Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 10

CHANNEL CONCEPTS: DISTRIBUTING THE PRODUCT

threat has been the rapid

of franchising. Franchising is not a new development. The

major oil companies such as

have long enfranchised its dealers, who only sell the

products of the

(the oil companies). Automobile manufacturers also enfrancilise

dealers, who sell a stipulated make of car (e.g., Chevrolet)

operate

business

to some extent as the manufacturer wishes.

Planned Shopping CenterslMaUs

After World War II, the United States under-

went many changes. Among those most influential on retailing were the growth of the pop-

ulation and of the economy. New highway construction enabled people to leave the

central cities and move to newly developed suburban residential communities .

move-

ment to the suburbs established the need for new centers of retailing to serve the explod-

ing populations. By 1960 there were 4,500 such centers with both chains and nonchains

vying

centers are successful because they provide customers with

a wide

of

If you want to buy a suit or a dress, a regional shopping

many alternatives in one location. Regional centers are those larger cen-

ters that typically have one or more department stores as major tenants. Community cen-

ters are

sized with perhaps a junior department store; while neighborhood centers

are small, with the key stOfe usually a supermarket. Local clusters are shopping districts that have simply grown over time around key intersections, courthouses, and the like. String street locations are

major traffic routes, while isolated locations are freestanding sites

not necessarily in heavy traffic areas. Stores in isolated locations must use promotion or

some other aspect of their marketing mix to attract shoppers. Still , as indicated in

next

Newsline, malls are facing serious problems.

NEWSLINE: THE MALL: A THING OF THE PAST?

She was born into retail royalty, a double-decker shrine to capitalism

that seduced cool customers

shopaholics alike to roam

her exhausting mix of 200 stores

funky , W-shaped design was

pure 1960s, as if dreamed up by that era's noted architectural whiz,

Mike Brady. When her doors opened the first morning, a brass band

serenaded the arriving mob.

Cinderella City, once the biggest covered mall on the planet, was a

very big deal-for about six years, until the next gleaming mall

along in 1974. That's when the music stopped at Cinderella City.

Soon the patrons grew scarce, the concrete began crvmbling and

graffiti stained some of the walls. It's not pretty, but that's the

law of the consumer jungle. One minute you're luring shoppers from

miles around to chug an Orange Julius or grab a snack at the Pretzel

Hut; a few years go by, and they're planting you in the dreaded mall

graveyard.

Back then, people made a day out of wandering the massive con-

and lunching in the food courts. Today, with less

available for many people, shopping is seen as a necessity. Spending

time with your family and at home is more important than spending

time in a store.

The newest malls reflect the modern need for shopping speed. Cov-

ered shopping centers now come equipped with dozens of doors to the

out side instead of two main entrances that usher crowds in

out

CHANNEL INSTITUTIONS: CAPABILITIES AND LIMITATIONS

261

through the anchor department store. That same trend paved the way

for the flurry of freestanding

Depots and TJ Maxx stores as well

as discount giants like Wal-Mart. All are

customers from mid-

market malls, already struggling. In addition to the fresh success of

freestanding discount stores, the Internet is drawing off even more

customers who seeK to buy books or music online.

For the mall to survive, they'll have

something

high-quality environment for the aelivery of high

high experi-

ence, high margin retail goods and services: a place

go for the

entertainment shopping experience.

Sources: Herb Greenberg, "Dead Mall Walking," Fortune, July 8, 2000, p. 304;

Calmetla Y. Coleman, "Making Malls (Gasp!] Convenient," The Walt

Jour-

February 8 , 2000, pp . B 1, B2; Bill Briggs. "Birth and Death of the Ameri-

can Mall," The Denver Post, June 4, 2000 , pp.

D4.

Nonstore Retailing

Nonstore retailing describes sales made to ultimate consumers

outside of a traditional retail store setting. In total, nonstore retailing accounts for a rela-

tively small percentage of total retail sales, but it

growing and very important with

tain types of merchandise, such as life insurance, cigarettes, magazines, books, CDs, and

clothing.

One type of

retailing used by such companies as Avon, Electrolux, and many

insurance agencies is in-home selling. Such sales calls may be made to preseiected prospects or in some cases on a cold call basis. A variation of door-to-door selling is the demonstration party. Here one customer acts as a host and invites friends Tupperware has been very successful with this approach.

Vending machines are another type of nonstore retailing. Automated vending uses coin-

operated, self-service machines to make a wide variety of products and services available

to shoppers in convenient locations. Cigarettes, soft drinks , hosiery, and banking transac-

tions are but a few of the items distributed in this way. This method of retailing is an effi-

cient way to provide continuou:; service. It is particularly useful with convenience goods.

Mail order is a form of nonstore retailing that relies on product description to sell

merchandise. The communication with the customer can be by flyer or catalog. Magazines,

CDs, clothing, and assorted household items are often sold in this fashion . As with vend-

ing machines, mail order offers convenience but limited service. It is an efficient way to

cover a very large geographical area when shoppers are not concentrated in one location.

Many retailers are moving toward the use of newer communications and computer tech-

nology in catalog shopping

Online marketing has emerged during the last decade; it requires that both the retailer and the consumer have computer and modem. A modem connects the computer to a telephone line so that the computer user can reach various online information services. There

are two types of oniine channels: (1) commercial online channels-various companies have

set up online information and marketing services that can be assessed by those who have

signed up and paid a monthly fee, and (2)

global web of some 45,000 com-

puter networks that is making instantaneous and decentralized global communication pos-

sible. Users can send e-mail, exchange views, shop for products, and access real-time news .

Marketers can carryon online marketing in four ways: (1) using e-mail; (2) partici-

pating in forums, newsgroups, and bulletin boards; (3) placing ads online; and (4) creating

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