Retailing and Wholesaling

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Retailing and Wholesaling

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Title: Retailing and Wholesaling

1
Principles of Marketing
13

Retailing and Wholesaling

2
Learning Objectives

After studying this chapter, you should be able
to
Explain the roles of retailers and wholesalers in
the distribution channel
Describe the major types of retailers and give
examples of each
Identify the major types of wholesalers and give
examples of each
Explain the marketing decisions facing retailers
and wholesalers

13-2
3
Chapter Outline

Retailing
Wholesaling

13-3
4
Retailing

Retailing includes all the activities in selling
products or services directly to final consumers
for their personal, non-business use
Retailers are businesses whose sales come
primarily from retailing

13-4
5
Retailing

Non-store retailing includes selling to final
consumers through
Direct mail
Catalogs
Telephone
Internet
TV shopping
Home and office parties
Door-to-door sales
Vending machines

13-5
6
Retailing

Types of Retailers
Classified in terms of
Amount of service
Product lines
Relative price

13-6
7
Retailing

Types of Retailers
Amount of service
Self service
Limited service
Full service

13-7
8
Retailing

Types of Retailers
Amount of Service
Self-service retailers serve customers who are
willing to perform their own locate-compare-select
process to save money
Wal-Mart
Supermarkets

13-8
9
Retailing

Types of Retailers
Amount of Service
Limited service retailers provide more sales
assistance because they carry more shopping goods
about which customers need more information
Sears
JC Penney

13-9
10
Retailing

Types of Retailers
Amount of Service
Full-service retailers assist customers in every
phase of the shopping process, resulting in
higher costs that are passed on to the customer
as higher prices
Department stores
Specialty stores

13-10
11
Retailing

Types of Retailers
Amount of Service
Specialty stores carry narrow product lines with
deep assortments within the product lines
Department stores carry a wide variety of product
lines
Convenience stores carry a limited line of
high-turnover convenience goods

13-11
12
Retailing

Types of Retailers
Amount of Service
Superstores offer a large assortment of routinely
purchased food products, no food items, and
services
Supercenters have very large combination food
and discount stores

13-12
13
Retailing

Types of Retailers
Amount of Service
Category killers are large stores that carry a
very deep assortment of a particular line with a
knowledgeable staff
Service retailers product lines are actually
service

13-13
14
Retailing

Types of Retailers
Relative Prices
Discount stores
Office price retailers
Factory outlets
Warehouse clubs

13-14
15
Retailing

Types of Retailers
Relative Prices
Discount stores sell standard merchandise at
lower prices by accepting lower margins and
selling higher volume
Off-price retailers buy at less than regular
wholesale prices and charge customers less than
retail
Independent off-price retailers either are owned
and run by entrepreneurs or are divisions of
larger retail corporations

13-15
16
Retailing

Types of Retailers
Relative Prices
Factory outlets are producer-operated stores
Warehouse clubs are large warehouse-like
facilities with few frills and offer ultra-low
prices

13-16
17
Retailing

Types of Retailers
Organizational Approach
Corporate chain stores
Voluntary chain stores
Retailer cooperatives
Franchise organizations
Merchandising conglomerates

13-17
18
Retailing

Types of Retailers
Organizational Approach
Corporate chains are two or more outlets that are
commonly owned and controlled
Size allows them to buy in large quantities at
lower prices and gain promotional economies
Sears
CVS

13-18
19
Retailing

Types of Retailers
Organizational Approach
Voluntary chains are wholesale-sponsored groups
of independent retailers that engage in group
buying and common merchandising
IGA
Western Auto

13-19
20
Retailing

Types of Retailers
Organizational Approach
Retailer cooperative is a group of independent
retailers that band together to set up a
joint-owned, central wholesale operation and
conduct joint merchandising and promotion effort
Ace Hardware
Associated Grocers

13-20
21
Retailing
Types of Retailers Organizational Approach

Franchise organizations are based on some unique
product or service on a method of doing
business or on the trade name, good will, or
patent that the franchisor has developed
Subway
Holiday Inn

13-21
22
Retailing

Types of Retailers
Organizational Approach
Merchandising conglomerates are corporations that
combine several retailing forms under central
ownership
Limited Brands

13-22
23
Retailing

Retailer Marketing Decisions
Target market and positioning
Product assortment and services
Price
Promotion
Place

13-23
24
Retailing
Retailer Marketing Decisions

Target market and positioning involves the
definition and profile of the market so the other
retail marketing decisions can be made

13-24
25
Retailing

Retailer Marketing Decisions
Product assortment and service decisions include
Product assortment
Services mix
Store atmosphere

13-25
26
Retailing

Retailer Marketing Decisions
Product assortment should differentiate the
retailer while matching target shoppers
expectations
Offers merchandise that no other competitor
carries
Private or national brands
Merchandising events
Highly targeted product assortment

13-26
27
Retailing

Retailer Marketing Decisions
Services mix should also serve to differentiate
the retailer from the competition
Customer support
Store atmosphere is the physical layout that
makes moving around the store hard or easy
Experiential retailing
Test driving

13-27
28
Retailing

Retailer Marketing Decisions
Price Decision
Price policy must fit the target market and
positioning, product and service assortment, and
competition
High markup on lower volume
Low markup on higher volume

13-28
29
Retailing

Retailer Marketing Decisions
Price Decision
High-low pricing involves charging higher prices
on an everyday basis, coupled with frequent sales
and other price promotions to increase store
traffic, clear out unsold merchandise, create a
low price image, or attract customers who will
buy other goods at full price

13-29
30
Retailing

Retailer Marketing Decisions
Price Decision
Everyday low prices (EDLP) involves charging a
constant, everyday low price with few sales or
discounts

13-30
31
Retailing

Retailer Marketing Decisions
Promotion Decision
Advertising
Personal selling
Sales promotion
Public relations
Direct marketing

13-31
32
Retailing

Retailer Marketing Decisions
Place Decision
Location
Accessibility
Consistent with positioning

13-32
33
Retailing

Retailer Marketing Decisions
Place Decision
Central business districts are located in cities
and include department and specialty stores,
banks, and movie theaters
Shopping center is a group of retail businesses
planned, developed, owned, and managed as a unit.
Regional shopping centers
Community shopping centers
Neighborhood shopping centers
Power centers
Lifestyle centers

13-33
34
Retailing

The Future of Retailing
Retailers have to choose target segments
carefully, position themselves strongly, and
consider the following developments as they plan
and execute their competitive strategies
Non-store retailing
Retail convergence
Megaretailers
Retail technology
Global expansion
Retail stores as communities

13-34
35
Retailing

The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Wheel-of-retailing concept states that many new
types of retailing forms begin as low-margin,
low-price, low-status operations and challenge
established retailers. As they succeed, they
upgrade their facilities and offer more services,
increasing their costs and forcing them to
increase prices, eventually becoming the
retailers they replaced.

13-35
36
Retailing

The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Growth of non-store retailing includes
Mail order
Television
Phone
Online

13-36
37
Retailing

The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Retail convergence involves the merging of
consumers, producers, prices, and retailers,
creating greater competition for retailers and
greater difficulty differentiating offerings

13-37
38
Retailing

The Future of Retailing
New Retailing Forms and Shortening Life Cycles
The rise of megaretailers involves the rise of
mass merchandisers and specialty superstores, the
formation of vertical marketing systems, and a
rash of retail mergers and acquisitions
Superior information systems
Buying power
Large selection

13-38
39
Retailing

The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Retail technology includes video-casts,
inventory control, electronic ordering, transfer
of information, scanning, online transaction
processing, improved merchandise handling
systems, and the ability to connect with customers

13-39
40
Wholesaling

Wholesaling
Wholesalers add value by performing channel
functions
Selling and promoting
Buying assortment building
Bulk breaking
Warehousing
Transportation
Financing
Risk bearing
Market information
Management services and advice

13-40
41
Wholesaling

Wholesaling
Selling and promoting involves the wholesalers
sales force helping the manufacturer reach many
smaller customers at lower cost
Buying and assortment building involves the
selection of items and building of assortments
needed by their customers, saving the customers
work

13-41
42
Wholesaling

Wholesaling
Bulk breaking involves the wholesaler buying in
larger quantity and breaking into smaller lots
for its customers
Warehousing involves the wholesaler holding
inventory, reducing its customers inventory cost
and risk

13-42
43
Wholesaling

Wholesaling
Transportation involves the wholesaler providing
quick delivery due to its proximity to the buyer
Financing involves the wholesaler providing
credit and financing suppliers by ordering
earlier and paying on time

13-43
44
Wholesaling

Wholesaling
Risk bearing involves the wholesaler absorbing
risk by taking title and bearing the cost of
theft, damage, spoilage, and obsolescence
Market information involves the wholesaler
providing information to suppliers and customers
about competitors, new products, and price
developments

13-44
45
Wholesaling

Wholesaling
Management services and advice involves
wholesalers helping retailers train their sales
clerks, improve store layouts, and set up
accounting and inventory control systems

13-45
46
Wholesaling

Types of Wholesalers
Merchant wholesalers
Agents and brokers
Manufacturers sales branches and offices

13-46
47
Wholesaling

Types of Wholesalers
Merchant wholesalers is the largest group of
wholesalers and include
Full-service wholesalers who provide a full set
of services
Limited-service wholesalers who provide few
services and specialized functions

13-47
48
Wholesaling

Types of Wholesalers
Brokers and agents do not take title, perform a
few functions, and specialize by product line or
customer type
Brokers bring buyers and sellers together and
assist in negotiations
Agents represent buyers or sellers

13-48
49
Wholesaling

Types of Wholesalers
Manufacturers sales branches and offices is a
form of wholesaling by sellers or buyers
themselves rather than through independent
wholesalers

13-49
50
Wholesaling