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CHAPTER 8
CHAPTER 8
Retailing
Retailing
Retailingall the activities directly related to the sale of goods and services to the
ultimate consumer for personal, non business usehas enhanced the quality of
our daily lives.
Independent Retailers
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b) Level of Service
The level of service that retailers provide can be classified from full service to
self-service.
Some retailers, such as exclusive clothing stores, offer high levels of service.
They provide alterations, credit, delivery, consulting, gift wrapping, and personal
shopping.
Discount stores usually offer fewer services or no services.
c) Product Assortment
Discount specialty stores like IKEA or Toys R Us carry a broad assortment in
concentrated product lines, such as building and home supplies or toys.
d) Price
Price is a fourth way to position retail stores.
Traditional department stores and specialty stores typically charge full suggested
retail price.
In contrast, discounters factory outlets, and off price retailers use low prices as a
major lure for shoppers.
6a
6b
6c
6d
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1) Department Stores
Housing several departments under one roof, a department store carries a wide
variety of shopping and specialty goods, including apparel, cosmetics,
housewares, electronics, and sometimes furniture.
Purchases are generally made within each department rather than at one central
check-out area. Each department is treated as a separate buying center to achieve
economies in promotion, buying, service, and control.
Example : Metrojaya
2) Specialty Stores
Specialty store formats allow retailers to refine their segmentation strategies and
tailor their merchandise to specific target markets.
Examples include childrens clothing, mens clothing, candy, baked goods,
gourmet coffee, sporting goods, and pet supplies.
Example : Cosmetic MAC, Ogawa, Vincii, Starbucks
3) Supermarkets
Supermarketslarge, departmentalized, self-service retailers that specialize in
food and some non-food items.
Example : Giant, Tesco Supermarket
Superstores offer one-stop shopping for many food and nonfood needs, as well as
many servicesincluding pharmacies, flower shops, salad bars, in-store bakeries,
takeout food sections, sit-down restaurants, health food sections.
Scrambled Merchandising
This tendency to offer a wide variety of nontraditional goods and services under
one roof is called scrambled merchandising.
Loyalty Marketing Programs
Many supermarket chains are tailoring marketing strategies to appeal to specific
consumer segments to help them stand out in an increasingly competitive
marketplace. Most notably is the shift toward loyalty marketing programs that
reward loyal customers carrying frequent-shopper cards with discounts or gifts. Jcard, Sogo Card
4) Drugstores
Drugstores also carry an extensive selection of over the counter (OTC)
medications, cosmetics, health and beauty aids, seasonal merchandise, specialty
items such as greeting cards and a limited selection of toys, and some non
refrigerated convenience foods.
Example : Guardian Pharmacy, Watson
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5) Convenience Stores
A convenience store can be defined as a miniature supermarket, carrying only a
limited line of high-turnover convenience goods.
These self-service stores are typically located near residential areas and are open
twenty-four hours, seven days a week. Convenience stores offer exactly what
their name implies: convenient location, long hours, fast service.
However, prices are almost always higher at a convenience store than at a
supermarket. Thus the customer pays for the convenience.
Example : 7e, KK Mart or Kedai Mesra
6) Discount Stores
A discount store is a retailer that competes on the basis of low prices, high
turnover, and high volume.
Discounters can be classified into four major categories: full-line discount stores,
discount specialty stores, warehouse clubs, and off-price discount retailers.
6a) Full-Line Discount Stores
full-line discount stores offer consumers very limited service and carry a
much broader assortment of well-known, including housewares, toys,
automotive parts, hardware, sporting goods, and garden item, as well as
clothing, bedding, and linens.
Full-line discounters are often called mass merchandisers. Discounts for all
items.
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7) Restaurant
Restaurants straddle the line between a retailing establishment and a service
establishment.
Restaurants do sell tangible products, food and drink, but they also provide a
valuable service for consumers in the form of food preparation and food service.
Most restaurants could even fall into the definition of a specialty retailer given
that most concentrate their menu offerings on a distinctive type of cuisinefor
example, Starbucks coffee houses, Kentucky Fried Chicken, and Pizza Hut pizza
restaurants.
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Nonstore Retailing
The retailing methods discussed so far have been at the origin in-store methods, in
which customers must physically shop at stores.
In contrast, nonstore retailing is shopping without visiting a store.
Because consumers demand convenience, nonstore retailing is currently growing
faster than in-store retailing. The major forms of nonstore retailing are:
1) Automatic vending
2) Direct retailing
3) Direct marketing
4) Electronic retailing
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1) Automatic Vending
A low-profile yet important form of retailing is automatic vending, the use of
machines to offer goods for salefor example, the cola, candy, or snack vending
machines found in college cafeterias and office buildings.
Due to their convenience, consumers are willing to pay higher prices for products
from a vending machine than for the same products in traditional retail settings.
2) Direct Retailing
In direct retailing, representatives sell products door-to-door, office-to-office, or
at home sales parties.
Companies like Avon and Mary Kay Cosmetics depend on these techniques.
Even personal computers are now being sold through direct retailing methods.
The company targets new users of technology who need more support with the
purchase, setup, and learning of computers and the Internet.
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c) Telemarketing
Telemarketing is the use of telephone to sell directly to consumers.
Outbound telemarketing is call customers and prospects to sell products and
services, generate and qualify leads, prompt them to visit stores and showrooms
and set appointments. Give existing buyers heads-up on hot deals.
Inbound telemarketing is customer call and order such as Mcdonals.
4) Electronic Retailing
Electronic retailing includes the twenty-four-hour, shop-at-home television
networks and online retailing.
a) Shop-At-Home Networks
The shop-at-home television networks are specialized forms of direct-response
marketing.
These shows display merchandise, with the retail price, to home viewers. Viewers
can phone in their orders directly on a toll-free line and shop with a credit card.
Shop-at-home networks have the capability of reaching nearly every home that
has a television set. For example SmartShop, Go-shop@astro.
b) Online Retailing
For many people today, it means turning on a computer, surfing retail Web sites,
and selecting and ordering products online with the click of a mouse.
Online retailing, or e-tailing, is a type of shopping available to consumers with
personal computers and access to the Internet. For example, www.mudah.my or
www.lelong.com, instagram, facebook etc.
Franchising
Franchise
Franchiser - The franchiser originates the trade name, product, methods of operation,
and so on.
Franchisee - The franchisee, in return, pays the franchiser for the right to use its name,
product, or business methods.
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A franchise agreement between the two parties usually lasts for ten to twenty years, at
which time the franchisee can renew the agreement with the franchiser if both parties
are agreeable.
The franchisee may also be expected to pay advertising fees, which usually cover the
cost of promotional materials and, if the franchise organization is large enough,
regional or national advertising.
The size of the restaurant facility, area of the country, inventory, selection of kitchen
equipment, signage, and style of dcor and landscaping affect new restaurant costs.
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STEP 1
Defining a Target Market
The first and foremost task in developing a retail strategy is to define the target
market.
Successful retailing has always been based on knowing the customer.
Target markets in retailing are often defined by demographics, geographic, and
psychographics.
STEP 2
Choosing the Retailing Mix
1
6
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Merchandise type and density: They type of merchandise carried and how
it is displayed add to the atmosphere the retailer is trying to create.
Fixture type and density: Fixtures can be elegant (rich woods), trendy
(chrome and smoked glass), or consist of old, beat-up tables, such as in an
antique store.
Odors: Smell can either stimulate or detract from sales. The wonderful
smell of pastries and breads entices bakery customers. Conversely,
customers can be repulsed by bad odors such as cigarette smoke, musty
smells, antiseptic odors, and overly powerful room deodorizers. Lovely
lace odor maybe strong for some people.
Visual factors: Colors can create a mood or focus attention and therefore
are an important factor in atmosphere. Red, yellow, and orange are
considered warm colors and are used when a feeling of warmth and
closeness is desired. Some colors are better for display. For instance,
diamonds appear most striking when against black or dark blue velvet.
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