Topic 11

TOPIC 11
RETAILING
Boone & Kurtz, Contemporary Marketing, Nineteenth Edition. © 2022 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Objectives
11.1 Describe the retailing sector in terms of size, major companies, and
marketing channels.
11.2 Describe the six components of retail strategy.
11.3 Given a component of retail strategy, summarize the key strategic
considerations for that component.
11.4 Outline the four bases for categorizing retailers.
11-1
Retailing
Boone
Boone&&Kurtz,
Kurtz,Contemporary
ContemporaryMarketing,
Marketing,Nineteenth
NineteenthEdition.
Edition.©©2022
2022Cengage.
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11-1 Retailing
• Retailing: the activities involved in selling merchandise to consumers
• Retailers represent the distribution channel to most consumers.
• Retailers determine:
• Locations
• Store hours
• Number of sales personnel
• Store layouts
• Merchandise selections
• Return policies
• Technology is changing the way consumers shop.
• WHAT TYPES OF RETAILER WOULD ATTRACT YOU AS CUSTOMER?
11-2
Retailing Strategy
Boone
Boone&&Kurtz,
Kurtz,Contemporary
NineteenthEdition.
Edition.©©2022
2022Cengage.
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11-2 Retailing Strategy (1 of 7)
• A retailer develops a marketing strategy based on the firm’s goals and

strategic plans.
• Part of this strategy includes developing a retailing mix to satisfy the chosen
market.
• Merchandising strategy
• Customer service standards
• Pricing guidelines
• Promotion goals
• Location/distribution decisions
• Store atmosphere choices
Exhibit 16.2 Components of Retail Strategy
• Merchandising strategy: guides a retailer’s decisions regarding the items it

will offer.
• A retailer must decide on:
• General merchandise categories – RETAIL STORES,WALMART,LOTUS
• Product lines
• Specific items within lines
• Depth and width of assortments
• Example: Selling “all things beauty,” Ulta offers well-known brands such as Cover Girl as well as
high-end cosmetics and professional hair care products.
• Customer service strategy: some stores offer no-frills shopping.

• Others build their retailing strategy around customer service for shoppers.
• Examples: gift wrapping, alterations, bridal registries, delivery, and installations
• A retailer’s customer service strategy must specify:

• The services the firm will offer
• Whether it will charge customers for the services
• Example: Ulta allows customers to try products before they buy and provides full-service
salons offering haircuts, facials, and manicures.
• Pricing strategy: prices reflect a retailer’s marketing objectives and policies.

• Prices also impact consumers’ perceptions of a retailer.
• Example: Ulta offers high-end brands as well as affordably priced products.
• Location/Distribution strategy: location can be a determining factor in the

success or failure of a retail business. Retailer may locate as isolate site,central
business district, planned shopping center.
• The location decision depends on the:
• Type of merchandise
• Retailer’s financial resources
• Characteristics of the target market
• Site availability
• To change its perception of discount shopping, Ulta stores moved from strip malls to locations near
urban centers.
• Ulta built two distribution centers to improve delivery times for online purchases.
• Promotional strategy: retailers use promotional techniques to entice more
shoppers.
• A retailer communicates information about its stores:
• Locations
• Merchandise selections
• Hours of operation
• Prices
• Advertising is typically used to promote current styles.
• Example: To promote the store, Ulta advertises during prime-time TV shows and uses
direct mail and print ads in fashion magazines.
• Atmospherics: the physical characteristics and amenities that attract

customers and satisfy their shopping needs
• Atmospherics include both a store’s exterior and interior décor.
• Ulta has created store interiors that are bright and clean with an open layout and wide
aisles.
11-3
Strategic Considerations for Retail Strategy
Boone
Boone&&Kurtz,
Kurtz,Contemporary
NineteenthEdition.
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11-3 Strategic Considerations for Retail Strategy
(1 of 8)
• A retailer begins to define its strategy by selecting a target market.

• Once a retailer has done that, it must develop a retailing mix to satisfy the
chosen market.
• Example: Best Buy has identified a number of target markets:
• Small business owners
• Affluent professionals
• Adopters of new technology
• Suburban families
(2 of 8)
• Merchandising strategy: to develop a successful merchandise mix, a retailer

must weigh a few priorities:
• The preferences and needs of its defined target market
• The overall profitability of each product line and category
• The competitive environment influences these choices.

• By offering a range of electronic product categories and multiple brands within each
category, Best Buy is a trusted source for consumers’ electronics needs.
(3 of 8)
• Customer service strategy: choosing which services to offer and how much
to charge for them depends on:
• Store size, type, and location
• Merchandise assortment
• Services offered by competitors
• Customer expectations
• Financial resources
• The basic objective of all customer services focuses on attracting and
retaining target customers in order to increase sales and profits.
• Example: Best Guy’s Geek Squad provides services such as home installation, set up,
support, and repair for thousands of products.
(4 of 8)
• Pricing strategy: retailers determine a pricing strategy based on:

• Type of product
• Company objectives
• Competitor pricing
• Customer perceptions
• Markup: the amount a retailer adds to a product’s cost to set the final selling
price.
• The amount of markup typically results from services performed by the
retailer and inventory turnover rate.
(5 of 8)
• Showrooming: when a customer examines and compares products at a

store, then buys the product through an online retailer
• Example: Best Buy introduced price matching to reduce lost sales through
showrooming.
(6 of 8)
• Location/distribution strategy: planned shopping centers: a group of retail

stores designed, coordinated, and marketed to shoppers in a geographic
trade area
• Example: Almost all Best Buy stores are located in planned shopping centers.
• Distribution impacts how efficiently a retailer gets its products to customers.

• Example: Best Buy offers same day in-store pickup on many items purchased online.
(7 of 8)
• Promotional strategy: decisions about the amount and type of promotion are
influenced by the target market and other components of the retailer’s
strategy.
• Best Buy uses many promotional techniques:
• Weekly circulars
• Commercials
• Banner ads on websites
• In-store promotions
(8 of 8)
• Store atmospherics:
• The exterior of a store:
• Identifies the retailer
• Attracts its target shoppers
• The interior of a store should:
• Complement the retailer’s image
• Respond to customers’ interests
• Induce shoppers to buy
• When designing the interior and exterior of a store, marketers must remember that
people shop for reasons other than purchasing needed products.
• Best Buy’s products are displayed to encourage customers to try them.
• Products are grouped with clear signage to help customers navigate the stores.
11-4
Categorizing Retailers
Boone
Boone&&Kurtz,
Kurtz,Contemporary
NineteenthEdition.
Edition.©©2022
2022Cengage.
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Reserved.May
Maynot
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scanned,
scanned,copied
publiclyaccessible
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11-4 Categorizing Retailers (1 of 6)
• Certain differences define categories of retailers:
• Forms of ownership
• Shopping effort expended by customers
• Services provided to customers
• Product lines carried
• These categories are not mutually exclusive.
• Classification by form of ownership: the easiest way to categorize retailers

may be by ownership structure.
• Chain stores
• Groups of retail outlets that operate under central ownership and management
• Independent retailers
• Those who are responsible for their own businesses
• Classification by shopping effort: this classification is based on the reasons

consumers shop at a particular retailer:
• convenience retailers: stores that appeal to customers by having accessible locations,
extended store hours, rapid checkout service, and adequate parking
• Examples: local food stores, gas stations, dry cleaners
• shopping stores: stores where consumers compare prices, assortments, and quality
levels before making purchase decisions
• Examples: furniture stores, clothing outlets, sporting goods stores
• specialty retailers: stores that combine carefully defined product lines, services, and
reputations in attempts to persuade consumers to expend considerable effort to shop at
their stores
• Examples: Macy’s, Sephora, Footlocker
• Classification by services provided: this classification differentiates retailers

by the services they provide:
• A continuum between self-service and full-service retailers with the middle of the
continuum called self-selection
• Example: A gas station is a self-service retailer; LensCrafters is a full-service eyeglass retailer.
• Most retailers fall between self-service and full-service and are considered
self-selection.
• Examples: Albertsons and Kroger grocery stores
• Classification by product line: this classification results in three major

categories:
• specialty stores: focus on a single product category but stock it in considerable depth
or variety
• Examples: health food stores, shoe stores, bakeries
• general-merchandise retailers: stores that carry a wide variety of product lines stocked
in some depth and distinguish themselves from specialty retailers by the large number of
product lines they carry
• Examples: Target, Walmart
• supermarkets: stores that sell mainly groceries, but also a wide selection of items in
other categories
• Examples: Whole Foods, Fred Meyer, Costco
• Department Store: a series of specialty stores under one roof
Non store retailing
• Direct marketing – a broad concepts includes direct mail,direct selling,online and auto
merchandise
• Direct mail
• Direct selling
• Online retailing
• Direct response retailer
• Auto merchandise

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• WHAT TYPES OF RETAILER WOULD ATTRACT YOU AS CUSTOMER?

• A retailer develops a marketing strategy based on the firm’s goals and

• Merchandising strategy: guides a retailer’s decisions regarding the items it

• Specific items within lines

• Depth and width of assortments

• Customer service strategy: some stores offer no-frills shopping.

• A retailer’s customer service strategy must specify:

• Whether it will charge customers for the services

• Pricing strategy: prices reflect a retailer’s marketing objectives and policies.

• Location/Distribution strategy: location can be a determining factor in the

• Atmospherics: the physical characteristics and amenities that attract

• A retailer begins to define its strategy by selecting a target market.

• Small business owners

• Adopters of new technology

• Merchandising strategy: to develop a successful merchandise mix, a retailer

• The overall profitability of each product line and category

• The competitive environment influences these choices.

• Pricing strategy: retailers determine a pricing strategy based on:

• Showrooming: when a customer examines and compares products at a

• Location/distribution strategy: planned shopping centers: a group of retail

• Distribution impacts how efficiently a retailer gets its products to customers.

• Banner ads on websites

• Certain differences define categories of retailers:

• Shopping effort expended by customers

• Services provided to customers

• Product lines carried

• These categories are not mutually exclusive.

• Classification by form of ownership: the easiest way to categorize retailers

• Those who are responsible for their own businesses

• Classification by shopping effort: this classification is based on the reasons

• Classification by services provided: this classification differentiates retailers

• Example: A gas station is a self-service retailer; LensCrafters is a full-service eyeglass retailer.

• Classification by product line: this classification results in three major

• Department Store: a series of specialty stores under one roof

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