Chapter 6

Web, Nonstore-
Based, and
Other Forms of
Nontraditional RETAIL
MANAGEMENT:
Retailing A STRATEGIC
APPROACH,
10th Edition

BERMAN EVANS
 Chapter Plan
To contrast single-channel and multi-
channel retailing
To look at the characteristics of the 3
major retail institutions involved with
nonstore-based strategy mixes: direct
marketing, direct selling, and vending
machines.
To explore the emergence of e-retailing
To discuss 2 other nontraditional forms of
retailing: video kiosks and airport retailing

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 Nonstore Retailing

 Retailing strategy that is not store-

based
 It exceeds $375 billion annually
 80% comes from direct marketing
 Web-based retailing is fastest
growing area

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 Single-channel & multi-channel

• Single-channel: when retailer uses

one retail format, could be store or
nonstore-based.
• Single-channel: usually in the
beginning.
• Multi-channel: when firm grows

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 Direct Marketing

Customer is first exposed to a good

or service through a nonpersonal
medium and then orders by mail,
phone, fax, or computer
2 broad categories: general & speciality
Annual U.S. sales exceed $300
billion
 Other leading countries include
* Japan, Germany, France, Great Britain, Italy

6-5
 Characteristics of Direct
Marketing Customers
• Married, upper
middle class, 36-50
years old
• Live: far from malls
or in upscale metro
• Desire: convenience,
unique merchandise,
good prices

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 Strategic Business Advantages of
Direct Marketing
Reduced costs
Lower prices
Large geographic coverage
Convenient to customers
Ability to pinpoint customer segments
Ability to eliminate sales tax for some
Ability to supplement regular business
without additional outlets
6-7
 Strategic Business Limitations
of Direct Marketing
Products cannot be examined prior to
purchase
Costs may be underestimated
Response rates to catalogs under 10%
Clutter exists
Long lead time required
Industry reputation sometimes
negative
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 Data-Base Retailing
Collection, storage, and usage of
relevant customer information
* name
* address
* background
* shopping interests
* purchase behavior
Observation of 80-20 rule

6-9
 8 Steps in direct marketing
strategy (Diagram)
• Business definition, generating customers,
media selection, generating customers,
media selection, presenting the message,
customer contact, customer response, order
fulfillment and measuring results &
maintaining the database.

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 Business definition
• A company makes two decision regarding
its business definition
2. Is the firm going to be a pure direct marketer
or is going to engage in multi channel
retailing.
3. Is the firm going to be a general direct
marketer & carry a broad product
assortment., or will it specialize in one good/
service category.

6-11
 Generating customer
A firm can
• Buy a printed mailing list from a broker.
• Download a mailing list from the web.
• Send out a blind mailing to all the residents in a
particular area.
• Advertise in a news paper, magazine, websites
etc.
• Contact consumers who have bought from the
firm or requested information.
6-12
 Media Selection & Customer Generation

 Printed catalogs  Purchase a list

 Direct-mail ads and  Develop a data base
brochures  Blind mailing
 Inserts with monthly  Advertise
credit card and other
bills (statement
stuffers)
 Ads in mass media
 Vending m/c
 Others

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 Measuring results
• Overall response rate
• Average purchase amount
• Sales volume by product category
• Value of list brokers- the revenues
generated from various mailing lists.

6-14
 Outcome Measures

Overall Response Rate

Average Purchase Amount
Sales Volume by Product Category
Value of List Brokers

6-15
 Direct Selling

• Includes personal contact with

consumers in their homes (and other
non-store locations) and phone
solicitations
• Strategy mix emphasizes convenient
shopping & personal touch.
• Lower overhead costs (for retailer).
• Problems?

6-16
 Problems in direct selling
• More women work
• Improved job opportunities in other fields
• Market coverage is limited by size of sales
force.
• Sales force turnover is high
• Above average prices due to compensation
to sales personnel
• Legal restrictions
• Name of door to door selling has poor
image.
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 The Role of the Web
 Project a retail presence
 Enhance image
 Generate sales
 Reach geographically-dispersed
customers
 Provide information to customers
 Promote new products
 Demonstrate new product benefits
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 The Role of the Web (cont.)
 Provide customer service (e.g., e-mail)
 Be more “personal” with consumers
 Conduct a retail business efficiently
 Obtain customer feedback
 Promote special offers
 Describe employment opportunities
 Present information to potential
investors, franchisees, and the media
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 Figure 6-8: Five Stages of Developing
a Retail Web Presence

1. Brochure Web Site

2. Commerce Web Site

3. Integrated Web Site

4. The ‘Webified’ Store

5. Site Integrated with

Manufacturer Systems

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 Web Strengths

 Using the Web  Shopping Online

– information – selection
– entertainment – prices
– interactive – convenience
communications – fun

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 Reasons NOT to Shop Online

Trust
Fear
Lack of security
Lack of personal communication

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 Recommendations for
Web Retailers
Develop or exploit a well-known,
trustworthy retailer name
Tailor the product assortment for Web
shoppers
Enable the shopper to click as little as
possible
Provide a solid search engine
Use customer information

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 Nontraditional Retailing

 Nontraditional retailing also includes

formats that do not fit into the store and
nonstore-based categories:
 Video kiosks
 Airport retailing

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 Features of Airport Retailing

 Large group of prospective shoppers

 Captive audience
 Strong sales per square foot of retail
space
 Strong sales of gift and travel items
 Difficulty in replenishment
 Longer operating hours
 Duty-free shopping possible

6-25
 Video Kiosks
• Free standing interactive computer terminal
for purchasing (purchase may occur onsite
or offsite)
• Though actual sales may be less from
kiosks per se, they influence sales by
providing product information
• Used for greeting cards, movie tickets, book
sales

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