Chapter 16: Retailing and Multichannel Marketing

Objectives: 

• Discuss the four factors manufacturers should consider as they develop their strategy for working with retailers,
• Outline the considerations associated with choosing retail partners,
• List the three levels of distribution intensity,
• Describe the various types of retailers,
• Describe the components of a retail strategy,
• Identify the benefits of stores,
• Identify the benefits of multichannel retailing,
• detail the challenges of multilevel retailing.

Retailing: The set of business activities that add value to products and services sold to consumers for their personal or family use; includes products bought at stores, through catalogs, and over the internet, as well as services like fast-food restaurants, airlines, and hotels. 

Factors for Establishing a Relationship with Retailers:

1. Choosing Retail Partners
2. Identifying Types of Retailers
3. Develop a Retail Strategy
4. Managing a Multichannel Strategy

Multichannel Strategy: Selling in more than one channel (ex: stores, internet, catalog).

I. Choosing Retail Partners

• Channel Structure
• Customer Expectations
• Channel Member Characteristics
• Distribution Intensity: The number of Supply chain members to use at each level of the supply chain.
• Intensive Distribution: A strategy designed to get products into as many outlets as possible.
• Exclusive Distribution: A strategy in which selected retailers can sell a manufacturer's brand.
• Selective Distribution: Lies between the intensive and exclusive distribution strategies; uses a few selected customers in a territory.

II. Identifying Types of Retailers

• Food Retailers
• Supermarkets
• Conventional Supermarkets: Type of retailer that offers groceries, meat, produce, with limited sales of nonfood items, such as beauty and health aids and general merchandise, in a self service format.
• Stock Keeping Units: (SKUs) Individual items within each product category; the smallest unit available for inventory control.
• Limited Assortment Supermarkets: (Extreme Value Food Retailers) Retailers that offer only one or two brands or sizes of most products (usually including a store brand) and attempt to achieve great efficiency to lower costs and prices.
• Super-centers: Large stores combining full-line discount stores with supermarkets in one place. 
• Warehouse Clubs: Large retailers with an irregular assortment, low service levels, and low prices that often require membership for shoppers.
• Convenience Stores: Type of retailer that provides a limited number of items at a convenient location in a small store with a speedy checkout. 
• General Merchandise Retailers
• Department Stores: A retailer that carries many different types of merchandise (broad variety) and lots of items within each type (deep assortment); offers some customer services, and is organized into separate departments to display its merchandise.
• Full-Line Discount Stores: Retailers that offer low prices, limited service, and a broad variety of merchandise.
• Specialty Stores: A type of retailer that concentrates on a limited number of complimentary merchandise categories in a relatively small store.
• Drugstores: A specialty store that concentrates on health and personal grooming merchandise, though pharmaceuticals may represent more than 60 percent of its sales.
• Category Specialists: A retailer that offers a narrow variety but a deep assortment of merchandise.
• Big-Box Retailers: Discount stores that offer a narrow but deep assortment of merchandise.
• Category Killers: A specialist that offers an extensive assortment in a particular category, so much so that other retailers cannot compete. 
• Extreme Value Retailers: A general merchandise discount store found in lower income urban or rural areas.
• Off-Price Retailers: A type of retailer that offers inconsistent assortment of merchandise at relatively low prices. 
• Services Retailers: A firm that primarily sells services rather than merchandise. 
• Auto Rental
• Health Spa
• Vision Center
• Bank

III. Developing a Retail Strategy using the Four Ps

• Product
• Exclusive Co-brand: Developed by national brand vendor and retailer and sold only by that retailer. 
• Price
• Promotion
• Mobile Commerce: (m-commerce) Communicating with or selling to consumers through wireless handheld devices such as cellular devices. 
• Cooperative Advertising (Co-op): An agreement between a retailer and a manufacturer in which the manufacturer agrees to defray some advertising costs. 
• Share of Wallet:  The percentage of the customer's purchases made from a particular retailer. 
• Place

IV. Benefits of Stores for Consumers

• Browsing
• Touching and Feeling Products
• Personal Service
• Cash and Credit Payment
• Entertainment and Social Experience
• Immediate Gratification

V. The Benefits of the Internet and Multichannel Retailing

• Deeper and Broader Selection
• Personalization
• Personalized Customer Service
• Online Chats: Instant messaging or voice conversation with an online sales representative.
• Personalized Offering
• Expand Market Presence

VI. Effective Multichannel Retailing

• Integrated CRM
• Brand Image
• Pricing
• Supply Chain