Chapter 16:

Question 1

What is retailing?

Answer 1

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.

Question 2

What is primarily the retailer’s responsibility?

Answer 2

Make sure that customers’ expectations are fulfilled

Question 3

4 factors for establishing a relationship with retailers

Answer 3

1. Choosing retail partners (how likely is it for certain retailers to carry their products- look at target customer location, overall size and level of sophistication of manufacturer)
2. Identifying types of retailers (which one is appropriate?)
3. Developing a retail strategy
4. Managing an omnichannel strategy

Question 4

What is an omnichannel strategy?

Answer 4

Selling in more than one channel (e.g. stores, internet, catalog)

Question 5

What is a supercenter?

Answer 5

Large store that combines a full-line discount store with a supermarket in on place. e.g. Walmart, Target etc

Question 5

What to look at when choosing retail partners?

Answer 5

1. Channel structure
2. Customer expectations
3. Channel member characteristics
4. Distribution intensity

Question 5

What is a full-line discount store?

Answer 5

Retailer that offers low prices, limited service, and a broad variety of merchandise.

Question 6

What helps determine channel structure?

Answer 6

• size of channel member
• sophistication

the bigger and more sophisticated, the less likely that it will use supply chain intermediaries

Question 6

What is a limited-assortment supermarket?

Answer 6

Retailer that only offers one or two brands or sizes of most products (usually including a store brand) and attempts to achieve great efficiency to lower costs and prices

Question 6

Three levels of distribution intensity

Answer 6

Distribution intensity: the no of supply chain members to use at each level of the supply chain

intensive distribution: strategy designed to get produced into as many outlets as possible
e.g. used by most consumer packaged-goods companies

exclusive distribution: strategy in which one selected retailers can sell a manufacturer’s brand
e.g. granting exclusive geographic territories to one or very few retail customers so that no other retailers in the territory can sell a particular brand
(can ensure enough inventory when firm is just starting out, also ensure protection of profit margins of retailers due to lack of competition)

selective distribution: lies between the intensive and exclusive distribution strategies; uses a few selected customers in a territory
(helps seller maintain a particular image and control flow of merchandise into an area)

Question 6

What is a conventional supermarket?

Answer 6

Large, self-service retail food store offering groceries, meat, and product- as well as some nonfood items such as health and beauty aids and general merchandise.

Question 7

What is a warehouse club?

Answer 7

Large retailer with an irregular assortment, low service levels, and low prices that often requires membership for shoppers
e.g. Costco, Sam’s Club (Walmart)

Question 8

What are convenience stores?

Answer 8

Type of retailer that provides a limited no of ties, at a convenient location in a small store with speedy checkout. e.g. 7-Eleven

Question 9

What is a department store?

Answer 9

A retailer that carries many different types of merchandise (brand variety) and lots of items within each type (deep assortment); offers some customer services; and is organized into separate departments to display its merchandise.

Question 10

Examples of food retailers:

Answer 10

1. Supermarkets
2. Supercenters
3. Warehouse clubs
4. Convenience stores
5. Online grocery retailers

Question 11

Examples of general merchandise retailers

Answer 11

1. Department stores
2. Full-line discount
3. Specialty stores
4. Drugstores
5. Category specialists (e.g. Staples, IKEA)
6. Extreme-value retailers e.g. Dollar Tree
7. Off-price retailers e.g. TJ.Maxx (offer merchandise at a significant discount from the manufacturer’s suggested retail price (MSRP))

Question 12

Examples of service retailers

Answer 12

Hair salon, dry cleaner etc

Question 13

How are the 7Ps used for retailers

Answer 13

Product: offering assortment give customers a choice, don’t like excess inventory
so turn to private-label brands

Price: Defines value of both merchandise and the service, and general price range of a particular store helps define its image
e.g. Saks Fifth vs JCPenney
Price should always be aligned with the other elements of a retailer’s strategy

Place: convenience is a key ingredient to success, especially location

Promotion: catalogs, traditional ads, especially sales promotion: in-store and online coupons, mobile commerce, also coordinated effort between manufacturer and retailer (co-op advertising)

Presentation: atmospherics- what is it like in the store- cater to 5 senses, strategic placement, point-of-purchase (POP)

Personnel: well-trained sales personnel can influence the sale at point of purchase by educating consumers about product attributes or advantages over others, and encouraging multiple purchases. Also help sale complicated products and handle sales transactions
e.g. Apple and Apple geniuses

Processes: how can they add value? e.g. shorter lines, personalized service, electronic gadgets like at Apple stores

Question 15

Advantages of Internet channel for retailers?

Answer 15

• Can host a wider, broader selection of products
• Retailers can provide customers with more personalized info about products and services, and more personalized overall offering
• Can enter menu markets economically through the web
• Gain access to customers’ shopping behavior

Con:
creates additional complicated challenges when maintaining constant brand image, developing pricing strategies across channels and maintaining an effective supply chain