Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 10

CHANN EL CONCEPTS: DISTRIBUTING THE PRODUCT

generate billions in sales. Despite these

all are in business to satisfy the needs

of markets. In order to do this, these

must be assured that their products are

uted to their intended markets. Mos t producing and manufacturing

are not in a favor-

able position to perform all the tasks that would be necessary to distribute their products

directly to thei r

user markets. A computer manufacturer may know everything about

designing the

personal computer, but know absolutely nothing about

sure the

customer has access to the product.

In many instances, it is the expertise

availability of other channel institutions that

make it possible for a producer/manufacturer to even participate in a particular market. Imag-

ine the leverage that a company like Frito-Lay

with various supermarket chains. Sup-

pose you developed a super-tasting new

chip. What are your chances of taking

shelf-facings away from Flito-Lay?

Thankfully, a specialty catalog retai ler is able to

include your product for a prescribeci fee. Likewise, other

members can be useful

to the producer in designing the product, packaging it, pricing it, promoting it, and distributing it through the

effective

It is rare that a manufacturer has the expertise found

with other channel

Retailing

Retailing

all activities

to market consumer goods and services to ultimate

consumers who a"e motivated to buy in order to satisfy individual

family needs in con-

trast to business, institutional, or industrial use. Thus, when an individual buys a computer

at Circuit City, groceries at Safeway, or a purse at Ebags.com, a retail sale has been made .

We typically think of a store when we think of a retail sale. However, retail sales are

made in ways other than through stores. For example, retail sales are made by door-to-door

Performing Artists (Business and Tour Managers)

IPersonal II Personal I

Manager

Manager

IBooking II Booking I

I Booking I

Agency

Agency

Agency

I Arts II Arts II Arts

Council

Council

Council I

Mass

I Media I

I

I[

II

I

I

II

I

Performing

Audiences

I

FIGURE 10.4

The marketing channels for the performing arts

Source: John R. Nevi n, "A n Em pirical Ana lysis of ivlarketing Channels for t he

in Michael

Mokwa, William M . Dawson, and E. Arthur Prieve (eds.). Marketing the Arts, New York: Praeger Publishers, 1980, p. 204.

CHANNEL INSTITUTIONS: CAPABILITIES AND LIMITATIONS

salespeople, such as an Avon

by mail order through a company such as

Bean, by automatic vending machines, and by hotels and motels. Nevertheless, most retail

sales are still made in brick-and-mortar stores.

The Structure of Ret ailing

Stores vary in size, in the kinds of serv:ces that are provided, in the assortwent of mer-

chandise they carry. and in many other

stores are small and have

sales of only a few hundred dollars.

few are extreIT'ely large,

of $500,000

or more on a single day.

fact, on special sale days, some stores have exceeded

mil-

lion in sales.

Department Stores

Department stores are

by their very wide

uct mixes. That is, they carry many different types of merchandise that may

hard-

ware, clothing, and appliances. Each type of merchandise is typically displayed in a

section or department within the store. The depth of the product

depends on the store.

Chain Stores

The 1920s saw the evolution of the chain store movemenL. Because

chains were so large, they were able to buy a wide variety of merchandise in large quan-

tity discornts. The discounts substantially lowered their cost compared to costs of single-

unit retailers. As a result, they could set retail prices that were lower than those of their

competitors and thereby iflcrease their share of the market. Furthermore, chains were

able to attract many customers because of their convenient locations, made possible by the;r

financial resources and expertise in selecting locations.

Supermarkets

Supermarkets evolved in the 1 nos and 1930s. For example, Piggly

Wiggly Food Stores, founded by Clarence Saunders around 1920, introduced self-service

and customer checkout counters . Supermarkets are large, self-service

with central

checkout facilities, they carry an extensive line of food items and

nonfood products.

Supermarkets were among the first to experiment with such innovations as mass mer-

chandising and low-cost

methods. Their entire approach to the distribution of

food and household cleaning and

products was to make available to the pub-

lic large assortments of a variety of such goods at each store at a minimal price.

Discount Houses

Cut-rate retailers have existed for a long time. However, since

the end of World War II, the growth of di scount

as a legitimate and extremely com-

petitive retailer has assured this type of outlet a permanent place among retail institutions.

It essentially foHowed the growth of the suburbs.

Discount houses are characterized by an emphasis on price as their main

appeal.

Merchandise assortments are generally broad including both hard and soft goods, but assort-

ments are typically limited to the most popular items, colors, and sizes. Such stores are usu-

ally large, self-service operations with long hours, free parking, and relatively simple fixtures.

Warehouse Retailing

Warehouse retailing is a relatively new type of retail insti-

tution that experienced considerable growth

the 1970s. Catalog showrooms are the largest

type of warehouse retailer, at least in terms of the number of stores operated. Retail sales

for catalog showrooms grew

1 billion dollars in 1970 to over 12 billion today.

growth rate has slowed recently, but is still substantial.

Franchises

the years, particularly since the 1930s, large chain store retailers

have posed a serious competitive threat to small storeowners. One of the responses to this

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