Deck 15: Retailing, Direct Marketing and Wholesaling

Question 1

Dick's Sporting Goods Scores with Stores within Stores
Dick's Sporting Goods is scoring big points with customers by setting up stores within stores that each feature an extensive selection of goods from a particular brand. The Pennsylvania-based retailer was founded in 1948 as a bait and tackle shop. Today, the founder's son is CEO, heading up a management team responsible for 558 large-scale Dick's Sporting Goods stores selling sports equipment, clothing, and shoes for team and individual use. Despite competition from other sporting-goods retailers, including Bass Pro Shops and REI, Dick's continues to grow beyond $6 billion in annual sales by putting brand-name merchandise at the core of its strategy for in-store, online, and mobile retailing.
For example, inside some of the larger Dick's stores is a special shop where only Nike-brand products are displayed. Part of the Nike inventory is exclusive to Dick's, which adds to the attraction for customers who prefer that brand. Selected Dick's stores contain a dedicated Under Armour shop or a dedicated North Face shop, again featuring a mix of merchandise available nationwide and some items available only at Dick's. These stores-within-a store not only differentiate Dick's from its rivals, but they also generate higher sales and profits per square foot than other areas of the store.
Not long ago, the retailer teamed up with the National Hockey League to test the sale of league- and team-branded merchandise at Dick's. The NHL operates three flagship specialty stores, and each of the 30 professional hockey teams also sells its own branded merchandise. However, the NHL decided it needed an experienced retail partner with a national presence to expand the NHL shop concept and reach more hockey fans. Now Dick's is working with the NHL to test dedicated shops within three Dick's stores. Averaging 400 square feet, each NHL store-within-a-store offers team merchandise geared to the interests and wallets of a wider range of fans. If the dedicated NHL shops do well, Dick's will open dozens more in the coming years.
Dick's also operates 82 Golf Galaxy specialty stores, catering to golf enthusiasts who appreciate the vast selection of golf-related merchandise, including clothing, shoes, and new or used equipment. Customers can take lessons from golf professionals, test clubs in an indoor driving area and a putting green, and use the interactive golf-course simulator to "play" at some of the world's best-known courses. The full-service retailer offers trade-ins, custom fitting, equipment repair, teetime reservations, and travel arrangements for golf vacations.
In addition, Dick's is opening a series of smaller specialty stores with narrow but deep assortments for specific target markets. For instance, it operates three True Runner specialty stores stocked with footwear, apparel, and accessories for serious runners. These stores use special technology to analyze each runner's arch and gait so salespeople can make personalized suggestions for appropriate shoes. To encourage runners to drop by, True Runner stores serve as a community hub for running information and provide lockers where customers can leave their belongings while running in the area.
Dick's recently acquired the Field Stream brand, which has been in existence for more than 140 years. Now the company has begun opening specialty stores under that name to sell equipment and accessories for fishing, camping, and hunting. By 2017, the company expects to have at least 55 Field Stream specialty stores, coast to coast. Field Stream stores, like True Runner stores, are smaller than Dick's Sporting Goods and-like all of Dick's stores-are staffed by employees who are knowledgeable and can help customers make informed choices.
Recognizing the potential of e-commerce and growing customer interest in mobile access to retail sites, Dick's has upgraded its website retailing technology and streamlined the process of browsing and buying via smartphone. The idea is to give customer more buying options and achieve the retailer's goal of ringing up $1 billion in online sales by 2017. Nonetheless, store retailing remains the firm's main focus, because most customers like to see sports equipment in person, seek expert advice, and try products before making a purchase. With that in mind, Dick's has invested in a fourth distribution center to be able to receive, sort, and ship merchandise for up to 750 stores. Looking even further ahead, the retailer's research indicates sufficient long-term demand and profit potential for more than 1,000 Dick's Sporting Goods stores nationwide.
Questions for Discussion
How would you describe the store image of Dick's Sporting Goods?

Answer 1

Introduction:
The case discusses a sporting goods Company D which sets up stores within stores that features an extensive selection of sporting goods equipment, fitness equipment, golf equipment, hunting and fishing gear products, apparel, footwear, and accessories. The company also owns and operates GG, F S, a few specialty concept stores, and e-commerce Websites. Inside D stores there are special brands, which adds attractions to customers and differentiate from its rival and also generate higher profits.
The company has teamed up with NHL (National hockey league) to test the sale of the league and team-branded merchandise. NHL requires an experienced retail partner to expand their shop concept and reach more hockey fans. Company D is working with the NHL to test dedicated shops within three D's stores. If the dedicated NHL shops do well Company D tends to open a dozen more in the future. The case concludes that the sports company anticipates satisfactory future demand and more than 1000 D Sporting goods stores nationwide.
Description of the store image of D's Sporting Goods:
Company D is a multi-channel sporting goods retailer which offers a wide range of authentic high-quality sports equipment, apparel, footwear, accessories which serve and inspire athletes and outdoor enthusiasts to accomplish their personal best through a blend of dedicated teammates.

Question 2

What value is added to a product by retailers? What value is added by retailers for producers and ultimate consumers?

Answer 2

A retailer is a business or an organization that buys goods for the purpose of reselling directly to the ultimate consumer.
A retailer adds to the value of the product by:
• making the shopping experiences of buyers quite convenient just as in the case of online shopping;
• facilitating shopping comparisons when similar retail shops are located in the same general vicinity;
• offering services like technical advice, home delivery, easy credit, repair, and maintenance; and
• demonstrating the needs and uses of the product to meet the satisfaction of the customers.
A retailer provides an environment for exchange, and therefore, acts as a significant link between the producer and the ultimate consumer of the product. Retailers open a broader array of products through their marketing operations to satisfy the needs of the consumers.

Question 3

Distribution decisions in the marketing plan entail the movement of your product from the producer until it reaches the final consumer. An understanding of how and where your customer prefers to purchase products is critical to the development of the marketing plan. As you apply the information in this chapter to your plan, focus on the following issues:
Considering your product's attributes and your target market's (or markets') buying behavior, will your product likely be sold to the ultimate customer or to another member of the marketing channel?
The information obtained from these questions should assist you in developing various aspects of your marketing plan found in the "Interactive Marketing Plan" exercise at www.cengagebrain.com.

Answer 3

Considering the attributes and buying behaviour of the target market, the product will be sold to retailer. The product requires a retailer to sell it to the ultimate consumer because the attributes of the product demands the product to be displayed and marketed to the customers.
On the other hand, the buying behaviour also demands the product to be displayed by the retailer. The buying behaviour is variety seeking so the customers need the retailer to make them aware about the features and attributes of the product. Such customers always prefer to buy something new in terms of quality, quantity, design and colour.
The attribute in this product are its quality, colour, taste, shape, innovative features, etc. the product cannot be sold to the customer without the help of a retailer as the product requires the retailer to inform customer about the attributes of the product.

Question 4

IKEA Makes the Most of Its Marketing Channels
The furniture and housewares retailer IKEA has a long history of using multiple marketing channels to reach customers near and far. IKEA's founder, Ingvar Kamprad, was a teenage entrepreneur when he started a mail-order business selling postcards and pencils in Sweden more than 70 years ago. Within a few years, he had expanded into reselling locally-made furniture and, in 1951, he printed the first annual IKEA furniture catalog. Soon, he opened the first IKEA showroom to allow customers to see and try furniture before making a purchase. By 1955, the company was designing and manufacturing many of its own products to meet customers' needs for stylish yet affordable furniture. IKEA came up with innovative designs for bookcases and other furniture items that are packed flat for shipment to stores and then assembled by buyers at home. This kept costs low and allowed the company to charge low prices. With the opening of its first store outside Sweden in the early 1960s, IKEA was on its way to becoming a global retailing sensation. Today, 770 million people annually pass through the front doors of 345 IKEA stores in 42 countries. The printed IKEA catalog remains a vital marketing tool, with 38 versions now published in 17 languages. More than 10 million every year. In addition, IKEA's websites attract more than 1 billion online visitors yearly. No matter how consumers like to browse and buy, IKEA wants to accommodate their preferences.
What's in Store?
Because in-store transactions account for 95 percent of IKEA's sales, the company puts considerable emphasis on brick-and-mortar retailing. Its warehouse-sized stores carry 10,000 items for the home, from measuring cups, mirrors, and mattresses to towels, toys, and tables. Customers can get ideas and inspiration from dozens of sample rooms filled with furnishings and accessories. They can also use in-store computer kiosks, work with employees, or access software from home to design their own kitchens, see which products fit the project and the budget, and view the results in 3D before ordering anything. Staff experts are on hand to provide design advice for customers who are renovating bathrooms, reorganizing closets, or creating a home office.
IKEA complements the merchandise assortment and onsite customer service with optional, fee-based extras such as delivery and installation. The idea is to extend IKEA's reach beyond the do-it-yourselfers who don't mind lugging bulky boxes and assembling furniture to save money. And, to encourage shoppers to linger, each outlet includes a cafeteria serving traditional dishes like Swedish meatballs, local favorites like chicken wings, and specially-priced children's meals.
One of IKEA's goals is to increase sales of existing stores by enhancing the customer experience. Through extensive in-home research, the company is constantly learning more about customers' aspirations, irritations, lifestyles, and value perceptions, so its local stores can carry the right mix of products at the right prices for each market. For example, based on in-home visits to local customers, the U.K. stores changed their policy of stocking outdoor furniture only during warm months and began selling such merchandise all year long. Supported by a multimedia marketing campaign, IKEA's U.K. sales of outdoor furniture skyrocketed by 58 percent during the year following this change. The U.K. stores are also testing the sale of solar panel kits, in line with the retailer's commitment to earth-friendly renewable energy.
As IKEA blankets the globe with stores, some of its suppliers are opening facilities in nearby areas, to reduce the time and expense of getting products from factory to store. As one example, China-based Liaoyang Ningfeng Woodenware recently created a U.S. subsidiary to manufacture bedroom sets in Virginia for IKEA stores in the United States, Europe, and Asia. The company cited Virginia's abundant raw materials and its well-developed transportation infrastructure as two main reasons for choosing the state for its American division.
At Home in Asia
Although IKEA has slowed the overall pace of new-store openings in recent years, it sees tremendous growth opportunity in emerging markets such as China, where middle-class incomes are rising and consumers are seeking out foreign brands. The company is adding three stores in China every year, competing on the basis of its dual strengths in European styling and vast selection. Initially, IKEA's prices were higher than those of rival retailers, but once it increased the proportion of merchandise sourced from local suppliers, it was able to reduce costs and prices. Now IKEA rings up more than $1 billion in yearly sales through its stores in China and expects double-digit revenue growth in the future.
IKEA has done its homework, stocking products and setting up displays keyed to the specific needs of customers in each area. For instance, apartment-dwellers in the north of China often set aside part of their balconies for food storage, whereas those in the south use part of their balconies for laundry. Therefore, IKEA's in-store exhibits of balcony organizers include storage units reflecting these regional preferences. Because IKEA's China stores are so much larger than local stores and carry a wider array of merchandise, they are extremely popular shopping destinations. In fact, the Beijing store alone draws more customers on a Saturday than an IKEA store in Europe would serve in an entire week. Several couples have even chosen to be married inside one of IKEA's stores in China.
IKEA is also preparing to bring its unique brand of retailing to India, another fast-growing market with great promise. Few large-scale retailers operate in India, and IKEA's fame and novelty have already raised public awareness and anticipation. The most difficult challenge may be navigating all the regulations governing foreign business ownership and the sourcing and shipment of merchandise within India. However, IKEA has the financial strength to wait for profitability as it proceeds with a long-term plan to open 25 stores.
Apps, Social Media, and the Web
Not every customer wants to spend hours in a store, as IKEA well knows. That's why the company has introduced smartphone apps for tech-savvy customers. One app provides access to IKEA's online catalog, enabling customers to check product listings and view photos and videos of merchandise from home or office or anywhere on the go. This app also allows customers to point a smartphone at a space in a room and see how a piece of IKEA furniture such as a sofa or chair would look if placed there. Customers make more informed buying decisions when they can visualize the furniture's position within a real room-and IKEA benefits from fewer merchandise returns. In addition, customers can use an IKEA app to confirm whether an item is in stock at a particular store, to check store hours and directions, and to receive notices of special deals and events.
IKEA uses social media such as Pinterest, Twitter, and Google+ to connect with local customers in many of its markets. By engaging customers with interesting and useful content, the retailer builds brand awareness, polishes its image, and promotes selected products or categories. Its U.S. Facebook page, with more than 3.2 million likes, features product photos, store news, and links to nonprofit groups that IKEA supports, such as UNICEF. Its U.S. Twitter account, named @DesignByIKEA, posts a variety of tweets and Vine videos focusing on seasonal merchandise and solutions to common problems like storage and organization.
Although IKEA has traditionally concentrated on brickand- mortar retailing, it is upgrading its e-commerce technology and its logistics to accommodate customers who like to browse and buy with a click. The retailer now makes 70 percent of its products available for online purchase and delivery in 13 countries. Within just a few years, all of IKEA's products will be included in its e-commerce offerings.
Questions for Discussion
Would you recommend that IKEA continue printing and mailing catalogs or should it switch to an online-only catalog? Explain your answer.

Question 5

L.Bean: Open 24/7, Click or Brick
L.L.Bean, based in Freeport, Maine, began life as a one product firm selling by mail in 1912. Founder Leon Leonwood Bean designed and tested every product he sold, starting with the now-iconic rubber-soled Bean Boot. Today, the catalog business that L.L.Bean began is still going strong, along with 30 U.S. stores and a thriving online retail operation. In addition, L.L.Bean is expanding its retail presence in
Japan and China, where customers are particularly drawn to brand names that represent quality and a distinct personality. The company's outdoorsy image and innovative products, combined with a century-old reputation for standing behind every item, have made its stores popular shopping destinations around the world and around the Web.
Although the award-winning L.L.Bean catalog swelled in size during the 1980s and 1990s, it has slimmed down over the years as the online store has grown. Now, using sophisticated marketing database systems, L.L.Bean manages and updates the mailing lists and customer preferences for its catalogs. For targeting purposes, L.L.Bean creates 50 different catalogs that are mailed to selected customers across the United States and in 160 countries worldwide. The company's computer modeling tools indicate which customers are interested in which products so they receive only the specialized catalogs they desire. Still, says the vice president of stores, "what we find is most customers want some sort of touch point," whether they buy online, in a store, by mail, or by phone.
The company's flagship retail store in Freeport, Maine, like its online counterpart, is open 24 hours a day, 7 days a week, throughout the year. Even on major holidays like Thanksgiving and Christmas, when most other stores are closed, the flagship store is open for business. It stocks extra merchandise and hires additional employees for busy buying periods, as does the online store. Day or night, rain or shine, customers can walk the aisles of the gigantic Freeport store to browse an assortment of clothing and footwear for men, women, and children; try out camping gear and other sporting goods; buy home goods like blankets; and check out pet supplies. Every week, the store offers hands-on demonstrations and how-to seminars to educate customers about its products. Customers can pause for a cup of coffee or sit down to a full meal at the in-store café. Thanks to the store's enormous size and entertaining extras, it has become a tourist attraction as well as the centerpiece of L.L.Bean's retail empire.
L.L.Bean's online store continues to grow in popularity. In fact, online orders recently surpassed mail and phone orders, a first in the company's history, and the company also offers a mobile app for anytime, anywhere access via cell phone. The web-based store is busy year-round, but especially during the Christmas shopping season, when it receives a virtual blizzard of orders-as many as 120,000 orders in a day. Unlike the physical stores, which have limited space to hold and display inventory for shoppers to buy in person, the online store can offer every product in every size and color. Customers can order via the Web and have purchases sent to their home or office address or shipped to a local L.L.Bean store for pickup. This latter option is particularly convenient for customers who prefer to pay with cash rather than credit or debit cards.
At the start of L.L.Bean's second century, its dedication to customer satisfaction is as strong as when Leon Leonwood Bean began his mail-order business so many decades ago. "We want to keep... the customer happy and keep that customer coming back to L.L.Bean over and over," explains the vice president of e-commerce.
What forms of direct marketing does L.L.Bean employ? Which additional forms of direct marketing should L.L.Bean consider using?

Question 6

Dick's Sporting Goods Scores with Stores within Stores
Dick's Sporting Goods is scoring big points with customers by setting up stores within stores that each feature an extensive selection of goods from a particular brand. The Pennsylvania-based retailer was founded in 1948 as a bait and tackle shop. Today, the founder's son is CEO, heading up a management team responsible for 558 large-scale Dick's Sporting Goods stores selling sports equipment, clothing, and shoes for team and individual use. Despite competition from other sporting-goods retailers, including Bass Pro Shops and REI, Dick's continues to grow beyond $6 billion in annual sales by putting brand-name merchandise at the core of its strategy for in-store, online, and mobile retailing.
For example, inside some of the larger Dick's stores is a special shop where only Nike-brand products are displayed. Part of the Nike inventory is exclusive to Dick's, which adds to the attraction for customers who prefer that brand. Selected Dick's stores contain a dedicated Under Armour shop or a dedicated North Face shop, again featuring a mix of merchandise available nationwide and some items available only at Dick's. These stores-within-a store not only differentiate Dick's from its rivals, but they also generate higher sales and profits per square foot than other areas of the store.
Not long ago, the retailer teamed up with the National Hockey League to test the sale of league- and team-branded merchandise at Dick's. The NHL operates three flagship specialty stores, and each of the 30 professional hockey teams also sells its own branded merchandise. However, the NHL decided it needed an experienced retail partner with a national presence to expand the NHL shop concept and reach more hockey fans. Now Dick's is working with the NHL to test dedicated shops within three Dick's stores. Averaging 400 square feet, each NHL store-within-a-store offers team merchandise geared to the interests and wallets of a wider range of fans. If the dedicated NHL shops do well, Dick's will open dozens more in the coming years.
Dick's also operates 82 Golf Galaxy specialty stores, catering to golf enthusiasts who appreciate the vast selection of golf-related merchandise, including clothing, shoes, and new or used equipment. Customers can take lessons from golf professionals, test clubs in an indoor driving area and a putting green, and use the interactive golf-course simulator to "play" at some of the world's best-known courses. The full-service retailer offers trade-ins, custom fitting, equipment repair, teetime reservations, and travel arrangements for golf vacations.
In addition, Dick's is opening a series of smaller specialty stores with narrow but deep assortments for specific target markets. For instance, it operates three True Runner specialty stores stocked with footwear, apparel, and accessories for serious runners. These stores use special technology to analyze each runner's arch and gait so salespeople can make personalized suggestions for appropriate shoes. To encourage runners to drop by, True Runner stores serve as a community hub for running information and provide lockers where customers can leave their belongings while running in the area.
Dick's recently acquired the Field Stream brand, which has been in existence for more than 140 years. Now the company has begun opening specialty stores under that name to sell equipment and accessories for fishing, camping, and hunting. By 2017, the company expects to have at least 55 Field Stream specialty stores, coast to coast. Field Stream stores, like True Runner stores, are smaller than Dick's Sporting Goods and-like all of Dick's stores-are staffed by employees who are knowledgeable and can help customers make informed choices.
Recognizing the potential of e-commerce and growing customer interest in mobile access to retail sites, Dick's has upgraded its website retailing technology and streamlined the process of browsing and buying via smartphone. The idea is to give customer more buying options and achieve the retailer's goal of ringing up $1 billion in online sales by 2017. Nonetheless, store retailing remains the firm's main focus, because most customers like to see sports equipment in person, seek expert advice, and try products before making a purchase. With that in mind, Dick's has invested in a fourth distribution center to be able to receive, sort, and ship merchandise for up to 750 stores. Looking even further ahead, the retailer's research indicates sufficient long-term demand and profit potential for more than 1,000 Dick's Sporting Goods stores nationwide.
Questions for Discussion
What effect do you think the opening of NHL storeswithin- stores will have on the retail positioning of Dick's Sporting Goods?

Question 7

What are the major differences between discount stores and department stores?

Question 8

Distribution decisions in the marketing plan entail the movement of your product from the producer until it reaches the final consumer. An understanding of how and where your customer prefers to purchase products is critical to the development of the marketing plan. As you apply the information in this chapter to your plan, focus on the following issues:
If your product will be sold to the ultimate customer, what type of retailing establishment is most suitable to your product? Consider the product's characteristics and your target market's buying behavior. Refer to Table 16.1 for retailer types.

The information obtained from these questions should assist you in developing various aspects of your marketing plan found in the "Interactive Marketing Plan" exercise at www.cengagebrain.com.

Question 9

IKEA Makes the Most of Its Marketing Channels
The furniture and housewares retailer IKEA has a long history of using multiple marketing channels to reach customers near and far. IKEA's founder, Ingvar Kamprad, was a teenage entrepreneur when he started a mail-order business selling postcards and pencils in Sweden more than 70 years ago. Within a few years, he had expanded into reselling locally-made furniture and, in 1951, he printed the first annual IKEA furniture catalog. Soon, he opened the first IKEA showroom to allow customers to see and try furniture before making a purchase. By 1955, the company was designing and manufacturing many of its own products to meet customers' needs for stylish yet affordable furniture. IKEA came up with innovative designs for bookcases and other furniture items that are packed flat for shipment to stores and then assembled by buyers at home. This kept costs low and allowed the company to charge low prices. With the opening of its first store outside Sweden in the early 1960s, IKEA was on its way to becoming a global retailing sensation. Today, 770 million people annually pass through the front doors of 345 IKEA stores in 42 countries. The printed IKEA catalog remains a vital marketing tool, with 38 versions now published in 17 languages. More than 10 million every year. In addition, IKEA's websites attract more than 1 billion online visitors yearly. No matter how consumers like to browse and buy, IKEA wants to accommodate their preferences.
What's in Store?
Because in-store transactions account for 95 percent of IKEA's sales, the company puts considerable emphasis on brick-and-mortar retailing. Its warehouse-sized stores carry 10,000 items for the home, from measuring cups, mirrors, and mattresses to towels, toys, and tables. Customers can get ideas and inspiration from dozens of sample rooms filled with furnishings and accessories. They can also use in-store computer kiosks, work with employees, or access software from home to design their own kitchens, see which products fit the project and the budget, and view the results in 3D before ordering anything. Staff experts are on hand to provide design advice for customers who are renovating bathrooms, reorganizing closets, or creating a home office.
IKEA complements the merchandise assortment and onsite customer service with optional, fee-based extras such as delivery and installation. The idea is to extend IKEA's reach beyond the do-it-yourselfers who don't mind lugging bulky boxes and assembling furniture to save money. And, to encourage shoppers to linger, each outlet includes a cafeteria serving traditional dishes like Swedish meatballs, local favorites like chicken wings, and specially-priced children's meals.
One of IKEA's goals is to increase sales of existing stores by enhancing the customer experience. Through extensive in-home research, the company is constantly learning more about customers' aspirations, irritations, lifestyles, and value perceptions, so its local stores can carry the right mix of products at the right prices for each market. For example, based on in-home visits to local customers, the U.K. stores changed their policy of stocking outdoor furniture only during warm months and began selling such merchandise all year long. Supported by a multimedia marketing campaign, IKEA's U.K. sales of outdoor furniture skyrocketed by 58 percent during the year following this change. The U.K. stores are also testing the sale of solar panel kits, in line with the retailer's commitment to earth-friendly renewable energy.
As IKEA blankets the globe with stores, some of its suppliers are opening facilities in nearby areas, to reduce the time and expense of getting products from factory to store. As one example, China-based Liaoyang Ningfeng Woodenware recently created a U.S. subsidiary to manufacture bedroom sets in Virginia for IKEA stores in the United States, Europe, and Asia. The company cited Virginia's abundant raw materials and its well-developed transportation infrastructure as two main reasons for choosing the state for its American division.
At Home in Asia
Although IKEA has slowed the overall pace of new-store openings in recent years, it sees tremendous growth opportunity in emerging markets such as China, where middle-class incomes are rising and consumers are seeking out foreign brands. The company is adding three stores in China every year, competing on the basis of its dual strengths in European styling and vast selection. Initially, IKEA's prices were higher than those of rival retailers, but once it increased the proportion of merchandise sourced from local suppliers, it was able to reduce costs and prices. Now IKEA rings up more than $1 billion in yearly sales through its stores in China and expects double-digit revenue growth in the future.
IKEA has done its homework, stocking products and setting up displays keyed to the specific needs of customers in each area. For instance, apartment-dwellers in the north of China often set aside part of their balconies for food storage, whereas those in the south use part of their balconies for laundry. Therefore, IKEA's in-store exhibits of balcony organizers include storage units reflecting these regional preferences. Because IKEA's China stores are so much larger than local stores and carry a wider array of merchandise, they are extremely popular shopping destinations. In fact, the Beijing store alone draws more customers on a Saturday than an IKEA store in Europe would serve in an entire week. Several couples have even chosen to be married inside one of IKEA's stores in China.
IKEA is also preparing to bring its unique brand of retailing to India, another fast-growing market with great promise. Few large-scale retailers operate in India, and IKEA's fame and novelty have already raised public awareness and anticipation. The most difficult challenge may be navigating all the regulations governing foreign business ownership and the sourcing and shipment of merchandise within India. However, IKEA has the financial strength to wait for profitability as it proceeds with a long-term plan to open 25 stores.
Apps, Social Media, and the Web
Not every customer wants to spend hours in a store, as IKEA well knows. That's why the company has introduced smartphone apps for tech-savvy customers. One app provides access to IKEA's online catalog, enabling customers to check product listings and view photos and videos of merchandise from home or office or anywhere on the go. This app also allows customers to point a smartphone at a space in a room and see how a piece of IKEA furniture such as a sofa or chair would look if placed there. Customers make more informed buying decisions when they can visualize the furniture's position within a real room-and IKEA benefits from fewer merchandise returns. In addition, customers can use an IKEA app to confirm whether an item is in stock at a particular store, to check store hours and directions, and to receive notices of special deals and events.
IKEA uses social media such as Pinterest, Twitter, and Google+ to connect with local customers in many of its markets. By engaging customers with interesting and useful content, the retailer builds brand awareness, polishes its image, and promotes selected products or categories. Its U.S. Facebook page, with more than 3.2 million likes, features product photos, store news, and links to nonprofit groups that IKEA supports, such as UNICEF. Its U.S. Twitter account, named @DesignByIKEA, posts a variety of tweets and Vine videos focusing on seasonal merchandise and solutions to common problems like storage and organization.
Although IKEA has traditionally concentrated on brickand- mortar retailing, it is upgrading its e-commerce technology and its logistics to accommodate customers who like to browse and buy with a click. The retailer now makes 70 percent of its products available for online purchase and delivery in 13 countries. Within just a few years, all of IKEA's products will be included in its e-commerce offerings.
Questions for Discussion
If you were in charge of choosing IKEA's next U.S. store location, what factors would you consider in making your decision?

Question 10

L.Bean: Open 24/7, Click or Brick
L.L.Bean, based in Freeport, Maine, began life as a one product firm selling by mail in 1912. Founder Leon Leonwood Bean designed and tested every product he sold, starting with the now-iconic rubber-soled Bean Boot. Today, the catalog business that L.L.Bean began is still going strong, along with 30 U.S. stores and a thriving online retail operation. In addition, L.L.Bean is expanding its retail presence in
Japan and China, where customers are particularly drawn to brand names that represent quality and a distinct personality. The company's outdoorsy image and innovative products, combined with a century-old reputation for standing behind every item, have made its stores popular shopping destinations around the world and around the Web.
Although the award-winning L.L.Bean catalog swelled in size during the 1980s and 1990s, it has slimmed down over the years as the online store has grown. Now, using sophisticated marketing database systems, L.L.Bean manages and updates the mailing lists and customer preferences for its catalogs. For targeting purposes, L.L.Bean creates 50 different catalogs that are mailed to selected customers across the United States and in 160 countries worldwide. The company's computer modeling tools indicate which customers are interested in which products so they receive only the specialized catalogs they desire. Still, says the vice president of stores, "what we find is most customers want some sort of touch point," whether they buy online, in a store, by mail, or by phone.
The company's flagship retail store in Freeport, Maine, like its online counterpart, is open 24 hours a day, 7 days a week, throughout the year. Even on major holidays like Thanksgiving and Christmas, when most other stores are closed, the flagship store is open for business. It stocks extra merchandise and hires additional employees for busy buying periods, as does the online store. Day or night, rain or shine, customers can walk the aisles of the gigantic Freeport store to browse an assortment of clothing and footwear for men, women, and children; try out camping gear and other sporting goods; buy home goods like blankets; and check out pet supplies. Every week, the store offers hands-on demonstrations and how-to seminars to educate customers about its products. Customers can pause for a cup of coffee or sit down to a full meal at the in-store café. Thanks to the store's enormous size and entertaining extras, it has become a tourist attraction as well as the centerpiece of L.L.Bean's retail empire.
L.L.Bean's online store continues to grow in popularity. In fact, online orders recently surpassed mail and phone orders, a first in the company's history, and the company also offers a mobile app for anytime, anywhere access via cell phone. The web-based store is busy year-round, but especially during the Christmas shopping season, when it receives a virtual blizzard of orders-as many as 120,000 orders in a day. Unlike the physical stores, which have limited space to hold and display inventory for shoppers to buy in person, the online store can offer every product in every size and color. Customers can order via the Web and have purchases sent to their home or office address or shipped to a local L.L.Bean store for pickup. This latter option is particularly convenient for customers who prefer to pay with cash rather than credit or debit cards.
At the start of L.L.Bean's second century, its dedication to customer satisfaction is as strong as when Leon Leonwood Bean began his mail-order business so many decades ago. "We want to keep... the customer happy and keep that customer coming back to L.L.Bean over and over," explains the vice president of e-commerce.
Do you think L.L.Bean's website will ever entirely take the place of its mail-order catalog? Why or why not?

Question 11

Dick's Sporting Goods Scores with Stores within Stores
Dick's Sporting Goods is scoring big points with customers by setting up stores within stores that each feature an extensive selection of goods from a particular brand. The Pennsylvania-based retailer was founded in 1948 as a bait and tackle shop. Today, the founder's son is CEO, heading up a management team responsible for 558 large-scale Dick's Sporting Goods stores selling sports equipment, clothing, and shoes for team and individual use. Despite competition from other sporting-goods retailers, including Bass Pro Shops and REI, Dick's continues to grow beyond $6 billion in annual sales by putting brand-name merchandise at the core of its strategy for in-store, online, and mobile retailing.
For example, inside some of the larger Dick's stores is a special shop where only Nike-brand products are displayed. Part of the Nike inventory is exclusive to Dick's, which adds to the attraction for customers who prefer that brand. Selected Dick's stores contain a dedicated Under Armour shop or a dedicated North Face shop, again featuring a mix of merchandise available nationwide and some items available only at Dick's. These stores-within-a store not only differentiate Dick's from its rivals, but they also generate higher sales and profits per square foot than other areas of the store.
Not long ago, the retailer teamed up with the National Hockey League to test the sale of league- and team-branded merchandise at Dick's. The NHL operates three flagship specialty stores, and each of the 30 professional hockey teams also sells its own branded merchandise. However, the NHL decided it needed an experienced retail partner with a national presence to expand the NHL shop concept and reach more hockey fans. Now Dick's is working with the NHL to test dedicated shops within three Dick's stores. Averaging 400 square feet, each NHL store-within-a-store offers team merchandise geared to the interests and wallets of a wider range of fans. If the dedicated NHL shops do well, Dick's will open dozens more in the coming years.
Dick's also operates 82 Golf Galaxy specialty stores, catering to golf enthusiasts who appreciate the vast selection of golf-related merchandise, including clothing, shoes, and new or used equipment. Customers can take lessons from golf professionals, test clubs in an indoor driving area and a putting green, and use the interactive golf-course simulator to "play" at some of the world's best-known courses. The full-service retailer offers trade-ins, custom fitting, equipment repair, teetime reservations, and travel arrangements for golf vacations.
In addition, Dick's is opening a series of smaller specialty stores with narrow but deep assortments for specific target markets. For instance, it operates three True Runner specialty stores stocked with footwear, apparel, and accessories for serious runners. These stores use special technology to analyze each runner's arch and gait so salespeople can make personalized suggestions for appropriate shoes. To encourage runners to drop by, True Runner stores serve as a community hub for running information and provide lockers where customers can leave their belongings while running in the area.
Dick's recently acquired the Field Stream brand, which has been in existence for more than 140 years. Now the company has begun opening specialty stores under that name to sell equipment and accessories for fishing, camping, and hunting. By 2017, the company expects to have at least 55 Field Stream specialty stores, coast to coast. Field Stream stores, like True Runner stores, are smaller than Dick's Sporting Goods and-like all of Dick's stores-are staffed by employees who are knowledgeable and can help customers make informed choices.
Recognizing the potential of e-commerce and growing customer interest in mobile access to retail sites, Dick's has upgraded its website retailing technology and streamlined the process of browsing and buying via smartphone. The idea is to give customer more buying options and achieve the retailer's goal of ringing up $1 billion in online sales by 2017. Nonetheless, store retailing remains the firm's main focus, because most customers like to see sports equipment in person, seek expert advice, and try products before making a purchase. With that in mind, Dick's has invested in a fourth distribution center to be able to receive, sort, and ship merchandise for up to 750 stores. Looking even further ahead, the retailer's research indicates sufficient long-term demand and profit potential for more than 1,000 Dick's Sporting Goods stores nationwide.
Questions for Discussion
Would you recommend that Dick's Sporting Goods test direct selling through at-home consultants? Explain your answer.

Question 12

In what ways are traditional specialty stores and off-price retailers similar? How do they differ?

Question 13

Distribution decisions in the marketing plan entail the movement of your product from the producer until it reaches the final consumer. An understanding of how and where your customer prefers to purchase products is critical to the development of the marketing plan. As you apply the information in this chapter to your plan, focus on the following issues:
Discuss how the characteristics of the retail establishment, such as location and store image, have an impact on the consumer's perception of your product.
The information obtained from these questions should assist you in developing various aspects of your marketing plan found in the "Interactive Marketing Plan" exercise at www.cengagebrain.com.

Question 14

IKEA Makes the Most of Its Marketing Channels
The furniture and housewares retailer IKEA has a long history of using multiple marketing channels to reach customers near and far. IKEA's founder, Ingvar Kamprad, was a teenage entrepreneur when he started a mail-order business selling postcards and pencils in Sweden more than 70 years ago. Within a few years, he had expanded into reselling locally-made furniture and, in 1951, he printed the first annual IKEA furniture catalog. Soon, he opened the first IKEA showroom to allow customers to see and try furniture before making a purchase. By 1955, the company was designing and manufacturing many of its own products to meet customers' needs for stylish yet affordable furniture. IKEA came up with innovative designs for bookcases and other furniture items that are packed flat for shipment to stores and then assembled by buyers at home. This kept costs low and allowed the company to charge low prices. With the opening of its first store outside Sweden in the early 1960s, IKEA was on its way to becoming a global retailing sensation. Today, 770 million people annually pass through the front doors of 345 IKEA stores in 42 countries. The printed IKEA catalog remains a vital marketing tool, with 38 versions now published in 17 languages. More than 10 million every year. In addition, IKEA's websites attract more than 1 billion online visitors yearly. No matter how consumers like to browse and buy, IKEA wants to accommodate their preferences.
What's in Store?
Because in-store transactions account for 95 percent of IKEA's sales, the company puts considerable emphasis on brick-and-mortar retailing. Its warehouse-sized stores carry 10,000 items for the home, from measuring cups, mirrors, and mattresses to towels, toys, and tables. Customers can get ideas and inspiration from dozens of sample rooms filled with furnishings and accessories. They can also use in-store computer kiosks, work with employees, or access software from home to design their own kitchens, see which products fit the project and the budget, and view the results in 3D before ordering anything. Staff experts are on hand to provide design advice for customers who are renovating bathrooms, reorganizing closets, or creating a home office.
IKEA complements the merchandise assortment and onsite customer service with optional, fee-based extras such as delivery and installation. The idea is to extend IKEA's reach beyond the do-it-yourselfers who don't mind lugging bulky boxes and assembling furniture to save money. And, to encourage shoppers to linger, each outlet includes a cafeteria serving traditional dishes like Swedish meatballs, local favorites like chicken wings, and specially-priced children's meals.
One of IKEA's goals is to increase sales of existing stores by enhancing the customer experience. Through extensive in-home research, the company is constantly learning more about customers' aspirations, irritations, lifestyles, and value perceptions, so its local stores can carry the right mix of products at the right prices for each market. For example, based on in-home visits to local customers, the U.K. stores changed their policy of stocking outdoor furniture only during warm months and began selling such merchandise all year long. Supported by a multimedia marketing campaign, IKEA's U.K. sales of outdoor furniture skyrocketed by 58 percent during the year following this change. The U.K. stores are also testing the sale of solar panel kits, in line with the retailer's commitment to earth-friendly renewable energy.
As IKEA blankets the globe with stores, some of its suppliers are opening facilities in nearby areas, to reduce the time and expense of getting products from factory to store. As one example, China-based Liaoyang Ningfeng Woodenware recently created a U.S. subsidiary to manufacture bedroom sets in Virginia for IKEA stores in the United States, Europe, and Asia. The company cited Virginia's abundant raw materials and its well-developed transportation infrastructure as two main reasons for choosing the state for its American division.
At Home in Asia
Although IKEA has slowed the overall pace of new-store openings in recent years, it sees tremendous growth opportunity in emerging markets such as China, where middle-class incomes are rising and consumers are seeking out foreign brands. The company is adding three stores in China every year, competing on the basis of its dual strengths in European styling and vast selection. Initially, IKEA's prices were higher than those of rival retailers, but once it increased the proportion of merchandise sourced from local suppliers, it was able to reduce costs and prices. Now IKEA rings up more than $1 billion in yearly sales through its stores in China and expects double-digit revenue growth in the future.
IKEA has done its homework, stocking products and setting up displays keyed to the specific needs of customers in each area. For instance, apartment-dwellers in the north of China often set aside part of their balconies for food storage, whereas those in the south use part of their balconies for laundry. Therefore, IKEA's in-store exhibits of balcony organizers include storage units reflecting these regional preferences. Because IKEA's China stores are so much larger than local stores and carry a wider array of merchandise, they are extremely popular shopping destinations. In fact, the Beijing store alone draws more customers on a Saturday than an IKEA store in Europe would serve in an entire week. Several couples have even chosen to be married inside one of IKEA's stores in China.
IKEA is also preparing to bring its unique brand of retailing to India, another fast-growing market with great promise. Few large-scale retailers operate in India, and IKEA's fame and novelty have already raised public awareness and anticipation. The most difficult challenge may be navigating all the regulations governing foreign business ownership and the sourcing and shipment of merchandise within India. However, IKEA has the financial strength to wait for profitability as it proceeds with a long-term plan to open 25 stores.
Apps, Social Media, and the Web
Not every customer wants to spend hours in a store, as IKEA well knows. That's why the company has introduced smartphone apps for tech-savvy customers. One app provides access to IKEA's online catalog, enabling customers to check product listings and view photos and videos of merchandise from home or office or anywhere on the go. This app also allows customers to point a smartphone at a space in a room and see how a piece of IKEA furniture such as a sofa or chair would look if placed there. Customers make more informed buying decisions when they can visualize the furniture's position within a real room-and IKEA benefits from fewer merchandise returns. In addition, customers can use an IKEA app to confirm whether an item is in stock at a particular store, to check store hours and directions, and to receive notices of special deals and events.
IKEA uses social media such as Pinterest, Twitter, and Google+ to connect with local customers in many of its markets. By engaging customers with interesting and useful content, the retailer builds brand awareness, polishes its image, and promotes selected products or categories. Its U.S. Facebook page, with more than 3.2 million likes, features product photos, store news, and links to nonprofit groups that IKEA supports, such as UNICEF. Its U.S. Twitter account, named @DesignByIKEA, posts a variety of tweets and Vine videos focusing on seasonal merchandise and solutions to common problems like storage and organization.
Although IKEA has traditionally concentrated on brickand- mortar retailing, it is upgrading its e-commerce technology and its logistics to accommodate customers who like to browse and buy with a click. The retailer now makes 70 percent of its products available for online purchase and delivery in 13 countries. Within just a few years, all of IKEA's products will be included in its e-commerce offerings.
Questions for Discussion
How much channel power does IKEA possess? What are the implications for the role it plays in the channel?

Question 15

L.Bean: Open 24/7, Click or Brick
L.L.Bean, based in Freeport, Maine, began life as a one product firm selling by mail in 1912. Founder Leon Leonwood Bean designed and tested every product he sold, starting with the now-iconic rubber-soled Bean Boot. Today, the catalog business that L.L.Bean began is still going strong, along with 30 U.S. stores and a thriving online retail operation. In addition, L.L.Bean is expanding its retail presence in
Japan and China, where customers are particularly drawn to brand names that represent quality and a distinct personality. The company's outdoorsy image and innovative products, combined with a century-old reputation for standing behind every item, have made its stores popular shopping destinations around the world and around the Web.
Although the award-winning L.L.Bean catalog swelled in size during the 1980s and 1990s, it has slimmed down over the years as the online store has grown. Now, using sophisticated marketing database systems, L.L.Bean manages and updates the mailing lists and customer preferences for its catalogs. For targeting purposes, L.L.Bean creates 50 different catalogs that are mailed to selected customers across the United States and in 160 countries worldwide. The company's computer modeling tools indicate which customers are interested in which products so they receive only the specialized catalogs they desire. Still, says the vice president of stores, "what we find is most customers want some sort of touch point," whether they buy online, in a store, by mail, or by phone.
The company's flagship retail store in Freeport, Maine, like its online counterpart, is open 24 hours a day, 7 days a week, throughout the year. Even on major holidays like Thanksgiving and Christmas, when most other stores are closed, the flagship store is open for business. It stocks extra merchandise and hires additional employees for busy buying periods, as does the online store. Day or night, rain or shine, customers can walk the aisles of the gigantic Freeport store to browse an assortment of clothing and footwear for men, women, and children; try out camping gear and other sporting goods; buy home goods like blankets; and check out pet supplies. Every week, the store offers hands-on demonstrations and how-to seminars to educate customers about its products. Customers can pause for a cup of coffee or sit down to a full meal at the in-store café. Thanks to the store's enormous size and entertaining extras, it has become a tourist attraction as well as the centerpiece of L.L.Bean's retail empire.
L.L.Bean's online store continues to grow in popularity. In fact, online orders recently surpassed mail and phone orders, a first in the company's history, and the company also offers a mobile app for anytime, anywhere access via cell phone. The web-based store is busy year-round, but especially during the Christmas shopping season, when it receives a virtual blizzard of orders-as many as 120,000 orders in a day. Unlike the physical stores, which have limited space to hold and display inventory for shoppers to buy in person, the online store can offer every product in every size and color. Customers can order via the Web and have purchases sent to their home or office address or shipped to a local L.L.Bean store for pickup. This latter option is particularly convenient for customers who prefer to pay with cash rather than credit or debit cards.
At the start of L.L.Bean's second century, its dedication to customer satisfaction is as strong as when Leon Leonwood Bean began his mail-order business so many decades ago. "We want to keep... the customer happy and keep that customer coming back to L.L.Bean over and over," explains the vice president of e-commerce.
What type(s) of location do you think would be most appropriate for future L.L.Bean stores, and why?

Question 16

What major issues should be considered when determining a retail site location?

Question 17

Distribution decisions in the marketing plan entail the movement of your product from the producer until it reaches the final consumer. An understanding of how and where your customer prefers to purchase products is critical to the development of the marketing plan. As you apply the information in this chapter to your plan, focus on the following issues:
Are direct-marketing or direct-selling methods appropriate for your product and target market?
The information obtained from these questions should assist you in developing various aspects of your marketing plan found in the "Interactive Marketing Plan" exercise at www.cengagebrain.com.

Question 18

IKEA Makes the Most of Its Marketing Channels
The furniture and housewares retailer IKEA has a long history of using multiple marketing channels to reach customers near and far. IKEA's founder, Ingvar Kamprad, was a teenage entrepreneur when he started a mail-order business selling postcards and pencils in Sweden more than 70 years ago. Within a few years, he had expanded into reselling locally-made furniture and, in 1951, he printed the first annual IKEA furniture catalog. Soon, he opened the first IKEA showroom to allow customers to see and try furniture before making a purchase. By 1955, the company was designing and manufacturing many of its own products to meet customers' needs for stylish yet affordable furniture. IKEA came up with innovative designs for bookcases and other furniture items that are packed flat for shipment to stores and then assembled by buyers at home. This kept costs low and allowed the company to charge low prices. With the opening of its first store outside Sweden in the early 1960s, IKEA was on its way to becoming a global retailing sensation. Today, 770 million people annually pass through the front doors of 345 IKEA stores in 42 countries. The printed IKEA catalog remains a vital marketing tool, with 38 versions now published in 17 languages. More than 10 million every year. In addition, IKEA's websites attract more than 1 billion online visitors yearly. No matter how consumers like to browse and buy, IKEA wants to accommodate their preferences.
What's in Store?
Because in-store transactions account for 95 percent of IKEA's sales, the company puts considerable emphasis on brick-and-mortar retailing. Its warehouse-sized stores carry 10,000 items for the home, from measuring cups, mirrors, and mattresses to towels, toys, and tables. Customers can get ideas and inspiration from dozens of sample rooms filled with furnishings and accessories. They can also use in-store computer kiosks, work with employees, or access software from home to design their own kitchens, see which products fit the project and the budget, and view the results in 3D before ordering anything. Staff experts are on hand to provide design advice for customers who are renovating bathrooms, reorganizing closets, or creating a home office.
IKEA complements the merchandise assortment and onsite customer service with optional, fee-based extras such as delivery and installation. The idea is to extend IKEA's reach beyond the do-it-yourselfers who don't mind lugging bulky boxes and assembling furniture to save money. And, to encourage shoppers to linger, each outlet includes a cafeteria serving traditional dishes like Swedish meatballs, local favorites like chicken wings, and specially-priced children's meals.
One of IKEA's goals is to increase sales of existing stores by enhancing the customer experience. Through extensive in-home research, the company is constantly learning more about customers' aspirations, irritations, lifestyles, and value perceptions, so its local stores can carry the right mix of products at the right prices for each market. For example, based on in-home visits to local customers, the U.K. stores changed their policy of stocking outdoor furniture only during warm months and began selling such merchandise all year long. Supported by a multimedia marketing campaign, IKEA's U.K. sales of outdoor furniture skyrocketed by 58 percent during the year following this change. The U.K. stores are also testing the sale of solar panel kits, in line with the retailer's commitment to earth-friendly renewable energy.
As IKEA blankets the globe with stores, some of its suppliers are opening facilities in nearby areas, to reduce the time and expense of getting products from factory to store. As one example, China-based Liaoyang Ningfeng Woodenware recently created a U.S. subsidiary to manufacture bedroom sets in Virginia for IKEA stores in the United States, Europe, and Asia. The company cited Virginia's abundant raw materials and its well-developed transportation infrastructure as two main reasons for choosing the state for its American division.
At Home in Asia
Although IKEA has slowed the overall pace of new-store openings in recent years, it sees tremendous growth opportunity in emerging markets such as China, where middle-class incomes are rising and consumers are seeking out foreign brands. The company is adding three stores in China every year, competing on the basis of its dual strengths in European styling and vast selection. Initially, IKEA's prices were higher than those of rival retailers, but once it increased the proportion of merchandise sourced from local suppliers, it was able to reduce costs and prices. Now IKEA rings up more than $1 billion in yearly sales through its stores in China and expects double-digit revenue growth in the future.
IKEA has done its homework, stocking products and setting up displays keyed to the specific needs of customers in each area. For instance, apartment-dwellers in the north of China often set aside part of their balconies for food storage, whereas those in the south use part of their balconies for laundry. Therefore, IKEA's in-store exhibits of balcony organizers include storage units reflecting these regional preferences. Because IKEA's China stores are so much larger than local stores and carry a wider array of merchandise, they are extremely popular shopping destinations. In fact, the Beijing store alone draws more customers on a Saturday than an IKEA store in Europe would serve in an entire week. Several couples have even chosen to be married inside one of IKEA's stores in China.
IKEA is also preparing to bring its unique brand of retailing to India, another fast-growing market with great promise. Few large-scale retailers operate in India, and IKEA's fame and novelty have already raised public awareness and anticipation. The most difficult challenge may be navigating all the regulations governing foreign business ownership and the sourcing and shipment of merchandise within India. However, IKEA has the financial strength to wait for profitability as it proceeds with a long-term plan to open 25 stores.
Apps, Social Media, and the Web
Not every customer wants to spend hours in a store, as IKEA well knows. That's why the company has introduced smartphone apps for tech-savvy customers. One app provides access to IKEA's online catalog, enabling customers to check product listings and view photos and videos of merchandise from home or office or anywhere on the go. This app also allows customers to point a smartphone at a space in a room and see how a piece of IKEA furniture such as a sofa or chair would look if placed there. Customers make more informed buying decisions when they can visualize the furniture's position within a real room-and IKEA benefits from fewer merchandise returns. In addition, customers can use an IKEA app to confirm whether an item is in stock at a particular store, to check store hours and directions, and to receive notices of special deals and events.
IKEA uses social media such as Pinterest, Twitter, and Google+ to connect with local customers in many of its markets. By engaging customers with interesting and useful content, the retailer builds brand awareness, polishes its image, and promotes selected products or categories. Its U.S. Facebook page, with more than 3.2 million likes, features product photos, store news, and links to nonprofit groups that IKEA supports, such as UNICEF. Its U.S. Twitter account, named @DesignByIKEA, posts a variety of tweets and Vine videos focusing on seasonal merchandise and solutions to common problems like storage and organization.
Although IKEA has traditionally concentrated on brickand- mortar retailing, it is upgrading its e-commerce technology and its logistics to accommodate customers who like to browse and buy with a click. The retailer now makes 70 percent of its products available for online purchase and delivery in 13 countries. Within just a few years, all of IKEA's products will be included in its e-commerce offerings.
Questions for Discussion
What are the main logistical issues IKEA must address to be able to make 100 percent of its products available for online purchase and delivery?

Question 19

Describe the three major types of traditional shopping centers. Give an example of each type in your area.

Question 20

Distribution decisions in the marketing plan entail the movement of your product from the producer until it reaches the final consumer. An understanding of how and where your customer prefers to purchase products is critical to the development of the marketing plan. As you apply the information in this chapter to your plan, focus on the following issues:
If your product will be sold to another member in the marketing channel, discuss whether a merchant wholesaler, agent, or broker is most suitable as your channel customer.
The information obtained from these questions should assist you in developing various aspects of your marketing plan found in the "Interactive Marketing Plan" exercise at www.cengagebrain.com.

Question 21

Discuss the major factors that help to determine a retail store's image. How does atmosphere add value to products sold in a store?

Question 22

How is door-to-door selling a form of retailing? Some consumers believe that direct-response orders bypass the retailer. Is this true?

Question 23

If you were opening a retail business, would you prefer to open an independent store or own a store under a franchise arrangement? Explain your preference.

Question 24

What services do wholesalers provide to producers and retailers?

Question 25

What is the difference between a full-service merchant wholesaler and a limited-service merchant wholesaler?

Question 26

Drop shippers take title to products but do not accept physical possession of them, whereas commission merchants take physical possession of products but do not accept title. Defend the logic of classifying drop shippers as merchant wholesalers and commission merchants as agents.

Question 27

Why are manufacturers' sales offices and branches classified as wholesalers? Which independent wholesalers are replaced by manufacturers' sales branches? By sales offices?