Retailing and Direct Marketing

Retailing and Direct Marketing

• Retailing includes selling products or services directly to final consumers for personal, non-business use.
• Most retailing is done by businesses, whose sales come primarily from retailing.
• Non-store retailing has grown faster than store retailing recently.
• Non-store retailing includes selling to final consumers through various methods like direct mail, the Internet, and vending machines.

Types of Retailers

• Retail stores vary in shape and size. They can be classified by service amount, product line breadth/depth, pricing, and organization.

Major Store Retailer Types

• Specialty Stores carry a narrow product line with deep assortment within that line; e.g., apparel, sporting goods, bookstores. An example is CMS bookshop in Broad Street Lagos.
• Department Stores carry a wide variety of product lines, each line operated as a separate department managed by specialist buyers or merchandisers; examples include Just Rites in Nigeria.
• Supermarkets are large, low-cost, self-service stores with a wide variety of grocery and household products. Examples include Ebiano Supermarket in Lekki and Shoprites Ikeja City Hall.
• Convenience Stores are small stores near residential areas, open long hours, carrying limited high-turnover convenience goods at slightly higher prices; examples include Ogunleye Stores, Finbarr's Road and Best Choice Convenience Store University Road.
• Discount Stores carry standard merchandise sold at lower prices with lower margins and higher volumes; for example, Vitafoam Discount Shop at Oguntona Cresent and Unique Metro Mart at Herbert Macauley Way.
• Off-Price Retailers sell merchandise bought at less-than-regular wholesale prices, including factory outlets, independent off-price retailers, and warehouse clubs; e.g., Konga Retail Store, SPAR Ilupeju, Jumia Ogunsanya Pickup Station, Wine House Nigeria at Bode Thomas.
• Superstores are larger than regular supermarkets, offering routinely purchased food, non-food items and services. Examples include Trolleys Superstore in Industrial Avenue and Justrite Superstore at Shomolu.
• Category Killers are giant specialty stores with a deep assortment in a particular category and knowledgeable staff, often the size of airplane hangars.
• Hypermarkets are huge superstores, another superstore variation. They have met with more success in Europe than in the United States.
• Service Retailers include hotels, banks, airlines, colleges, movie theatres, restaurants, repair services, hair salons, and dry cleaners. Service retailers are growing faster than product retailers.

Amount of Service

• Retailers offer self-service, limited service, or full service.
• Self-service retailers serve customers who perform their own "locate-compare-select" process to save money, which is the basis of discount operations.
• Limited-service retailers offer more assistance, increasing operating costs and prices.
• Full-service retailers provide salespeople to assist customers in every phase of the shopping process, with higher costs passed to customers.

Product Line

• Retailers are classified by product assortment length and breadth.
• Specialty stores carry narrow product lines with deep assortments within those lines.
• Department stores carry a wide variety of product lines but face competition from focused specialty stores and lower-priced discounters.
• Supermarkets face slow sales growth due to competition from discount food stores, supercenters, and upscale specialty food stores. They are improving to attract more customers through store improvements, higher-quality food, cost-cutting, and web-based sales.
• Convenience stores carry a limited line of high-turnover convenience goods and are experiencing growth by expanding beyond their traditional market.

Superstores

• Superstores are much larger than regular supermarkets. Examples include Justrite Superstore Ltd, Trolleys Superstore and Yem-Yem Superstore, among others.
• Category Killers are large specialty stores that feature a very deep assortment of a particular line with a knowledgeable staff
• Hypermarkets are a superstore variation and are very large

Relative Prices

• Retailers can be classified according to price: regular, higher, or low prices. Discount and off-price retailers offer low prices.
• Discount stores sell standard merchandise at lower prices with lower margins and higher volume.
• Off-price retailers sell at less than regular wholesale prices.
• The three main types of off-price retailers consist of independents, factory outlets, and warehouse clubs.

Organisational Approach

• Retail stores are independently owned or band together under corporate/contractual organizations.
• Chain stores have two or more commonly owned/controlled outlets, with advantages over independents due to size and economies.
• Voluntary chains are wholesaler-sponsored groups of independent retailers engaged in group buying and common merchandising.
• Retailer cooperatives consist of independent retailers banding together to set up a jointly owned wholesale operation and conduct joint promotion efforts.
• Franchise is a contractual arrangement based on a unique product/service, method of business or franchise-developed trademark/goodwill
• Merchandising conglomerates are corporations that combine several different retailing forms under central ownership.

Retailer Marketing Decision

• Retailers must define their target markets and positioning.
• Retailers must make product assortment, services mix and store atmosphere decisions

Price Decision

• A price policy should fit the market, positioning, product/service assortment & competition
• High markups and high volume cannot be achieved together.

Promotion Decision

• Promotion tools used include: advertising, personal selling, sales promotion, public relations, and direct marketing.

Place Decision

• Critical factors are location, location, and location. Retailers should select locations that are accessible to the target market and consistent with their positioning.
• A shopping center is a group of retail businesses planned, developed, owned, and managed as a unit.

Wheel-of-Retailing Concept

• Wheel-of-retailing concept - New retailers start with low margins/prices/status, then evolve to higher prices/service eventually replacing conventional retailers.

Growth of Nonstore Retailing

• Most store retailers have developed direct-retailing channels. Greater online retailing volume is conducted by "click-and-brick" retailers than "click-only."
• Online retailing is alive, well, and growing.

Rise of Mega Retailers

• Mega retailers offer better merchandise selections, service, and price savings

Major Types of Retail Organisations

• Corporate chain stores have two or more outlets.
• Voluntary chains-Wholesaler-sponsored groups of independent retailers engaged in buying and merchandising
• Retailer cooperatives are groups of independent retailers who set up a central buying organization and conduct joint promotion efforts.
• Franchise organizations has a contractual association.

Direct Marketing

• Direct marketing enables marketers to reach their target audience, bypassing intermediaries.
• Direct marketing types: direct mail, telemarketing, electronic marketing, online marketing
• Early direct marketers gathered customer names and sold goods mainly by mail and telephone.
• Internet marketing has undergone a dramatic transformation

Benefits to Buyers

• Benefits include being convenient, easy, and private.
• Direct marketing can offer flexibility.
• Can access a wealth Information.

Benefits to Sellers

• Direct marketing is a powerful tool for customer relationship building.
• Direct marketing also offers lower costs, improved efficiencies, and speedier handling

Customer Database

• Customer database-Organized compilation of comprehensive data of individual customers/prospects, including geographic, demographic, psychographic, and behavioral data.

Forms of Direct Marketing

• Telephone marketing or telemarketing uses the telephone to sell directly to consumers.
• Direct-mail marketing is sending offers, announcements, or other items at a particular address
• Catalogue marketing-Catalogue shopping was started almost as explosively as the Internet
• Direct response television marketing-Direct-response television marketing (DRTV) takes one of two main forms, direct-response advertising or home-shopping channels

Public Policy and Ethical Issues in Direct Marketing

• Direct marketers must address public policy issues such as irritation, unfairness, deception, fraud, and invasion of privacy.

Retailing

• Retailing makes the purchase of goods easy for the consumer.
• Retailing displays products and stocks them
• Some retailers offer personal shopping consultation and gift wrapping
• Wholesalers sell in bulk, while retailers are the final link in the supply chain.
• Manufacturers produce the goods
• Wholesalers purchase finished goods in large bulk quantities from Manufacturers
• Retailers sell the goods in amounts that end-users need
• Consumers are end users who purchase for personal use

Different Types of Retail Stores

• Department stores sell a wide range of merchandise that is arranged by category into different sections of the physical retail space.
• Grocery stores and supermarkets sell all types of food.
• Warehousing Retailers are large no-frills warehouse-type facilities.
• Specialty Retailers are in a specific category of products
• Convenience Retailer is usually a retail location which sells gasoline primarily
• Discount Retailer This sells a wide variety of products which are often private labelled or generic brands at below-retail prices.
• Mobile Retailer - Uses a smartphone platform to process retail transactions
• Internet E-tailer Sell from an Internet shopping website