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Chapter 17 Book Notes

Retailing includes all activities involved in selling, renting, and providing

products and services to ultimate consumers for personal, family, or household
Consumer Utilities Offered by Retailing
Utilities provided by retailers create value for consumers
Time, place, form, and possession utilities are offered by most retailers in
varying degrees, but one utility is often emphasized more than others
Ex. Of place utility- Wells fargo puts the bank products and services
close to the consumer because they provide mini banks in
Ex. Of form utility- (an alteration of a product)-Ralph Lauren uses a
Create your Own program online
Ex. Of time utility-Sports Authority allows consumers to find the right
sporting equipment during the off-season
Ex. Of possession utility-Saturn makes the purchase easier by
providing financial or leasing and by taking used cars or trade-ins
The Global Economic Impact of Retailing
Four of the 30 largest businesses in the United States are retailers
(Walmat, Costco, Home Depot, and Target)
Outlets can be classified in several ways
Form of ownership-distinguishes retail outlets based on whether
individuals, corporate chains, or contractual systems own the outlet
Level of service-used to describe the degree of service provided to the
Merchandise line- describes how many different types of products a
store carries and in what assortment
Form of Ownership
Independent Retailer- one of the most common forms of retail ownership
is the independent business owned by the individual. (account for most of
the 1.1 million retail establishments in the U.S. and include hardware
stores, convenience stores, clothing stores, and computer and software
Corporate Chain- involves multiple outlets under common ownership
(many of the department stores are now one of 810 Macys stores
Contractual Systems- involve independently owned stores that band
together to act like a chain ( 3 kinds=retailer sponsored cooperatives,
wholesaler sponsored voluntary chains, and franchises)
2 general types of franchises
Business-Format Franchises Subway, McDonalds, and Radio Shack
Product-Distribution Franchises- Ford dealership or Coca-Cola
Level or Service

Self-Service- requires that customers perform many functions and little is

provided by the outlet (ex. Costco)
Limited Service- provide some services, such as credit and merchandise
return, but not others, such as clothing alterations (ex. Walmart, Kmart,
and Target)
Full Service- include most specialty stores and department stores, provide
many services to their customers (ex. Neiman Marcus, Saks Fifth Avenue,
and Nordstrom)
Type of Merchandise Line
Depth of Product line- means the store carries a large assortment of each
item, such as a shoe store that offers running shoes, dress shoes, and
childrens shoes
Breadth of Product line- refers to the variety of different items a store
carries, such as appliances and CDs.
Depth of line
Stores that carry a considerable assortment (depth) of a related line
of items are limited line stores.
Stores that carry tremendous depth in one primary line of
merchandise are single-line stores
BOTH limited-and single-line stores are often referred to as
specialty outlets
Specialty discount outlets focus on one type of product, such as
electronics (best buy), office supplies (staples), or books (barnes
and noble) at very competitive prices
These outlets are referred to as category killers because they
often dominate the market
Breadth of line
Stores that carry a broad product line, with limited depth, are
referred to as general merchandise stores
Scrambled merchandising- offering several unrelated product
lines in a single store
Form of scrambled merchandising is HYPERMARKET (large
stores based at more than one location)-in the U.S. this is
called a Supercenter
Intertype competition- means that there is competition between
vary dissimilar types of retail outlets
Automatic Vending
Nonstore retailing includes vending machines, which make it possible to
serve customers when and where stores cannot
Direct Mail and Catalogs
Direct mail and catalog retailing is attractive because it eliminates the
cost of a store and clerks
Television Home Shopping

This is possible when consumers watch a shopping channel on which

products are displayed; orders are then placed over the telephone or the
Online Retailing
Online retailing allows consumers to search for, evaluate, and order
products through the internet
Another form of non-store retailing involves using the telephone to
interact with and sell directly to consumers
Direct selling
Direct selling, sometimes called door-to-door retailing, involves direct
sales of goods and services to consumers through personal interactions
and demonstrations in their home or office (ex. Mary Kay)
Positioning a Retail Store
Retail positioning matrix- a matrix developed by the MAC Group, Inc., a
management consulting firm this matrix positions retail outlets on two
dimensions: breadth of product line and value added
Breadth of product line= the range of products sold through each
Value added= includes elements such as location, product reliability,
and prestige
Retailing Mix
Includes activities related to managing the store and the merchandise
in the store
Similar to marketing mix and includes retail pricing, store location,
retail communication, and merchandise.
Retail pricing- retailers must decide on the markup, markdown,
and timing for markdowns
Off-price retailing- involves selling brand-name merchandise at
lower than regular prices
Store location second aspect of the retailing mix involves deciding
where to locate the store and how many stores to have
Central business district- the oldest retail setting, the communitys
downtown area
Regional shopping centers- consist of 50 to 150 stores that typically
attract customers who live or work with a 5-10 mile range, these
large shopping areas often contain two or three anchor stores,
which are well known national or regional stores
Community shopping center- typically has one primary store
(usually a department store) and often about 20 to 40 smaller
Strip mall- serve people who are within a 5-10 minute drive
Power center- a huge shopping strip with multiple anchor stores
such as Home Depot, Best Buy, or JcPenny (seen as having the

convenient location found in many strip malls and the additional

power of national stores)
Retail Communication
A retailers communication activities can play an important role in
positioning a store and creating its image
Managing the breadth and depth of the product line requires retail
buyers who are familiar with the needs of the target market and the
alternative products available from the many manufactures that
might be interested in having a product available in the store
Category Management- a popular approach to managing the
assortment of merchandise
Many retailers are developing an advanced form of category
management called consumer marketing at retail (CMAR)
The Wheel of Retailing
Describes how new forms of retail outlets enter the market
Usually they enter as low-status, low-margin stores such as a drive-in
burger stand with no indoor seating and a limited menu and then
gradually over time they add fixtures and more embellishments to
their stores
The Retail Life Cycle
The process of growth and decline that retail outlets, like products,
Early growth- the stage of emergence of a retail outlet, with a sharp
departure from existing competition
Accelerated development- both market share and profit achieve their
greatest growth rates
Future changes in Retailing
Two exciting trends in retailing that are likely to lead many changes for
retailers and consumers in the future
The growth of multichannel retailing
The increasing focus on customer experience management
Multichannel Retailing
Multichannel retailers will utilize and integrate a combination of
traditional store formats and non-store formats such as catalogs,
television, home shopping, and online retailing
Integrated channels can make shopping simpler and more
convenient a consumer can research choices online or in a
catalog and then make a purchase online, over the telephone, or
at the closest store
The use of multiple channels allows retailers to reach a broader
profile of customers
Managing the Customer Experience