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Chapter Thirteen: Retailing Concept Review Generally, the concept questions are designed to achieve a single purpose – to encourage students to test their knowledge and understanding of the theoretical content of the chapter. These questions encourage recall and reflection, which will better prepare students to answer the marketing applications questions based on their understanding of the theory. 1. Describe the factors that manufacturers must consider when choosing retail partners. They need to consider the basic channel structure, where their target customers expect to find the products, and channel member characteristics. Distribution intensity should also be considered. First they need to ensure that products are available in the form that customers prefer and in locations that are convenient. Then they need to examine the channel structure to determine how desirable the brand is in the market as well as how much power retailers have. Lastly, they need to consider the size and sophistication level of the channel member and how much they need to rely on intermediaries to reach their target markets. 2. How would a manufacturer’s strategy for choosing a retailer change depending on its overall market power and the consistency of the new product with existing offerings? A new company with an unknown offering would not have much, if any, market power and thus would need to rely on intermediaries to distribute its products. A well established company may be able to sell directly via its own stores or at least have easy access to shelf space at well-known retail outlets. However, even a well established company may face challenges if a new product offering is dramatically different from its existing product lines. It may be able to leverage its existing relationship with retailers to convince them to accept new products. 3. Discuss the types of retailers that operate in Canada and identify some of the issues facing each type. o Food retailers: conventional supermarkets, big-box food retailers, and convenience stores. o Issues faced by food retailers: Many non-food retailers such as gas bars and pharmacies are beginning to carry more food products infringing on conventional food retailers’ territory. Restaurants also compete for consumers’ food dollars. o General Merchandise Retailers: discount stores, speciality stores, category specialists, department stores, drugstores, off-price retailers. o Some issues general merchandise retailers face: Consumers can be overwhelmed by the extensive assortment in some category specialists. Many department stores in Canada have disappeared in the past decade, e.g. Eatons, Robinsons, Kresge, Kmart, or have lost share to specialty stores, discount store and category specialists. Government legislation banned drug stores from selling tobacco products effective July 1, 1993. This fact, in combination with low profit margins on prescription drugs resulted in more of a focus on non-pharmaceutical products such as food. In this category, the distinction between the merchandise and services strategy is becoming increasingly blurred that it is very difficult to distinguish them. For example, Wal-Mart is beginning to carry groceries in its stores and Loblaws is increasing the breadth of its non-grocery merchandise. Many are even beginning to offer financial services to their customers. o Specialty Stores: concentrate on a limited number of complementary merchandise categories in relatively small stores o Issues: Retail stores in this category are increasingly becoming specialised servicing very narrow niches or segments with a very narrow but deep line of merchandise and offering higher levels of services. 4. Generally merchandise retailers are classified into several different groups such as discount stores, specialty stores, category killers, and so on. However, it seems that increasingly many of these retailers are looking quite similar. Why is this so and what factors may explain this trend? Generally, many retail stores started out in a clear category, however, as competition intensifies, these stores have to find ways to survive and grow. As these retailers move through the Wheel of Retailing, they find it necessary to expand their range of merchandise and services they offer in order to attract and serve new and different market segments. Thus, they expand the range of products and services they offer. Also, customers’ desire for one-stop shopping has had a major influence on the merchandising strategies of retail businesses. 5. How do marketers use the 4Ps to create value in retailing? o Product - Providing the right mix of merchandise and services that satisfies the needs of the target market is one of retailers’ most fundamental activities and ways to deliver value to customers. o Price - helps define the value of both the merchandise and the service. The general price range of a particular store helps define its image. o Place – offering a convenient location is a key ingredient of success and an important way to deliver value to customers. o Promotion - informs customers about what is new and available and how much it costs. Good promotion can mean the difference between flat sales and a growing consumer base. Marketing communications add value for customers by not only informing them of new products and services, sales promotions, and where to they can be purchased, but also by educating customers about product features, use and performance. 6. How has the retail landscape changed in Canada based on the Wheel of Retailing concept? Under this concept, retailers expand the mix of merchandise carried or add services and improvements to stores, e.g. they may upgrade their facilities. This results in an existing retailer moving to a more sophisticated operation which opens up opportunities for new entrants at the beginning of the wheel. 7. In this chapter, we discuss the fact that researchers have found that store image and atmospherics exert a huge impact on customers shopping behaviour. What are the key elements of a store’s atmospherics and image and why do you think that they affect consumers so strongly? a. The layout of the store, i.e. physical and social surroundings, its merchandise, the music, the lighting, the appearance of its sales associates, and the location all contribute to a store’s atmospherics and image. Retailing as theatre has become an important concept to attract consumers to a store. For example, when choosing a restaurant, the Rainforest Café has a fantasy appeal to some consumers because of its jungle décor, changing scenery (thunderstorms, wild animal sounds) and fun atmosphere. G.A.P. Adventures has concept stores that let customers try a vacation before they buy it. The stores enhance customers’ visual experiences, provide them with educational information, and maximize the store’s sales potential. 8. Explain how the Internet has helped reshape retail marketing strategies. What are some of the unique advantages between physical store retailing, website selling, and kiosks? o Although some experts predicted that the Internet would result in people buying everything over the Internet, this has not yet happened. However, the Internet has reshaped retail strategies by reducing entry costs, offering search engines and shopping bots which make it easier for consumers to find products and buy them, and allowing much smaller niche players to compete in an expanded trade area. The Internet allows retailers to collect information about what consumers look at or purchase on their sites and use this information to plan inventories, promotions, and loyalty programs. o Physical store advantages - Personalized human contact; Ability to see, feel, try out and test item and substitute items; Immediacy - consumer can see item and take home on same trip; No shipping costs for items taken home by shopper; Satisfies “shopping as a social activity” which other channels cannot o Website advantages – Virtually unlimited space to describe and display an item; Access to a global market and to markets without retail stores; 24/7 ordering capability; Can easily compare offerings of merchants, prices, product features; Enables disabled shoppers to browse and shop in a barrier-free environment; Allows retailers to more effectively stock slow-selling merchandise; Enables prices to be easily and quickly changed. Communities help consumers exchange information and share their experiences about a product or service (word-of-mouth) which has a powerful impact on online shopping. o Kiosk advantages - Can reach customers without Web access; In-store kiosks can enable retailers to avoid lost sales due to out-of-stock situations; High levels of video/audio quality 9. Discuss the advantages of being a multi-channel retailer from the perspectives of both retailers and consumers. o Retailers: multi-channel retailing can lead to greater operational efficiencies, higher revenues, and increased market share. Consumers who shop at multichannel retailers typically buy more than those who shop in only one retail channel. Retailers can achieve economies of scale by coordinating their buying and logistics activities across channels and consolidating their marketing information and activities. o Consumers: enables customers to search for or examine goods at one channel, buy them at another channel, and pick them up at yet another channel. 10. Explain why it is important for retailers to develop effective retailing strategy and positioning. How do retailers develop such a strategy? Hint: Look at the various store formats of Loblaw or any national grocery chain. o Today’s consumers shop at retailers they feel offer the best value for money and so it is critical to develop effective retailing strategies and positioning. As the lines between different types of retailers become increasingly blurred, they need to differentiate themselves and give customers a compelling reason to shop at their stores. o To develop such a strategy, retailers must first obtain a deep understanding of the consumers in their markets. They must define segments and choose which segments they can best serve. Then they have to develop merchandising, pricing, promotion, and place strategies to reach and serve these consumers. Marketing Applications 1. How have retail institutions evolved over time according to The Wheel of Retailing concept? Provide an example of a specific retailer that operates within each of the categories identified in the model. The Wheel of Retailing concept suggests that retail institutions tend to evolve through several stages, starting with low-price, low-service operations and gradually progressing to higher-price, higher-service formats. Here's a breakdown of the stages along with examples of specific retailers for each: 1. Low-Price, Low-Service Operations: These are typically characterized by offering limited service and a focus on driving prices down to attract customers. Over time, they may add services and increase prices as they become more established. An example of a retailer in this category historically might be dollar stores like Dollar Tree or discount supermarkets like Aldi. 2. Medium-Price, Medium-Service Operations: As retailers grow and gain more customers, they often start to offer more services and slightly higher prices to differentiate themselves. Retailers in this category might include mid-range department stores like Kohl's or Target. 3. High-Price, High-Service Operations: At this stage, retailers typically offer a wide range of services and premium products at higher prices. They focus on providing exceptional customer service and creating a unique shopping experience. Examples of retailers in this category include luxury department stores like Harrods or Nordstrom. 4. Decline: Eventually, retailers may find themselves facing declining sales or increased competition, leading to a decline in their operations. They may struggle to maintain profitability and may ultimately exit the market or reinvent themselves to adapt to changing consumer preferences. It's important to note that while the Wheel of Retailing concept provides a useful framework for understanding how retail institutions evolve, not all retailers follow this exact trajectory, and there may be variations based on factors such as market dynamics, consumer behavior, and industry trends. Instructor’s Notes: The Wheel of Retailing refers to the fact that retailers generally start out with basic offerings and low prices. As time goes on, they add services/products that justify higher prices and higher status. The most successful retailers compete for the the biggest potential customer base. Firms move through the wheel by providing innovation or higher prices that attract customers and allow them to grow, but must always either continue to change and innovate to keep up with consumers’ shifting tastes or face unprofitability. • Example answers: o According to The Wheel of Retailing concept, retail institutions have evolved from being small, low priced firms into larger entities that serve more customers by pursuing two strategies: (1) offering a more sophisticated product, format, or concept—that attracts consumers and/or (2) offering more services and higher prices than competitors. By pursuing one or both of these strategies, retailers serve a bigger segment of the consumer population. o An example of a retailer that started at the beginning of the wheel and has since moved through it is Harry Rosen. The men’s clothing retailer started with one basic store in Toronto offering business suits. Over the years, its merchandise has gone more upscale with the addition of many well-known designer lines, accessories, jewellery, scent and casual clothes. 2. Why don’t traditional department stores have the same strong appeal to Canadian consumers that they enjoyed during their height in the last half of the twentieth century? Discuss which types of retailers are now competing with department stores. Several factors contribute to the decreased appeal of traditional department stores among Canadian consumers compared to their heyday in the latter half of the twentieth century: 1. Changing Consumer Preferences: Canadian consumers' shopping habits have shifted over time. Many now prefer the convenience and variety offered by specialty stores, online retailers, and discount stores over the more traditional department store model. 2. Rise of E-Commerce: The growth of e-commerce has significantly impacted brick-and-mortar retailers, including department stores. Canadian consumers increasingly turn to online shopping for its convenience, competitive pricing, and wider selection, which traditional department stores often struggle to match. 3. Increased Competition: Department stores now face stiff competition from a variety of retail formats. Specialty retailers, such as Zara, H&M, and Best Buy, offer focused assortments and trendy merchandise that appeal to specific consumer segments. Discount retailers like Walmart and Costco provide low prices and one-stop shopping convenience, further challenging department stores' market share. 4. Shift in Demographics: Changes in demographics, including an aging population and the rise of millennials as a dominant consumer group, have influenced shopping preferences. Younger consumers tend to prioritize experiences over material possessions, favoring brands that offer unique experiences, sustainable products, and digital engagement, which many traditional department stores struggle to deliver. 5. Adaptation Challenges: Some traditional department stores have been slow to adapt to changing consumer preferences and market dynamics. Their large physical footprints, extensive inventory, and legacy systems can make it difficult to innovate and respond quickly to evolving trends, leaving them at a disadvantage compared to more agile competitors. In today's retail landscape, various types of retailers compete with traditional department stores: 1. Online Retailers: E-commerce giants like Amazon have captured a significant share of consumer spending by offering convenience, competitive pricing, and a vast product assortment. 2. Fast Fashion and Specialty Retailers: Companies like Zara, H&M, and Sephora attract shoppers with trendy merchandise, frequent product refreshes, and immersive in-store experiences. 3. Discount Retailers: Walmart, Costco, and Winners provide value-conscious consumers with low prices, diverse product offerings, and a convenient shopping experience. 4. Luxury and Premium Brands: High-end retailers such as Holt Renfrew cater to affluent consumers seeking personalized service, exclusive merchandise, and luxury shopping environments. Overall, traditional department stores in Canada face a challenging retail landscape characterized by changing consumer preferences, intense competition, and the rise of digital commerce. To remain relevant and competitive, department stores must adapt their strategies, innovate their offerings, and enhance the customer experience both in-store and online. Instructor’s Notes: Following up on the concept of The Big Middle, this question asks students to consider why traditional department stores have lost their appeal. If students apply the logic of The Big Middle, they likely will notice that department stores have been slow to innovate and do not offer the lowest prices; thus, they exist in the in-trouble segment. • Example answers: o Traditional department stores lost their strong appeal because of a combination of changing customer tastes and a lack of real change. Consumers are much more cost conscious today, so stores like Wal-Mart and Costco have gained an advantage. Department stores also lack innovation. Therefore, the key players competing with department stores are big discount retailers (e.g., Wal-Mart, Costco) and stores offering innovative products (e.g., Old Navy, Best Buy). 3. What do retailers do to increase the value of products and services for consumers? Discuss the extent to which bricks-and-mortar retailers are threatened by Internet-only retailers with regard to these factors. Retailers employ various strategies to increase the value of products and services for consumers: 1. Product Quality and Selection: Retailers can enhance value by offering high-quality products and a diverse selection that meets the needs and preferences of their target customers. This includes sourcing unique or exclusive merchandise, curating collections, and ensuring consistent quality standards. 2. Price Competitiveness: Providing competitive pricing relative to similar products in the market is essential for retailers to attract price-conscious consumers. This may involve offering discounts, promotions, price matching, or value-added bundles to demonstrate value for money. 3. Convenience and Accessibility: Retailers strive to enhance convenience by offering accessible locations, extended operating hours, efficient checkout processes, and convenient payment options. This includes providing omnichannel shopping experiences that seamlessly integrate online and offline channels. 4. Customer Service and Experience: Exceptional customer service can differentiate retailers and increase perceived value. This involves knowledgeable staff, personalized assistance, hassle-free returns, and responsive customer support both in-store and online. Creating engaging and immersive shopping experiences through store layout, ambiance, and interactive elements also contributes to value perception. 5. Brand Reputation and Trust: Building a strong brand reputation based on trust, reliability, and authenticity can enhance the perceived value of products and services. Retailers invest in branding, marketing, and communication efforts to establish emotional connections with consumers and cultivate loyalty. Internet-only retailers, commonly referred to as e-commerce or online retailers, pose both challenges and opportunities for brick-and-mortar retailers concerning these factors: 1. Competition on Price and Selection: Online retailers often have lower overhead costs compared to traditional brick-and-mortar stores, allowing them to offer competitive prices and a wider selection of products. This can pressure brick-and-mortar retailers to match prices and expand their product offerings to remain competitive. 2. Convenience and Accessibility: Internet-only retailers excel in offering convenience and accessibility through 24/7 access to products, doorstep delivery, and user-friendly online platforms. Brick-and-mortar retailers may struggle to replicate this level of convenience, but they can leverage omnichannel strategies to provide seamless shopping experiences across multiple touchpoints. 3. Customer Service and Experience: While online retailers may lack face-to-face interaction, they can still provide excellent customer service through responsive online support, easy returns processes, and personalized recommendations based on customer data. Brick-and-mortar retailers have the advantage of offering in-person assistance and immersive in-store experiences, but they must invest in training and technology to compete effectively. 4. Brand Reputation and Trust: Established brick-and-mortar retailers often have strong brand recognition and trust built over years of operation. However, online retailers can quickly gain credibility through customer reviews, social proof, and transparent policies. Brick-and-mortar retailers must leverage their brand heritage and community presence to reinforce trust and loyalty among consumers. Overall, while Internet-only retailers pose significant competition to bricks-and-mortar retailers, the latter can mitigate threats and capitalize on opportunities by embracing digital transformation, optimizing their strengths, and delivering value-added experiences that resonate with today's consumers. By leveraging the strengths of both online and offline channels, retailers can create holistic shopping experiences that enhance value and drive customer loyalty. Instructor’s Notes: In considering how retailers add value, students might consider overall value creation or use the 4Ps framework to describe value creation related to each factor. The degree to which students consider Internet-only businesses threats to traditional retailers will depend on their assessments of the value each delivers to consumers. • Example answers: o Retailers increase the value of products and services by bringing everything together in one place for consumers, pricing their products to reflect quality and value, promoting offerings so consumers know where to get it and at what price, and providing convenient locations. Without such efforts, consumers would be forced to do all the legwork in finding products, negotiating prices with each manufacturer, getting the products shipped, and maybe even assembling and installing the products themselves. Traditional bricks-and-mortar retailers are being threatened in some degree by Internet-only retailers because Internet retailers can bring even more products and services together, price them attractively, and promote them without extensive investments in real estate, store locations, inventory, or staffing. The bricks-and-mortar retailers that will fare the best are those that can differentiate themselves in the minds of consumers, whether through innovation, lower prices, convenience, or customer service. 4. Some argue that retailers can be eliminated from the distribution channel because they only add costs to the final product without creating any value-added services in the process. Do you agree with this perspective? Is it likely that consumers will make most purchases directly from manufacturers in the near future? Provide justification for your answers. While it's true that some argue retailers only add costs to the final product without providing additional value, completely eliminating them from the distribution channel might not be feasible or desirable in many cases. Here's why: Convenience: Retailers offer convenience to consumers by providing a physical or online location where they can easily access a wide range of products. Directly purchasing from manufacturers might require consumers to deal with multiple suppliers for different items, which can be cumbersome. Curation and Selection: Retailers often curate and select products based on consumer preferences and trends. They offer a curated assortment that meets the needs and preferences of their target market. Directly purchasing from manufacturers may not provide consumers with the same level of variety and choice. Customer Service: Many retailers offer value-added services such as customer support, product demonstrations, and after-sales service. These services enhance the overall shopping experience and provide consumers with reassurance and support. While some manufacturers offer customer service, it may not be as comprehensive or easily accessible as that provided by retailers. Physical Experience: For certain products, such as clothing or furniture, consumers may prefer to see, touch, or try them before making a purchase. Retailers provide physical spaces where consumers can interact with products, which is an experience that cannot be replicated when purchasing directly from manufacturers. Logistics and Distribution: Retailers play a crucial role in the logistics and distribution process, especially for smaller manufacturers who may not have the resources or infrastructure to reach a wide consumer base on their own. Retailers can efficiently distribute products to different locations, reducing delivery times and costs for consumers. While direct-to-consumer (DTC) models have gained popularity in recent years, especially in industries like fashion and consumer electronics, completely bypassing retailers may not be practical for all products and industries. Instead, a combination of traditional retail channels and DTC strategies may offer the best of both worlds, providing consumers with choice, convenience, and value-added services while also allowing manufacturers to reach consumers directly in certain cases. Instructor’s Notes: Students must offer an opinion of the future of retailers and therefore should think about the ways in which retailers add value and whether manufacturers could provide such value. Students also might address the relative power of retailers in the value chain currently as compared with the past. • Example answers: o Retailers could not be eliminated from the distribution channel, because they provide value-added services that justify their associated additional costs. Such value-added services include aggregating disparate products from different vendors into convenient locations for consumers, installation and maintenance services, and customer service to answer questions or deal with issues. Consumers probably will not make more purchases directly from manufacturers in the near future, because most manufacturers are good at making products but not necessarily at serving consumers. In addition, the power relationships in the retailing industry have changed such that retailers—not manufacturers—have the greatest power. Because of this power and consumers’ preferences for direct, face-to-face service in many cases, retailers are here to stay. 5. Many years ago, the corporations that sold gasoline made the strategic move to include a substantial offering of food items. Today, it is rare to find a gas station that does not sell food items. Into which category of food retailer do these service stations fall? Do you think this was a prudent strategic direction for these corporations? Explain your logic. Gas stations that sell food items fall into the category of convenience stores. This strategic move by gasoline corporations to include a substantial offering of food items was indeed prudent. Here's why: Diversification of Revenue Streams: By selling food items, gas stations can diversify their revenue streams beyond just gasoline sales. This helps mitigate the risks associated with fluctuations in gasoline prices and demand. Increased Foot Traffic: Offering food items attracts more customers to the gas station, increasing foot traffic. Customers who come in for snacks or beverages may also purchase gasoline or other convenience items, thereby boosting overall sales. Enhanced Customer Experience: Providing food items caters to the needs of customers who may be on long journeys or in need of a quick snack or drink. This enhances the overall customer experience and can lead to increased loyalty and repeat business. Competitive Advantage: Gas stations that offer a variety of food items gain a competitive edge over those that only sell gasoline. They become one-stop destinations where customers can fulfill multiple needs in a single visit, making it more convenient for consumers. Adaptation to Changing Consumer Preferences: Consumer preferences have shifted towards convenience, with many people preferring to make quick stops for snacks and drinks rather than visiting traditional grocery stores. Gas stations that offer food items cater to this demand and stay relevant in a changing market landscape. Overall, incorporating food offerings into gas stations' business models has proven to be a prudent strategic direction, providing various benefits such as revenue diversification, increased foot traffic, enhanced customer experience, competitive advantage, and adaptation to changing consumer preferences. Instructor’s Notes: By identifying which of the three major food retailer categories (conventional supermarket, big-box food retailers, convenience stores) service stations that provide food fall into, students can determine how food items make service stations more attractive to consumers or helps them compete with other retailers. • Example answers: o These service stations fall into the food retail category of convenience stores. According to the definition of the category, convenience stores provide a limited number of items at convenient locations in small stores with speedy checkout processes. Adding the word “gasoline” to this definition provides a good description of modern service stations. It was a prudent decision by service stations to add food, because it brought consumers into the store rather than remaining out at the gas pump. The more time consumers spend in the service station, and the more products that are readily available to them, the more likely they are to make purchases beyond just gasoline. Thus, service stations have been able to increase their profits. 6. Identify three categories of products especially suited for sale on the Internet. Identify three categories that are not currently suitable for sale on the Internet. Justify your choices. There are three categories of products especially suited for sale on the Internet: Electronics: Electronics are highly suitable for online sales due to their standardized specifications and widespread demand. Consumers often prefer the convenience of browsing through a wide range of options online, comparing prices, and reading reviews before making a purchase. Additionally, electronics are relatively easy to ship, making online sales feasible for both retailers and consumers. Clothing and Fashion Accessories: Online platforms offer a vast array of clothing and fashion accessories, allowing consumers to explore different styles, sizes, and brands from the comfort of their homes. Virtual fitting rooms, size guides, and flexible return policies enhance the online shopping experience for customers. Moreover, the global reach of the Internet enables fashion retailers to target diverse audiences and expand their customer base. Books and Media: Books, e-books, music, movies, and other media products are well-suited for online sales due to their digital nature. Online marketplaces offer an extensive selection of titles, including rare and out-of-print items, catering to diverse interests and preferences. Furthermore, digital media can be instantly downloaded or streamed, providing immediate access to consumers without the need for physical inventory or shipping. Now, let's identify three categories that are not currently suitable for sale on the Internet: Perishable Goods: Perishable goods such as fresh produce, dairy products, and certain types of food items are challenging to sell online due to concerns regarding freshness, quality, and timely delivery. Maintaining the cold chain during shipping can be complex and costly, posing logistical hurdles for e-commerce retailers. Additionally, consumers may prefer to inspect perishable items in person before making a purchase to ensure they meet their standards. Highly Customized or Personalized Products: Products that require extensive customization or personalization, such as custom-made furniture, tailored clothing, and bespoke jewelry, are less suitable for online sales. The intricacies involved in creating personalized items often necessitate direct communication between the customer and the seller to ensure accuracy and satisfaction. While online platforms may facilitate initial inquiries and orders, the finalization of details and customization may be better handled through offline channels. Large, Bulky Items: Large, bulky items like furniture, appliances, and heavy machinery present challenges for online sales due to their size, weight, and shipping requirements. Transporting such items can be expensive and logistically complex, particularly for international shipments. Additionally, consumers may prefer to physically inspect and test large purchases before committing to a purchase, making traditional brick-and-mortar stores more suitable for these transactions. These categories highlight the diverse nature of products and the varying challenges and opportunities they present in the online retail landscape. Instructor’s Notes: In answering this question, students might review Exhibit 14.6, Internet Helpers and Hinderers, to recognize the factors that can help or hurt sales on the Internet and thus generalize to identify appropriate product categories. • Example answers: o Three product categories that are especially well suited for sale on the Internet are pure commodities (e.g., office supplies, building supplies, coffee), quasi-commodities (e.g., books, CDs), and unique products (e.g., one-of-a-kinds, limited editions). These three categories are well suited for Internet sale because they are either so standardized that a consumer can be confident of the product’s attributes and quality or so unique that they fill a niche that traditional bricks-and-mortar retail stores cannot. Three categories that are not suitable for sale on the Internet are medical care, home purchases, and postpurchase, low-cost services. These categories require direct human contact and a high level of interpersonal trust, prepurchase trial experience, and/or involvement from the retailer beyond the purchase transaction. 7. How does Staples.com or Officedepot.com provide value to their customers beyond the physical products that they sell? Identify some of the ways that the companies have overcome the inhibitors to successful Internet retailing. Staples.com and Officedepot.com both provide value to their customers beyond just the physical products they sell through various strategies and features. Here are some ways they achieve this and overcome inhibitors to successful internet retailing: Convenience: Both websites offer easy-to-use interfaces where customers can quickly search, browse, and purchase office supplies from the comfort of their homes or offices. This convenience factor saves customers time and effort compared to traditional brick-and-mortar shopping. Product Variety and Availability: They offer a wide range of products, often more than what could be found in a physical store. Additionally, they maintain high levels of stock, reducing the likelihood of items being out of stock, which is a common inhibitor to successful internet retailing. Competitive Pricing: Online retailers like Staples.com and Officedepot.com often offer competitive pricing due to lower overhead costs compared to physical stores. This pricing strategy attracts price-conscious customers and enhances the value proposition. Personalized Recommendations: Leveraging customer data and browsing history, these websites often provide personalized product recommendations, enhancing the shopping experience and increasing the likelihood of additional purchases. Efficient Fulfillment and Delivery: They invest in efficient fulfillment processes and offer various delivery options, including fast shipping and store pickup, to accommodate different customer needs and preferences. This overcomes inhibitors related to delayed shipping and unreliable delivery. Customer Reviews and Ratings: Both websites feature customer reviews and ratings for products, helping customers make informed purchasing decisions and fostering trust in the online shopping experience. Educational Content and Resources: They provide valuable educational content and resources related to office supplies and equipment, such as buying guides, how-to articles, and product demonstrations. This positions them as trusted sources of information and adds value beyond just selling products. Customer Support: Staples.com and Officedepot.com offer responsive customer support through various channels like live chat, email, and phone, helping customers resolve issues or get assistance with their purchases quickly and efficiently. Overall, by focusing on convenience, product availability, competitive pricing, personalization, efficient fulfillment, educational content, and excellent customer support, Staples.com and Officedepot.com successfully provide value to their customers beyond the physical products they sell, overcoming inhibitors to successful internet retailing in the process. Instructor’s Notes: According to the list of Internet helpers and hinderers in Exhibit 14.6, students might consider the lack of prepurchase product trial, lack of interpersonal trust, lack of instant gratification, loss of privacy and security, lack of in-store shopping experience, and high shipping and handling costs. They then must discuss how these retailers handle such concerns. • Example answers: o Websites like Staples.com and Officedepot.com offer value to their customers beyond the physical products they sell by offering services such as delivery to the customer’s home or business, rebate management, reward programs for different types of consumers, and business services such as copying and printing. A website like Staples.com can overcomes inhibitors to successful Internet retailing by posting its policies clearly, such as its guarantee of customer satisfaction (to build trust); allowing customers to create their own accounts on a secure site (to ensure privacy and security); and offering delivery to a customer’s home or business (to make gratification quicker and help eliminate the hassle and cost of customers picking up products themselves). 8. What options do you have for purchasing food in your town? Under what circumstances would you shop at each option? What about a family with two young children? In my town, there are several options for purchasing food, each catering to different needs and circumstances: Supermarkets/Grocery Stores: Circumstances: Supermarkets are convenient for everyday shopping, offering a wide variety of products ranging from fresh produce to packaged goods. They're suitable for regular grocery runs and bulk purchases. Family with young children: Supermarkets provide a one-stop-shop for families with young children, offering a range of child-friendly products, including baby food, snacks, and household essentials. Farmers' Markets: Circumstances: Farmers' markets are ideal for sourcing fresh, locally grown produce directly from farmers and artisans. They're great for those looking for organic or specialty items and want to support local agriculture. Family with young children: Farmers' markets can be a fun outing for families with young children, offering a vibrant atmosphere and often featuring activities like music or crafts. It's a chance to teach kids about where their food comes from while enjoying fresh, seasonal produce. Online Grocery Delivery: Circumstances: Online grocery delivery services offer convenience and flexibility, allowing shoppers to order groceries from the comfort of their home and have them delivered to their doorstep. This option is convenient for busy individuals or those with limited mobility. Family with young children: Online grocery delivery can be a lifesaver for parents with young children, saving them time and hassle by avoiding trips to the store with kids in tow. It also provides the convenience of scheduling deliveries around nap times or other routines. Local Butcher/Deli: Circumstances: Local butchers or delis offer high-quality meats, cheeses, and specialty items. They're great for those who prioritize freshness, quality, and personalized service. Family with young children: Visiting a local butcher or deli can be a more personalized experience for families, allowing them to select specific cuts of meat or deli items and even receive cooking tips or recommendations from knowledgeable staff. Convenience Stores: Circumstances: Convenience stores are handy for quick and last-minute purchases, offering a range of basic groceries, snacks, and household items. Family with young children: Convenience stores can be a convenient option for grabbing snacks or essentials on the go, especially during outings or when traveling with young children. Each option offers unique advantages, and the choice depends on factors such as convenience, quality, preferences, and lifestyle. Families with young children may prioritize convenience and ease of shopping, making options like supermarkets, online delivery, or farmers' markets particularly appealing. Instructor’s Notes: In answering the question, students might consider the three food retailer categories mentioned in Exhibit 14.4 (conventional supermarket, big-box food retailer, convenience store), in addition to online home-delivery grocers from both their own perspective and that of a parent. • Example answers: o I have several options for purchasing food, including grocery stores, convenience stores, warehouse clubs, and Internet-based home delivery. In normal circumstances, I go to my regular grocery store for most items and a warehouse club for those things I can store for longer periods of time and save by buying in bulk. In special circumstances (e.g., after-hours, when I am travelling), I might stop into a convenience store for a snack or order groceries online and schedule delivery for a day when I am home. A family with two children might be more inclined to use a warehouse club (for greater savings) or an online retailer (for greater convenience). 9. You can purchase apparel at a discount store, specialty store, category specialist, off-price retailer, department store, or Internet-only store. From which of these types of stores do you shop? Explain why you prefer one type over another. I typically prefer to shop at specialty stores or Internet-only stores. Specialty stores often offer a curated selection of apparel, which aligns well with my preferences and style. Additionally, they tend to provide a more personalized shopping experience, with knowledgeable staff who can offer advice and assistance. Internet-only stores, on the other hand, offer convenience and a vast array of options right at my fingertips. I appreciate the ability to browse through different brands and styles without having to leave my home, and online stores often have exclusive deals and promotions that can make shopping more budget-friendly. While discount stores, off-price retailers, and department stores may offer lower prices, I find that the overall quality and selection at specialty stores and Internet-only stores better suit my needs and preferences. Additionally, the convenience and personalized experience of shopping at these stores outweigh the potential cost savings of other options. Instructor’s Notes: Similar to the previous question, students must think about the types of stores they patronize and the circumstances that might make them prefer one type of retailer over another. • Example answers: o I shop at discount stores (Zellers), specialty stores (HMV), category specialists (Best Buy), off-price retailers (Winners), department stores (The Bay), and Internet-only stores (iTunes). I generally appreciate convenience and value, so I tend to favour the Internet-only and discount stores. 10. Suppose you are the confectionary buyer for a regional chain of grocery stores. Store policy charges a “substantial” listing fee for the placement of new items. Listing fees were originally designed to cover the costs of placing new products on the shelves, such as adjustments to computer systems and the realignment of warehouse and store space. Over the years, these fees have increased and now provide a significant source of revenue for the chain. A local manufacturer of a popular brand of specialty candy wants to sell to your chain but argues the listing fee does not reflect the real cost of adding its candy to your shelves. Discuss the ethical implications of such a policy. What should the chain do? The ethical implications of the listing fee policy in this scenario raise several concerns: Fairness and Access: Charging a substantial listing fee may deter smaller or local manufacturers from introducing their products to the market. This could create barriers to entry for new, innovative, or niche products, limiting consumer choice and potentially favoring larger, established brands. Transparency and Justification: If the listing fee does not accurately reflect the costs associated with adding a new product to the shelves, there is a lack of transparency in the fee structure. This can erode trust between the grocery chain and its suppliers, as well as with consumers who may perceive the policy as exploitative. Impact on Innovation: High listing fees could stifle innovation in the confectionary industry. Small or emerging businesses with unique and potentially popular products may be unable to afford the fees, depriving consumers of new and diverse options. Long-Term Relationships: Imposing excessive fees solely for revenue generation may strain relationships with suppliers. This could lead to short-term gains but long-term losses as suppliers seek alternative distribution channels or retaliate with pricing strategies that ultimately harm the chain's profitability. Considering these ethical concerns, the grocery chain should reassess its listing fee policy. Here are some steps it could take: Review and Justify Fees: Conduct a thorough analysis of the actual costs involved in listing new products on shelves. The chain should ensure that listing fees are reasonable and proportionate to these costs, rather than serving as a profit center. Transparency and Communication: Clearly communicate the rationale behind listing fees to suppliers and consumers. Transparency about the purpose and breakdown of fees can help build trust and mitigate concerns about fairness. Support Innovation and Diversity: Implement policies or incentives to support smaller or local manufacturers, such as reduced listing fees for new or innovative products. This encourages diversity in product offerings and fosters a more dynamic marketplace. Long-Term Partnerships: Foster mutually beneficial relationships with suppliers based on trust, fairness, and collaboration. Instead of viewing suppliers solely as revenue sources, prioritize long-term partnerships that support the success of both parties. By addressing these ethical considerations and revising its listing fee policy accordingly, the grocery chain can promote fairness, transparency, and innovation while maintaining its financial sustainability. Instructor’s Notes: Students should question the degree to which the common retail grocery practice of charging listing fees, regardless of the company and circumstances, might violate their ethical standards. Using the ethical decision-making framework, students could evaluate the practice and determine an appropriate course of action. This question is very similar to one in Chapter Fourteen, but in this question, the candy manufacturer explicitly argues that the listing fee is unethical, not just that it cannot afford the cost. • Example answers: o In applying the ethical decision-making framework: “Have you thought broadly of any ethical issues associated with the decision to be made?” I have thought broadly about the ethical issues, in that though listing fees are common practice in the industry, my store might be losing sight of a good business opportunity with a smaller firm because it is too concerned about earning additional revenue from listing fees. “Have you involved as many possible people who might have a right to offer input into or have actual involvement in making this decision and action plan?” At this point, the vendors, the stockholders, and the consumers have not been allowed to give input into the practice, though the candy manufacturer has indicated its opinion. “Does this decision respect the rights and dignity of the stakeholders?” As the candy firm claims, listing fees may not reflect real costs but instead serve as a form of bribery, which can be demeaning to the vendor. In addition, smaller, more entrepreneurial firms with good ideas cannot get their products the exposure they need because of high listing fees, which favour larger, more cash-rich companies. “Does this decision produce the most good and the least harm to the relevant stakeholders?” Smaller vendors are hurt, because they either have to pay or cannot get their products stocked in the store. It also hurts consumers whose choices are limited without their knowledge. “Does this decision uphold relevant conventional moral rules?” It likely violates the community’s standard for what is fair, because if a small, local firm is simply trying to get greater exposure for its products, the community may regard the lack of a sliding scale in the listing fee practice as unfair and a means to stifle competition. “Can you live with this decision alternative?” If the decision alternative is to forgo the listing fee altogether or create a sliding scale based on the size or sales revenue of the vendor, I could live with such a decision. o Based on these answers, in this case, I believe that my firm should stop charging listing fees. As it stands right now, the listing fee practice could seem fair to the stockholders, because it means higher revenues and more dividend income for them, but the vendors and consumers likely consider it unfair and discriminatory. Net Savvy 1. Companies like Lee Valley Tools have expanded their offerings beyond their original channels to sell through multiple channels. Visit the company’s website (www.leevalley.com) and determine in which channels it operates (Web, stores, and/or catalogue). Discuss the advantages of using a multichannel strategy over a single channel strategy. Lee Valley Tools operates through multiple channels, including its website (web), physical stores, and catalog. This multichannel approach offers several advantages over a single-channel strategy: Increased Reach: By operating through multiple channels, Lee Valley Tools can reach a wider audience. Some customers prefer shopping online, while others may prefer browsing a physical store or flipping through a catalog. By catering to different preferences, the company can attract more customers. Enhanced Convenience: Offering multiple channels provides customers with greater convenience. They can choose the channel that best fits their needs and preferences. For example, customers who need a tool urgently may prefer to visit a physical store, while those who prefer browsing from the comfort of their home can shop online. Improved Customer Experience: A multichannel strategy allows Lee Valley Tools to offer a seamless and consistent experience across different channels. Customers can expect the same level of quality and service whether they are shopping online, in-store, or through the catalog. This consistency enhances customer satisfaction and loyalty. Better Insights: Operating through multiple channels provides Lee Valley Tools with valuable insights into customer behavior and preferences. By analyzing data from different channels, the company can gain a deeper understanding of its customers and tailor its marketing strategies accordingly. Competitive Advantage: A multichannel strategy can give Lee Valley Tools a competitive advantage over competitors that operate through a single channel. By offering more options to customers, the company can differentiate itself and attract customers who value choice and flexibility. Overall, a multichannel strategy allows Lee Valley Tools to diversify its revenue streams, reach a wider audience, and provide a better shopping experience for its customers. Instructor’s Notes: Multichannel retailers sell merchandise in more than one retail channel (i.e. store, catalogue, and Internet); the question asks students to consider why. • Example answers: o Lee Valley uses a multichannel strategy that includes its website, retail store locations, and physical catalogues that the consumer can receive through the mail to sell its products. Consumers tend to buy more from multichannel retailers, the company can collect information about customers it would not be able to get through a single channel, and the company can achieve economies of scale by coordinating buying and logistics activities across channels and consolidating marketing information and activities. 2. Using either your own experience or that of a friend, select a familiar Internet website that engages in some form of retailing. Evaluate that website in terms elements that help or hinder it and summarize the extent to which you think the site is successful in sustaining a retailing Web presence. Let's evaluate a hypothetical website, "XYZ Mart," based on common factors that influence the success of an e-commerce platform. User Interface (UI) and User Experience (UX): The website's design should be intuitive, visually appealing, and easy to navigate. Cluttered layouts, confusing menus, or slow loading times can hinder user experience and drive potential customers away. Product Presentation: High-quality images, detailed descriptions, and user reviews enhance the presentation of products. If XYZ Mart provides clear product information and multiple images from different angles, it helps customers make informed purchasing decisions. Mobile Compatibility: With the increasing use of smartphones for online shopping, it's crucial for the website to be mobile-friendly. Responsive design ensures that the site functions well on various screen sizes and devices. Checkout Process: A streamlined and secure checkout process reduces cart abandonment rates. Lengthy forms, unexpected fees, or complicated payment methods can frustrate customers and lead to lost sales. Search and Filtering Options: Robust search functionality and filtering options make it easier for customers to find specific products. If XYZ Mart allows users to search by category, brand, price range, etc., it improves the overall shopping experience. Customer Support: Prompt and helpful customer support can build trust and loyalty. Offering multiple channels for assistance, such as live chat, email, or a helpline, demonstrates commitment to customer satisfaction. Security Measures: Secure payment gateways and SSL certificates reassure customers about the safety of their personal and financial information. XYZ Mart should prioritize cybersecurity to protect customer data and prevent unauthorized access. Marketing and Promotions: Effective marketing strategies, such as email campaigns, social media promotions, and loyalty programs, can attract new customers and encourage repeat purchases. Based on these factors, if XYZ Mart has a user-friendly interface, provides detailed product information, offers a seamless checkout process, and prioritizes customer support and security, it is likely successful in sustaining a retailing web presence. Regular updates, optimization based on user feedback, and adapting to changing trends in e-commerce further contribute to its success. Instructor’s Notes: In evaluating a familiar website that engages in retailing, students gain a deeper understanding of how different companies address the helpers and hinderers of e-retailing. • Example answers: o A website that I often use for making retail purchases is Amazon.com. In terms of Internet helpers, it offers standardized products (books), can be accessed from any PC with a Web browser and Internet connection, allows me to search for products I want, and never closes so it always matches my schedule. In addition, Amazon works to eliminate or alleviate hinderers by offering prepurchase trials (I can see excerpts from books before I buy them), suggestions based on my interests and past purchases (which improves my shopping experience), and discounts on shipping and handling, particularly for large orders. Therefore, Amazon.com is very successful at creating a positive online shopping experience because of this attention to detail. End-of-Chapter Case Staples, Inc. Questions 1. Assess the extent to which Staples has developed a successful multichannel strategy. What factors have contributed to its success? Staples, Inc. has indeed cultivated a successful multichannel strategy, effectively integrating various sales channels to cater to diverse customer preferences and needs. Several factors have contributed to its success: Omni-channel Approach: Staples has embraced an omni-channel approach, seamlessly connecting its physical stores, online platform, and mobile applications. This strategy ensures consistency in customer experience across different channels, allowing customers to interact with the brand in a way that suits them best. Robust Online Presence: Staples has invested significantly in its e-commerce platform, offering a user-friendly interface, extensive product assortment, and convenient features such as online ordering, easy payment options, and fast delivery services. This strong online presence has enabled Staples to capture a growing segment of digitally savvy consumers who prefer shopping online. Innovative Technologies: Staples has leveraged innovative technologies such as artificial intelligence (AI) and data analytics to personalize the shopping experience for customers. Through features like personalized product recommendations and targeted marketing campaigns, Staples can better understand customer preferences and tailor offerings accordingly. Integration of Brick-and-Mortar Stores: Staples has not neglected its brick-and-mortar stores but instead integrated them into its multichannel strategy. By offering services like in-store pickup for online orders, returns and exchanges across channels, and even utilizing stores as fulfillment centers for online orders, Staples maximizes the convenience and flexibility for customers. Customer-Centric Approach: Staples prioritizes the needs and preferences of its customers, continually seeking feedback and adapting its multichannel strategy accordingly. By focusing on enhancing customer experience and satisfaction, Staples has built a loyal customer base and fostered long-term relationships. Adaptation to Market Trends: Staples remains agile in responding to changing market trends and consumer behaviors. For instance, it has expanded its product offerings beyond traditional office supplies to include technology products, furniture, and business services, aligning with evolving customer demands and preferences. In conclusion, Staples' successful multichannel strategy stems from its commitment to providing a seamless and personalized shopping experience across various channels, leveraging innovative technologies, integrating both online and offline channels effectively, and remaining attentive to customer needs and market dynamics. Instructor’s Notes: To deepen students’ understanding of multichannel strategy, this question asks them to evaluate the factors that help make Staples a success with both individual consumers and businesses. • Example answers: o Staples has developed a very successful multichannel strategy, largely because it focuses on the needs of different types of customers (even offering separate online experiences to meet their specific needs), uses Internet kiosks in stores to allow customers to order products that the store does not carry (which ensures customers get what they want without increasing inventory levels at each store location), and distributes physical catalogues to people and business to facilitate product selection and ordering. 2. What are the advantages and disadvantages of using kiosks as a part of its approach? There are the advantages and disadvantages of using kiosks as part of a business approach: Advantages: Efficiency: Kiosks can streamline processes and reduce wait times for customers. They can handle routine tasks such as ticketing, check-ins, or ordering, freeing up staff to focus on more complex tasks. Cost Savings: Implementing kiosks can reduce labor costs over time as they can replace some human tasks. This can lead to long-term savings for the business. 24/7 Availability: Kiosks provide round-the-clock service, allowing customers to interact with the business outside of regular operating hours, increasing accessibility and convenience. Consistency: Kiosks provide consistent service without the variability that can come with human interactions. This ensures that every customer receives the same level of service. Data Collection: Kiosks can collect valuable data about customer preferences, behaviors, and trends, which can be used for targeted marketing, product development, and improving overall customer experience. Disadvantages: Initial Cost: The setup and installation of kiosks can be expensive, especially for small businesses. This initial investment may not be feasible for all organizations. Maintenance: Kiosks require regular maintenance and updates to ensure they are functioning properly. This can add to the overall cost of implementation and require dedicated technical support. Limited Functionality: While kiosks can handle many routine tasks, they may not be suitable for more complex or personalized interactions that require human intervention. This limitation can impact the level of service provided to customers. User Experience: If not designed and implemented properly, kiosks can lead to frustration and confusion among users, resulting in a negative customer experience. Security Concerns: Kiosks may be vulnerable to security breaches, such as hacking or data theft, especially if they are connected to the internet. Ensuring the security of customer data is crucial when implementing kiosk systems. Overall, while kiosks offer several benefits such as efficiency and cost savings, businesses must carefully weigh these advantages against the potential disadvantages and challenges associated with their implementation. Instructor’s Notes: Students must evaluate both the pros and the cons of Staples’s in-store kiosks. • Example answers: o In-store kiosks offer customers more SKU options than the retail store carries and eliminate the need to carry a lot of inventory at each location. However, Staples must persuade customers to use kiosks to order products rather than going to another retailer, and it must convince its own sales associates to direct customers to the kiosk to order products, for which the sales associates will not receive a commission. 3. How should Staples assess which SKUs to keep in its stores? Staples can employ various methods to assess which SKUs (Stock Keeping Units) to keep in its stores effectively: Sales Data Analysis: Analyzing historical sales data can provide insights into which SKUs are top performers and which ones are lagging. Staples can identify trends, seasonal variations, and customer preferences through this analysis. Inventory Turnover Rate: Calculating the inventory turnover rate for each SKU can help identify which products are selling quickly and which ones are sitting on shelves for too long. High turnover indicates strong demand and suggests keeping the SKU, while low turnover might indicate a need for reassessment. Customer Feedback and Reviews: Soliciting feedback from customers through surveys, online reviews, and social media can provide valuable insights into which products are popular and well-liked. Staples can use this qualitative data to understand customer preferences and adjust their SKU assortment accordingly. Market Trends and Competitor Analysis: Monitoring market trends and analyzing competitor offerings can help Staples stay ahead of the curve. By identifying emerging trends and understanding what competitors are offering, Staples can make informed decisions about which SKUs to keep, introduce, or remove from its stores. SKU Rationalization: Conducting regular SKU rationalization exercises can help Staples eliminate underperforming or redundant SKUs. By assessing factors such as profitability, sales volume, and strategic importance, Staples can prioritize its SKU assortment and streamline its product offerings. Category Management: Implementing category management principles can help Staples organize its SKUs into logical groupings and manage them more effectively. By understanding the role of each SKU within its category and optimizing assortments based on customer needs, Staples can enhance overall sales and profitability. Predictive Analytics: Utilizing predictive analytics tools and techniques can help Staples forecast demand for various SKUs more accurately. By leveraging historical data, market trends, and external factors, Staples can make data-driven predictions about future SKU performance and adjust its assortment accordingly. By combining these approaches and continuously monitoring and adapting to changing market dynamics, Staples can optimize its SKU assortment to meet customer needs, drive sales, and maximize profitability. Instructor’s Notes: Students should apply data mining and inventory management methods to determine the right balance of SKUs at the store level for Staples. • Example answers: o Staples can assess which SKUs to keep in its stores by performing data analyses of what people purchase in stores and what they purchase through in-store kiosks. If it finds that customers consistently order specific items from the in-store kiosks that it could easily stock at the store level, Staples could adjust its current inventory accordingly. 4. How do the Staples Copy and Print Centres differentiate Staples from the competition? Staples must add extra value to its office supplies. This is challenging given that offices supplies have become commodities. Skilled in-house staff will enable customers to more efficiently print their jobs. The ability to order or submit jobs online and pick them up in stores adds convenience. Stand-alone and self-service facilities allow Staples to compete in smaller cities and offer convenience and lower prices. Staples Copy and Print Centers offer several key points of differentiation that set them apart from competitors: Convenience: Staples Copy and Print Centers are often conveniently located within Staples retail stores, making it easy for customers to access printing services while shopping for office supplies or other necessities. This one-stop-shop approach saves customers time and effort. Wide Range of Services: Staples Copy and Print Centers offer a comprehensive suite of printing and document services, including copying, printing, scanning, faxing, binding, laminating, and more. This breadth of services allows customers to fulfill various printing needs in one place. Customization and Personalization: Staples Copy and Print Centers provide options for customization and personalization, allowing customers to tailor their printed materials to their specific preferences. Whether it's business cards, flyers, posters, or invitations, customers can choose from a range of paper types, finishes, sizes, and designs to suit their needs. Professional Quality: Staples Copy and Print Centers are known for delivering professional-quality results. With high-quality printing equipment and skilled staff, customers can expect crisp, clear prints with vibrant colors and sharp detail. Expert Assistance: Staples Copy and Print Centers offer expert assistance from knowledgeable staff members who can provide guidance on printing options, design tips, and troubleshooting assistance. This personalized service ensures that customers receive the support they need to achieve their desired results. Overall, Staples Copy and Print Centers differentiate Staples from the competition by offering a convenient, comprehensive, and high-quality printing solution with personalized service and expert assistance. ADDITIONAL TEACHING TIPS This chapter explores the issues manufacturers consider when choosing retail partners. Students evaluate the types of retailers available for distributing products and learn how manufacturers and retailers work together to develop strategies. One component of this chapter is distribution intensity: exclusive, selective, and intensive. It is important to also point out that the type of distribution is ALSO dependent upon the retail outlets or multi-channels that agree to stock the product. Products with high involvement of decision making such as cars, HD TVs, appliances take up space in the showroom and retailers do have a choice on whether they want to give up that space to your brand or another manufacturer’s. Good channel relationships are key especially when it comes to the retailer who will make decisions on how the product is presented to the target market. The benefit to the manufacturer provided by using different channels (Exhibit 16.4 below) is key and the application questions in the chapter also give students an opportunity to apply these concepts. This chapter is a good opportunity to stress CRM and the importance of retaining existing customers. It is also a good chapter to mention customization of the product and the importance of an integrated marketing effort. Online-Tip: Have students compare and contrast Internet retailer sets and evaluate the benefits. Have them repeat this process for the same retailer’s store and catalogues. Video Activities Video: Staples, Inc.: The Retail Mix Learning Objective: LO3, LO4 Page Number in Text: 429, 438 Description: The video discusses how retailers can expand by attracting new customers or by finding ways to grow their existing customers. A major growth strategy for Staples was to connect with existing customers to double and then triple their market share in their in-store copy centres. Key Words: multichannel retailers, multichannel strategy, retailing, specialty store Activity: Ask students to view the video and then (1) identify as many ways as possible in which retailers create value for customers through the 4Ps; (2) list strategies that retailers in the Big Middle like Stapes are using to keep their position as a major player in the Big Middle; (3) Identify some of the key considerations involved in establishing a retail location; and (4) what role does store layout and image influence customers shopping experience and purchase decisions. There are the answers to the activities based on the video "Staples, Inc.: The Retail Mix": 1. Identifying ways retailers create value through the 4Ps: • Product: Offering a wide range of office supplies, technology products, and services tailored to customer needs. • Price: Providing competitive pricing, discounts, and promotions to attract customers. • Place: Establishing convenient locations, both physical stores and online platforms, for easy access. • Promotion: Utilizing advertising, marketing campaigns, and customer loyalty programs to communicate value and attract customers. 2. Strategies used by retailers like Staples to maintain their position in the Big Middle: • Multichannel strategy: Integrating online and offline channels to reach customers through various touchpoints. • Customer retention: Focusing on retaining existing customers through personalized services and loyalty programs. • Product differentiation: Offering unique products or services to stand out from competitors. • Innovation: Constantly adapting to market trends and introducing new offerings to meet changing customer needs. 3. Key considerations in establishing a retail location: • Demographics: Understanding the target market and selecting a location that aligns with the customer base. • Competition: Analyzing the competitive landscape and choosing a location with minimal competition or a unique selling proposition. • Accessibility: Ensuring easy accessibility for customers, including proximity to transportation hubs and parking facilities. • Cost: Evaluating the cost of real estate, rent, and operational expenses in relation to the potential revenue. 4. Role of store layout and image in influencing customer shopping experience and purchase decisions: • Store layout: A well-designed layout can enhance navigation, highlight featured products, and encourage exploration, leading to a positive shopping experience. • Image: A strong brand image and appealing store aesthetics can attract customers, build trust, and differentiate the retailer from competitors. A positive store image can also influence purchase decisions by conveying quality and reliability. Solution Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9780071320382, 9780070984929
