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Comment on the changes that have happened to retailing.

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Introduction

Comment on the changes that have happened to retailing Over the past fifty years retailing has changed a lot. This change has occurred naturally with the great change in people's incomes and spending patterns. People nowadays have enough money to spend on things other than the basics. People have money to spend on 'luxuries' and hi-tech equipment that were not bought by people fifty years ago. The increase in people's spending money means that all item previously considered 'luxuries' can be aimed at a much larger market. This, however, also means that the prices need to be a lot lower. This decrease in price does not mean that the profit is necessarily lower, because the demand increases. The large market for such products means that they can be ordered in bulk and the retailer can negotiate lower prices with the manufacturer, which will in return mean lower prices for the customer. Nowadays, the retailer, especially if it is a successful multiple will invest in new equipment, which will lower costs, meaning higher profit margins and/or lower prices for customers. Successful multiples can also invest in training staff on how to deal with customers and create a friendly atmosphere. ...read more.

Middle

IKEA with that of a small family run business, in the furniture industry, owned by a craftsman. The marketing mix consists of four things - the product, the price, the place and promotion. Although IKEA sells the same types of product as a small family run business, their marketing mixes are very different. Both businesses sell furniture, which is a non-perishable good. Although furniture has a wide market, it sells less than single-use products like food. Furniture is considered a consumer durable good meaning that people are willing to pay more for it because it is not bought as often, bust should last longer. IKEA unlike small furniture businesses is likely to produce its products in mass. The products will be made in large factories, whereas a small family run business, which is owned by a craftsman is likely to sell furniture made in either batch production or as one-offs. This is because the craftsman is unlikely to have the means to make large amounts of the product. This means that the costs will be higher for the craftsman because he will not have the kind of equipment that a large company like IKEA would have. ...read more.

Conclusion

The small business, however, will only be able to afford advertising in local newspapers and radio stations. It is only necessary for them to advertise locally because the store is no use to people who do not live locally. IKEA can also use below-the-line techniques to its advantage. For example, if the use promotions in which they offer 10% if you buy a matching set, it means that the customer will buy more because they think they have got a better deal. The craftsman can also offer below-the-line promotions but not to the same extent because he will probably not be able to afford it financially. IKEA has a choice out of many different channels of distribution. IKEA may choose to buy directly from the producer if the store has enough space or a warehouse nearby. However it is quite likely that they will use an agent to send large deliveries to each store and advise them on technicalities. An agent will also probably used for stores in other countries. The craftsman has a much shorter channel of distribution because he makes the products himself. This means that the channel of distribution goes straight from the producer to the customer so transportation costs are a lot smaller. Although both IKEA and the small family run business are selling the same products, their marketing mixes are completely different. ...read more.

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