Chapter Twelve

Deliver the Customer

Experience:
Bricks and Clicks

Marketing: Real People, Real Choices, 8e

Solomon, Marshall, and Stuart

Copyright © 2016 Pearson Education, Inc. 12-1

Retailing: A Mixed (Shopping) Bag
• Retailing is the process by which
organizations sell goods and services to
consumers for their personal use
- Provide time, place, and ownership utility
• Retailing is big business:
- 2013 U.S. sales totaled $4.53 trillion
- More than 1 in 10 U.S. workers employed in retail
• Retailing practices vary around the world

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 The Evolution of Retailing
• Retailing has taken many forms over time –
- From the peddler hawking wares from a horse-
drawn cart to a majestic, urban department store
• As the economic, social, and cultural
climates change, different retail types
emerge …
- Often squeezing out older, outdated models
- Wheel of Retailing hypothesis

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Figure 12.1: The Wheel of
Retailing

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The Evolution Continues: What’s
“In-Store” for the Future?
• Four factors motivate
innovative merchants to
reinvent the way they do
business:
- Changes in economic
conditions
- Demographic and
cultural change
- Technology
- Globalization

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 Economic Change
• Economic downturn that began in 2008 had
great impact on retailers
- Lowered consumer confidence resulted in
less discretionary spending.
• Sales for upscale stores especially vulnerable
- While stores like TJ Maxx, Marshall’s, and
Amazon.com thrived
- Some retailers responded by allocating
more shelf space to private label brands
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 Changes in Demographics
and Culture
• More dual-career families places greater
emphasis on convenience
- Increased number of locations and format
- Extended hours
• Ethnic Diversity
- Need to adjust retail mix to attract
consumers in areas with high concentration
of ethnic population
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 Technology
• Technology is revolutionizing
retailing!
- Store associates carrying an iPod
Touch to quickly ring up a sale from
anywhere in the store
- Electronic POS systems feed data
into inventory control and auto
replenishment systems
- RFID tags on items
- E-menus and other electronic
ordering systems
- Electronic banking

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 Globalization
• Many retailers have expanded operations
into new countries
- Retailers must adjust to global differences
in culture, law, and regulations

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Retailtainment to Satisfy
Experiential Shoppers
• Retailtainment is all about
marketing strategies that
enhance the shopping
experience
- Many consumers are
seeking fun!
- Retail experiences that
incorporate elements of
surprise, excitement, and
novelty lead to increased
purchase likelihood
- FL
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 Ethical Problems in Retailing
• Retailers must deal with ethical problems
that involve both customers and employees.
- Shoplifting
- Employee theft
- Retail “borrowing”
- Ethical treatment of customers
- Customer profiling
- Sale of harmful products

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 Classifying Retailers by
Merchandise Mix
• One of the most important strategic
decisions a retailer makes is what to sell—its
merchandise mix
- Merchandise breadth: Narrow vs. broad
assortment (con store vs. sams)
- Merchandise depth: Shallow vs. deep
assortment (Walmart vs. brooks)

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Figure 12.2: Classification of Book
Retailers by Merchandise Selection

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 Classify Retailers by
Level of Service
• Firms recognize trade-off between service
and low prices and tailor strategies
• Retailers differ along a continuum based on
amount of service provided to customers
- Self service retailers (e.g, Sam’s Club)
- Full service retailers (e.g, Bloomingdales)

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Category Killer
• A category killer is a
specialty store that
carries a large section
of products within a
given category
- Best Buy
- Lowe’s
- Toys-R-Us

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 Department Stores
• Department stores sell
a broad range of items
and offer a deep
selection organized into
different sections
- Full-service U.S.
department stores
have struggled in
recent years
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 Popup Stores
• Popup stores are temporary retail spaces
that a company erects to help build buzz for
its products

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 Types of Retail Stores
• Retailers may be categorized based on a variety
of factors, including:
- Merchandise mix – both breadth and depth of
assortment
- Service levels offered to customers
- Store size

At how many different retailer types can a consumer

purchase a gallon milk? A greeting card? Gasoline?
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 E-Commerce and Other Types
of Non-store Retailing
• Nonstore retailing is any method a firm uses
to complete an exchange that does not
require a customer to visit a store

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 Direct Selling
• Direct selling occurs when a salesperson
presents a product to one individual or a
small group, takes orders, and delivers the
merchandise
- Door-to-door sales
- Party and networks
- Multilevel marketing

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Automatic Vending
• Automatic vending
- Usually best suited to
low-cost convenience
goods
- Offers many benefits to
consumers and
marketers

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 B2C E-Commerce
• B2C e-commerce is online exchange
between companies and individual
consumers
- Shoppers purchased $231 billion in
consumer goods online in 2012
• Experts predict that by 2017:
- 60% of all U.S. retail sales will involve Web
- Web-influenced sales will increase to $1.8
trillion
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 B2C and the Future of Retailing
• Does growth of B2C e-commerce mean the
death of bricks-and-mortar stores as we
know them?
- Virtual channels unlikely to replace traditional
ones
• Stores must evolve to lure customers away
from the computer
- Consumers will visit retailer more for the fun they
receive from the total experience.
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 Nonstore Retailing
• Nonstore retailing encompasses:
- Direct selling
- Automatic vending
- B2C e-commerce
• Many conventional retailers—from Tiffany’s
to Walmart—offer nonstore alternatives

Is multilevel marketing the same as a pyramid

scheme?

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Service as a Core Source of Value
• Services are acts, efforts, or performances
exchanged from producer to user without
ownership rights.
- Service industry account for four out of every five
jobs in the U.S. and nearly 80% of GDP
- Services are targeted toward both consumers and
organizations
- Intangibility of services creates unique
opportunities and challenges for marketing

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Figure12.4: Characteristics
of Services

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 The Service Encounter
• A service encounter occurs when the
customer comes into contact with the
organization
- Social dimension
- Physical dimension
• Quality of the service encounter exerts a big
impact on service quality evaluations
- Customer also plays a role in service experiences
Rx
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 Physical Elements of
the Service Encounter
• Servicescapes are the actual physical facility
where the service is performed, delivered,
and consumed
- Comprise exterior and interior elements of
the service facility
- Servicescapes can influence customer
perceptions
- Not as important if customer does not have
to visit a designated location

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 How we Provide Quality Service
• Quality service ensures
that customers are
satisfied with what they
have paid for
• Satisfaction is based on
customer expectations
- Not all customers
expect the same level
of service
- Not all customers can
be satisfied

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 Measuring Service Quality
• The SERVQUAL scale is a popular instrument
to measure customer service quality.
• SERVQUAL identifies consumer perceptions
of service quality on five components:
- Tangibles
- Reliability
- Responsiveness
- Empathy
- Assurance
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 Marketing People,
Places, and Ideas
• Services are not the only intangibles that
organizations need to market
- Intangibles such as people, places, and
ideas must also be marketed

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 Marketing People
• Politicians, athletes,
and celebrities are
commonly marketed
• Consultants “package”
celebrities
• Name changes and
rebranding are
common

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• Selena Gomez • Shia Lebeouf
• Demi Lovato • Joe Jonas
• Bella Thorne • Justin Timberlake
• Miley Cyrus • Britney Spears
• Hilary Duff • Christina Aguilera
• Vanessa Hudgens • Etc.
• Zac Efron
• Lindsay Lohan

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Table 12.4: Strategies to
Sell a Celebrity

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 Place Marketing
• Place marketing
strategies treat a
city, state, country,
or other locale as a
brand
- Michigan Travel and
Tourism Site

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 Marketing Ideas
• Marketing ideas
- Gaining market share for a concept, philosophy,
belief, or issue (e.g., religious institutions market
ideas about faith)
- Consumers often do not perceive the value they
receive when they conform with an idea or fail
to believe an idea is worth its ultimate cost-
pollution

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