Page 53 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes Advantages: All of the business operation processes have been established. The franchisee
receives help from a network and customers may already familiar with the name. The
marketing strategy has already been put in place. Most all of the risk associated with
starting a retail business has been reduced.
Disadvantages: Franchisees pay a fee, or royalty, based on sales each year. Startup costs
relating to the franchise may be high. One of the biggest disadvantages of owning a
franchise is the lack of flexibility and freedom.

Support: Franchisors usually provide all the marketing, training and ongoing support
needed to run a successful business.
5. Network Marketing: Multilevel marketing (MLM) or network marketing is a business
model where the selling of products depends on the people in the network. Not only is a
product being sold, but other salespeople are being recruited to sell that same product or
product line. It’s probably not a type of business one would initially consider when
discussing retail businesses, but Amway used this model quite successfully for many
years.
Advantages: Generally very little startup funding is needed to operate this type of business.
Network marketing provides freedom from conventional retailing businesses and offers
a greater interaction with all types of people. For those willing to invest the time, huge
profits can be made.
Disadvantages: Too many unscrupulous multilevel marketing schemes exist. Some systems
require their dealers to be more interested in recruiting new members than in selling the
products to consumers. It may be difficult to operate without a storefront.
Support: Most network marketing systems offer motivational materials, training and
support.

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Caution The two terms customer service and service retailing are not interchangeable.

3.11 Retail Channels

A channel of distribution or trade channel is defined as the path or route along which goods
move from producers or manufacturers to ultimate consumers or industrial users. In other
words, it is a distribution network through which producer puts his products in the market and
passes it to the actual users. This channel consists of :- producers, consumers or users and the
various middlemen like wholesalers, selling agents and retailers (dealers) who intervene between
the producers and consumers. Therefore, the channel serves to bridge the gap between the point
of production and the point of consumption thereby creating time, place and possession utilities.
A channel of distribution consists of three types of flows:
1. Downward flow of goods from producers to consumers
2. Upward flow of cash payments for goods from consumers to producers
3. Flow of marketing information in both downward and upward direction i.e. Flow of
information on new products, new uses of existing products, etc. from producers to
consumers. And flow of information in the form of feedback on the wants, suggestions,
complaints, etc from consumers/users to producers.

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