Retailers… 1 -66

Vending Machine Retailing A merchandise or services are stored in a machine and dispensed Vending Machine Retailing A merchandise or services are stored in a machine and dispensed to customers when they deposit cash or use a credit card. Sales growth has been declining due to higher prices and healthier eating habits New technology help sales growth Trend of placing machines in captive consumer locations 1 -67

Automatic Vending … Maintenance and operating costs are high. Small convenience products are available Automatic Vending … Maintenance and operating costs are high. Small convenience products are available in vending machines. Of the 3 million vending machines now in use, 1. 8 million are soft drink machines.

Direct Mail & Catalogs Marketing efficiency is improved through segmentation and targeting. Customer value Direct Mail & Catalogs Marketing efficiency is improved through segmentation and targeting. Customer value is enhanced by providing a fast and convenient means of making a purchase. However, Hard to compete with large well established firms

1 -70 Television Home Shopping Retail format in which customers watch a TV program 1 -70 Television Home Shopping Retail format in which customers watch a TV program demonstrating merchandise and then place orders for the merchandise by telephone. Consumers watch cable stations, infomercials or direct response ads Most purchases made by small proportion of viewers Customers must wait for merchandise to come on

T. v. . . TV home shopping is possible when consumers watch a shopping T. v. . . TV home shopping is possible when consumers watch a shopping channel on which products are displayed; orders are placed over the telephone. RESEARCH SHOWS THAT TV home shopping programs traditionally attract 40 -50 year old females. Limitations of TV shopping have been the lack of buyer-seller interaction and the inability of consumers to control the items they see.

Online Retailing Online retailing allows consumers to search for, evaluate, and order products through Online Retailing Online retailing allows consumers to search for, evaluate, and order products through the Internet. The advantages of online retailing are: ◦ ◦ ◦ ability to do comparison shopping privacy Variety Convenience speed

Telemarketing Telemarketing involves using the telephone to interact with and sell directly to consumers. Telemarketing Telemarketing involves using the telephone to interact with and sell directly to consumers. According to the American Telemarketing Association, telemarketing sales exceed $500 billion. As the use of telemarketing grows, consumer privacy has become a topic of discussion among consumers, Congresses, Trade Commissions, and businesses.

Direct Selling Direct selling involves direct sales of goods and services to consumers through Direct Selling Direct selling involves direct sales of goods and services to consumers through personal interactions and demonstrations in their home or office. Many direct selling retailers are expanding into international markets to offset the decline in domestic sales.

Issues in Direct Selling • Providing information and demonstrations is costly Party plan system Issues in Direct Selling • Providing information and demonstrations is costly Party plan system ◦ Merchandise is demonstrated in a party atmosphere Multi-level network ◦ Master distributors sell to distributors who sell merchandise Pyramid schemes ◦ Firm sells to other distributors and little if any merchandise goes to end users 1 -75

Tutorial questions 1. “Retailers are the most important players in the distribution channel. ’’ Tutorial questions 1. “Retailers are the most important players in the distribution channel. ’’ Discuss (20) 2. Research to find out the reasons behind the fast growth of Direct Marketing. (20) 3. Identify and discuss the various forms of nonstore retailing. (20) 4. ” The characteristics of services make them difficult to market. ” Discuss (20) 5. Discuss the relevance of the extended marketing mix in services retailing. (20)`

` 6. Critique. a) The Accordion theory (10) b) The wheel of retailing. (10) ` 6. Critique. a) The Accordion theory (10) b) The wheel of retailing. (10)