Retailing's Role in Marketing: Definition and Dimensions

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  • 0:04 Definition of Retailing
  • 0:59 Ownership
  • 2:39 Level of Service
  • 3:50 Product Assortment
  • 4:17 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
When you start a retail store, there are many things to consider, from the type of service you'll offer to the scale of the business. In this lesson, you will learn about retailing's role in marketing and the different forms retail stores can take.

Definition of Retailing

Our Ninja family wants to open a retail shop specializing in ninja clothes. The entire family did not realize how many factors went into deciding on a type of store. The Ninja son has spent over a month researching how retailing affects marketing and the different dimensions that need to be considered. Retailing consists of all the activities directly related to the sale of goods and services to the ultimate consumer for personal use. Although the mention of shopping might conjure up the giant store Walmart, retailing is still generally a small, local operation, with over 90% of retail establishments employing fewer than 20 employees. The first step in understanding retailing marketing strategy is to learn about the different classifications, or dimensions, of retail operations. These dimensions are important, because they will help the Ninja son position his store correctly in the market.

Ownership

The Ninja family has to decide how the store will operate in an ownership capacity. There are three choices facing the family in how to establish their business. The first and most common retail setup consists of being an independent retailer. This would mean that the Ninja family would own just a limited amount of stores locally.

Another type of retail ownership is the chain store. These types of stores are owned and operated as a group by a single organization. The organization manages all of the chains and buys the products. Examples of this type of establishment would be Sears, CVS drug stores, and Starbucks. The Ninja family is aware of a martial arts clothing store chain that has many stores around the country. It is called M.A. Wear and would be a direct competitor. Since the Ninja family is a small business group, they would not be opening a chain store.

The last type of ownership is called a franchise. A franchise is owned and operated by an individual, but it occurs through a legal license with a company. This type of ownership allows the individual to have access to a larger organization's resources but maintain individual store control. There is a franchise martial arts clothing store called Martial Arts Us, but the family has decided to not pursue that type of business situation. They would not have total control and would have to pay a large fee upfront for the name and marketing plans of the franchise. In addition, they would owe a yearly royalty to the parent company of Martial Arts Us.

After much research, Ninja son has decided the best type of ownership would be to open an independent store in the local community.

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