Chapter 5: Web,

Nonstore-Based,
and Other Forms
of Nontraditional
Retailing
 Figure 6-1: Approaches to
Retailing Channels

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-2

 Nontraditional Retailing
• Nontraditional retailing also includes
formats that do not fit into store and
nonstore-based categories:
• Video kiosks

• Airport retailing

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-3

 Direct Marketing
• Customer is initially exposed to a
good or service through a non-
personal medium and then orders by
mail, phone, fax, or computer
• Annual U.S. sales exceed $425
billion (including the Web)
• Other leading countries include
• Japan • France
• Germany • Italy
• Great Britain
© 2013 Pearson Education Inc. publishing as Prentice Hall 6-4
 Characteristics of Direct Marketing
Customers
• Married
• Upper middle class
• 35-50 years old
• Desire convenience,
unique items, good
prices

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-5

 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

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-6

 Strategic Business Limitations
of Direct Marketing
• Products often cannot be examined
prior to purchase
• Costs may be underestimated
• Response rates to catalogs under 10%
• A confused multitude of things exists
• Long lead time required
• Industry reputation sometimes
negative

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-7

 Data-Base Retailing
• Collection, storage, and usage of
relevant customer information
• name

• address

• background

• shopping interests

• purchase behavior

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-8

 Developing Trends
• Grow activities
• Changing customer lifestyles
• Increasing competition
• Increasing usage of dual distribution
channels
• Changing media roles, technological
advances, and global penetration

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-9

 Selection Factors by Customers
• Company reputation and image
• Ability to shop whenever consumer wants
• Types of goods and services
• Availability of toll-free phone number or Web
site for ordering
• Credit card acceptance
• Speed of promised delivery time
• Reasonable prices
• Satisfaction with past purchases and
good return policy
© 2013 Pearson Education Inc. publishing as Prentice Hall 6-10
 Figure 6-4: Executing a Direct
Marketing Strategy

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-11

 Media Selection

• Printed catalogs • Freestanding

• Direct-mail ads displays
and brochures • Ads or programs
• Inserts with in mass media
monthly credit • Banner ads or
card and other hot links on the
bills (statement Web
stuffers) • Video kiosks

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-12

 Direct Selling
• Direct selling includes personal contact
with consumers in their homes (and
other nonstore locations such as offices)
and phone solicitations initiated by
retailer.
• Annual sales of $29 billion in the U.S.,
where 16 million people are employed
(more than 90 percent part-time).
• Annual foreign revenues of $105 billion,
generated by 72 million salespeople.
© 2013 Pearson Education Inc. publishing as Prentice Hall 6-13
 Table 6-1 A Snapshot of the U.S.
Direct Selling Industry
Major Product Groups (as a percent of sales)

Home and family care products/home durables 24.4

Wellness (weight loss products, vitamins, etc.) 23.0

Personal care 19.4

Services 19.2

Clothing 11.0

Leisure/educational (books, encyclopedias,

toys/games, etc. 3.0

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-14

 Vending Machines
• Vending machines are a cash- or
card-operated retailing format that
sells goods and services.
• Eliminates the use of sales personnel
and allows 24-hour sales.
• Machines placed wherever convenient
for consumers.
• 95 percent of the $50 billion in annual
U.S. vending machine sales involve
hot/cold beverages and food items.
© 2013 Pearson Education Inc. publishing as Prentice Hall 6-15
 Development of World Wide Web
• The World Wide Web (Web) is a way
to access information on the Internet.
• People work with easy-to-use Web
addresses (sites) and pages.
• Web users see words, charts, pictures,
and video while hearing audio.
• Both “Internet” and “World Wide” Web
convey the same central theme: online
interactive retailing.

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-16

Figure 6-7:
Global
Consumers’
Online Retail
Purchase
Intent
(Selected
Product
Categories)

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-17

 Web Strengths
•Using the Web •Shopping
 information Online
 entertainment  selection

 interactive  prices
communications  convenience

 fun

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-18

 Reasons NOT to Shop Online
• Lack of trust
• Fear
• Lack of security (credit card
access)
• Lack of personal communication
• High shipping costs

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-19

 Video Kiosks
• A video kiosk is a freestanding,
interactive, electronic computer terminal
that displays products and related
information.
• Some kiosks are located in stores to
enhance customer service; others let
consumers place orders.
• There are 2.2 million video kiosks in use
throughout the world, nearly 1 million of
which are Internet-connected.
© 2013 Pearson Education Inc. publishing as Prentice Hall 6-20
 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

© 2013 Pearson Education Inc. publishing as Prentice Hall 6-21

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