Chapter 1 - Role Of Retailing Flashcards
The 3 Marketing functions of retailing
A provision of a link between customers and manufacturers
Functions performed in the marketing channel
Ability to create an image that enhances the marketing of a good or service.
Retailing Gaps or discrepancies between customer and manufacturer
S T I Q O V
Spatial gaps
- production and consumption take place in a different geographical location.
- retailer overcome this by selling in consumer populated areas
Time Gaps
- difference between production and consumption times.
Retailer make goods available when consumers want to purchase them. Eg Seasonal winter clothes
Information Gap
These gaps exist when producers need to make consumers aware of their products.
Done through advertising and sales promotion
Quantity or Assortment gap
When manufacturers narrow down product lines to achieve economies of scale. Producers provide greater variety and satisfaction for the customers.
Ownership Gaps
These discrepancies exist when consumers are unable to own products. Retailers make this possible through providing credit facilities.
Value Gaps
When consumers are in need of adjustments to a product. Services that add value to a p/s. Eg gift wrapping, deliveries and repairs. So is product customisation to better fit the consumers needs.
Functions performed in the marketing channel by Retailers
Marketing Functions of Retailers
Removing risk -
for wholesales and producers by ordering and stocking products in advance.
Offering the last opportunity for consumer interaction by providing products at convenient locations for consumers
Acting as a major source of market information - they detect changes in consumer purchasing and consumption habits and provide these to suppliers
Providing storage for products on consignment
Advertising and sales promotion
Providing access to consumers on a wide front: Retailers can be found in remote areas as well
Enhancing the product image of the wholesaler or producer by using location, architecture and decor.
Factors that influence a retailers image
Physical layout, architecture and general appearance of the shop
Price, quality and variety of products
Behaviour, appearance and knowledge of staff members
Customer mix, congestion and density of products
Parking facilities and convenience of access
The retailing concept
The retailer strives for satisfaction of consumers needs and wants while still achieving retailing objectives.
The retailing concept helps with identifying needs and wants and developing plans to satisfy their needs and wants.
This doesn’t not analyse the internal capabilities and strength of retailer but only the Identification and commitments to need and want satisfaction.
When the retailing concept is executed properly the consumers will experience “total retail experience” and the development of a long term relationship with the retailer
3 elements of the retailing concept
- Consumer orientation helps the retailer determine and focus on consumers needs and wants
- An integration and coordination of retailers plans and activities to satisfy consumer needs and wants
3 A goal orientation the aims at achieving financial and non financial goals by addressing consumer needs and wants with an integrated and coordinated approach by the retailer
The total retail experience
This consists of all the activities that either enhance or inhibit consumers during their interaction with the retailers
Some controllable elements of the total retailer experience
The number and appearance of salespeople on the shop floor
Brands offered
Layout
Display windows
Decor
Uncontrollable elements of the total retail experience
Quality of road that give access to shop
Sufficiency of on street-parking
Traffic congestion
Environmental factors
Behaviour of customers in the shop
Two components of consumer service
Services expected: Necessary like shopping baskets at a grocery store
Augmented services: services that a consumer would not consider essential like deliveries or consumer advice on nutritional value of foodstuffs
Relationship retailing
A strategy of activities that aims to attract retain and enhance the long term association between a retailer and individual consumers.
The focus here is on the creation of consumer loyalty.
The availability and low cost of computer technology has made development and maintenance of relationship retailing easier by utilising individual data on consumers to offer them useful augmented services
4 Theories of the emergence, growth and decline of retail institutions
Wheel of retailing
Dialectical process
Retail life cycle
Retail accordion
Wheel of retailing
Entry
- exploiting the weakness of other retailers by entering the market with low prices , low profit and low status.
Trading up
To differentiate retailers trade up and increase availability of additional services. Most common would be changes in demographic trends by offering higher quality products etc. Prices will rise.
Vulnerability
Retailer reaches maturity with high-cost and high profit which becomes vulnerable to other new low cost institutions.
The dialectical process
Thesis: the established retailing institution.
- speciality stores - with high prices and deep assortment
Antithesis: A new challenging institution
- discount stores - with low prices and broad variety
Synthesis: a retailing institution formed by the natural adaptations of the two initially opposing retail institutions.
- Category killer - average margin, reasonable prices, reduced services, shallow variety and extensive assortment.
Retail life cycle
Introduction phase
- Innovation of a new concept with a stark contrast to existing retailers
Fasted- tracked development phase
- early growth phase where sales, volume and profits have a rapid increase.
Maturity phase
Where cost pressure causes both sales volume and profit levels to reach their maximum levels. Market share stabilises and profit levels decline as new retailers enter at lower prices
Shrinking phase
Retailers try to curb shrinkage through repositioning the business or applying the techniques that the new retailing institutions are using
The retail accordion
This theory is based on the assumption that the merchandise mix of retailers offers an explanation for retail structure change.
Retailer begin as institutions that offer a wide variety then eventually offer a more limited range of specialised merchandise.
7 Reasons for international retailing
Foreign markets may represent better growth opportunities because of population trends etc
Domestic markets may be saturated
A retailer may be able to offer p/s not available in foreign market
May be less competition in foreign market
Foreign markets may supplement domestic sales
Tax incentives may be available in foreign markets
Worldwide changes in government and economic shits make countries more to foreign retailers
Factors to consider when engaging in international retailing
Institutional factors
- government restrictions and and incentives
Consumer factors
- demographics- income levels, literacy.
Store location factors
- availability of suitable sites
- rental/ purchase terms
- public transportation
- vehicle accessibility
Operation factors
- number + experience of personnel
- predominant management style
- prevalence of shoplifting
Merchandise factors
- width, depth and quality of merchandise available
- availability and quality of suppliers
Pricing factors
- pricing level
- taxes and levies
- price control
Image and promotional Factors - preferred store atmosphere of locals - shop layout - media availability and cost
Merchandise factors
Pricing factors
Image and promotion factors
4 best known entry strategies
Franchising - most visible
Self start entry
Acquisition of existing retailers
Joint ventures
Trends in South African Retailing
Convenience considerations
Expansion and growth of informal markets
Shifting of channel power
Expansion of services
Information management
Retail innovation
Revenue enhancement
Consumer and lifestyle influences
Casualisation and professionalisation of retail work force
Multichannel retailing
Importance of retailing in the South African Economy
Major source of employment
- 4th largest contributor to GDO and employed 20% of SA workforce.
+ informal retailing
4 Characteristics of successful international retailers:
Globally sustainable competitive advantage
Ability to adapt to local circumstances
Global mindset
Own sufficient financial resources
