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Chapter 11-14 FInal Exam Study Guide

Two general types of franchises o business format

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Two general types of franchises: o Business-format franchises , McDonald's, Radio Shack, and Subway. The franchisor provides step-by-step procedures for most aspects of the business and guidelines for the most likely decisions a franchisee will face. RETAILING STRATEGY To develop retailing strategy, managers work with retailing mix (retail pricing, store location, retail communication, and merchandise) Retail pricing Markup : how much should be added to the cost the retailer paid for a product to reach the final selling price. Original markup: difference between retailer cost and initial selling price Markdown : discounting that occurs when the product does not sell at the original price and adjustment is necessary Timing for markups Many retailers use price discounts as a part of their regular merchandising policy Emphasize consistently low prices and eliminate most markdowns with a strategy often called everyday low pricing Everyday fair pricing , is advocated by retailers that may not offer the lowest price but try to create value for customers through service and the total buying experience Off-price retailing involves selling brand-name merchandise at lower than regular prices o The difference between the off-price retailer and a discount store is that off-price merchandise is bought by the retailer from manufacturers with excess inventory at prices below wholesale prices. The discounter, however, buys at full wholesale price but takes less of a markup than do traditional department stores. Store Location Where to locate and how many stores to have
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Central business district is the oldest retail setting, the community's downtown area. Until the regional outflow to suburbs, it was the major shopping area. Less convenient because of lack of parking, higher crime rates, and exposure to the weather Regional shopping centers consist of 50 to 150 stores that typically attract customers who live or work within a 5- to 10-mile range. Two or three anchor stores: well-known national or regional stores such as Sears, Saks Fifth Avenue, and Bloomingdale's o Strip mall: clusters of stores to serve people who are within a 5- to 10-minute drive Multichannel retailers will utilize and integrate a combination of traditional store formats and non-store formats such as catalogs, television, home shopping, and online retailing. (Barnes & Noble) WHOLESALING Selling products and services for the purpose of resale or business use Merchant wholesalers: are independently owned firms that take title to the merchandise they handle. Also called industrial distributors and most wholesalers are merchants General merchandise (or full-line ) wholesalers carry a broad assortment of merchandise and perform all channel functions. o Most prevalent in the hardware, drug, and clothing industries. Do not maintain much depth of assortment within specific product lines Specialty merchandise (or limited-line ) wholesalers offer a relatively narrow range of products but have an extensive assortment within the product lines carried. They perform all channel functions. found in the health foods, automotive parts, and seafood industries
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