Copyright 1999 Prentice Hall 13-1 Chapter Retailing and Wholesaling.

Copyright 1999 Prentice Hall

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ChapterChapter

Retailing and

Wholesaling


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Chapter Questions

Chapter Questions• What major types of marketing intermediaries occupy this

sector?

• What marketing decisions do these marketing intermediaries make?

• What are the major trends with marketing intermediaries?


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Starbucks Hear Music Coffeehouse

Starbucks Hear Music Coffeehouse


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What is Retailing?What is Retailing?

• All the activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use.

• Retailers - businesses whose sales come primarily from retailing.

• Retailers can be classified as:–Store retailers such as Home Depot, Sears,

Walmart

–Nonstore retailers such as the mail, telephone, and Internet.


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Classification of Retail StoresClassification of Retail Stores

Amount of ServiceSelf-Service, Limited-Service and

Full-Service Retailers

Amount of ServiceSelf-Service, Limited-Service and

Full-Service Retailers

Product LineLength and Breadth of the Product

Assortment

Product LineLength and Breadth of the Product

Assortment

Relative PricesPricing Structure that is Used

by the Retailer

Relative PricesPricing Structure that is Used

by the Retailer

Retail OrganizationsIndependent, Corporate, or Contractual

Ownership Organization

Retail OrganizationsIndependent, Corporate, or Contractual

Ownership Organization


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Classification By Product LineClassification By Product Line

Specialty StoresSpecialty Stores

Department StoresDepartment Stores

SupermarketsSupermarkets

Convenience StoresConvenience Stores

SuperstoresSuperstores

Category KillersCategory Killers

Narrow Product Line, Deep AssortmentNarrow Product Line, Deep Assortment

Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items

Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items

Wide Variety of Food, Laundry, & Household Products

Wide Variety of Food, Laundry, & Household Products

Limited Line of High-Turnover Convenience Goods

Limited Line of High-Turnover Convenience Goods

Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services

Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services

Giant Specialty Store that Carries a Very Deep Assortment of a Particular Line

Giant Specialty Store that Carries a Very Deep Assortment of a Particular Line

HypermarketsHypermarkets Huge SuperstoresHuge Superstores

Store Type Length and Breadth of Product Assortment


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Department Store Model: Strong Retail Brand Approach

Department Store Model: Strong Retail Brand Approach


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Department Store Model: The Showcase Store

Department Store Model: The Showcase Store


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Classification By Retail OrganizationClassification By Retail Organization

Corporate Chains

Corporate Chains

Retailer Cooperatives

Retailer Cooperatives

Voluntary Chains

Voluntary Chains

Franchise Organizations

Franchise Organizations

MerchandisingConglomerates

MerchandisingConglomerates

Retail Organizations


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III- Corporate Retail Organizations

III- Corporate Retail Organizations

Features of corporate retailing:

• Greater purchasing power

• Achieve economies of scale

• Wider brand recognition

• Better trained employees


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III- Corporate Retail OrganizationsMajor Types:

III- Corporate Retail OrganizationsMajor Types:

• Corporate chain store

• Two or more outlets commonly owned and controlled, selling similar lines of merchandise, buy in large volumes at lower price, highly skilled employees.

• Voluntary chain.

• - It is wholesaler-sponsored group of independent retailers who have bulk

buying and have common merchandise.

• Retailer cooperative.

• Independent retailers who set up a central buying organization and conduct joint promotion efforts


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• Consumer cooperative

• A retail firm owned by its customers who elect a group to manage it and receive patronage dividends.

• Franchise organization• Contractual association between franchiser (manufacturers, wholesalers,

service organizations) and franchisee who are authorized to use the brand name. McDonalds ….

• Merchandize conglomerate• Several diversified retailing lines under central ownership with integration in

management and distribution.


13-1313-13Characteristics of Direct MarketingCharacteristics of Direct Marketing

KeyCharacteristics

ofDirect

Marketing

KeyCharacteristics

ofDirect

MarketingImmediate

OrdersImmediate

Orders

ResponseMeasurement

ResponseMeasurement

Targeted IndividualsTargeted

IndividualsPrivacyPrivacy

CustomizedOffer

CustomizedOffer

ContinuousRelationshipContinuousRelationship

HigherResponse

HigherResponse

TestingTesting


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Types of NonStore RetailingTypes of NonStore Retailing

Direct MarketingDirect Marketing

Direct SellingDirect Selling

Automatic VendingAutomatic Vending

Catalogs & Direct MailCatalogs & Direct Mail

TV Shopping ShowsTV Shopping Shows

Online ShoppingOnline Shopping

Home & Office PartiesHome & Office Parties

Nonstore Retailing Accounts for More Than 14% of All Consumer Purchases, and May Account for 33% of All Sales by 2000.


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Retailer Marketing DecisionsRetailer Marketing Decisions

Retailer MarketingMix

Retailer MarketingMix

Retailer StrategyRetailer Strategy

Target Market

Retail Store Positioning

Product and Service

Assortment

Prices

Promotion

Place (Location)


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Click to add titleClick to add titleRetailer’s Product Assortment and Services DecisionsRetailer’s Product Assortment and Services Decisions

Product Assortment Decisions• Width and Depth of Assortment• Quality of Products• Product Differentiation Strategies

Product Assortment Decisions• Width and Depth of Assortment• Quality of Products• Product Differentiation Strategies

Services MixKey Tool of Nonprice Competitionfor Setting One Store Apart From

Another.

Services MixKey Tool of Nonprice Competitionfor Setting One Store Apart From

Another.

Store’s Atmosphere• Physical Layout• “Feel” That Suits the Target Market and Moves Customers to Buy

Store’s Atmosphere• Physical Layout• “Feel” That Suits the Target Market and Moves Customers to Buy


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Retailer Services Mix

Retailer Services Mix

Prepurchase services

Postpurchase services

Ancillary services


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Click to add titleClick to add titleRetailer’s Price, Promotion, and Place DecisionsRetailer’s Price, Promotion, and Place Decisions

Promotion DecisionsUsing Advertising, Personal Selling,

Sales Promotion and Public Relations to Reach Customers.

Promotion DecisionsUsing Advertising, Personal Selling,

Sales Promotion and Public Relations to Reach Customers.

Place DecisionsShopping Centers, Central Business Districts, Power Centers, or Outlet

Malls. Location!

Place DecisionsShopping Centers, Central Business Districts, Power Centers, or Outlet

Malls. Location!

Price DecisionsTarget Market

Product & Services AssortmentCompetition

Price DecisionsTarget Market

Product & Services AssortmentCompetition


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Location Decision

Location Decision

• General business districts

• Regional shopping centers

• Community shopping centers

• Strip malls

• Location within a larger store


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Indicators of Sales Effectiveness

Indicators of Sales Effectiveness

Number of people passing by

% who enter store

% of those who buy

Average amount

spent per sale


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Wall Mart’s Factors of Success:

Wall Mart’s Factors of Success:

• Listen to the customers.

• Treat employees as partners.

• Big sign reading (Satisfaction guaranteed), (we sell for less).

• Customers often welcome by greeter

• Low price and speed stock replenishment.

• Expanded their stories outside of US


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New Retail Forms and Shortening Retail Lifecycles

New Retail Forms and Shortening Retail Lifecycles

The Future of RetailingThe Future of Retailing

Growth of Nonstore RetailingGrowth of Nonstore Retailing

Increasing Intertype CompetitionIncreasing Intertype Competition

Rise of MegaretailersRise of Megaretailers

Growing Importance of Retail Technology

Growing Importance of Retail Technology

Global Expansion of Major RetailersGlobal Expansion of Major Retailers


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Trends in Retailing

Trends in Retailing

• New retail forms has been emerged.• • New retailers are facing shorter life span, they are rapidly copied and

lose novelty. It is familiar in our areas.• Growth of non store retailing.

• Competition is increasing between different types of stores, like Discount stores, Catalog showrooms, Department stores. All are competing the same customers.

• All retailers now moving to one of 2 poles, either mass merchandiser, or as specialty retailer. Super power retailers emerging.


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Trends in Retailing cont.

Trends in Retailing cont.

• Department stores - one stop shopping convenience. Gradually they gave up to Malls where customers can find every thing.

• Technology became critical, Retailers using computers to manage better Inventory, Ordering, etc..

• Retailers with unique formats and strong positioning are moving to other countries, Like

• McDonalds. 18% of US retailers moved out, 40% of Europeans, and 31% of Far East.


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What is Wholesaling?What is Wholesaling?

• All the activities involved in selling goods and services to those buying for resale or business use.

• Wholesaler - those firms engaged primarily in wholesaling activity.


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Why are Wholesalers Used?Why are Wholesalers Used?

WholesalerFunctions

ManagementServices & Advice

ManagementServices & Advice

Selling andPromoting

Selling andPromoting

MarketInformation

MarketInformation

Buying andAssortment Building

Buying andAssortment Building

Risk BearingRisk Bearing Bulk BreakingBulk Breaking

TransportingTransporting

FinancingFinancing WarehousingWarehousing

Wholesalers are Often Better at Performing One or More of the Following Channel Functions:


13-2713-27Types of WholesalersTypes of Wholesalers

Merchant Wholesaler

Independently Owned Business that Takes

Title to the Merchandise

it Handles.

Merchant Wholesaler

Independently Owned Business that Takes

Title to the Merchandise

it Handles.Manufacturers’Sales Branches

and Offices

Wholesaling by Sellersor Buyers Themselves Rather Than Through

IndependentWholesalers.

Manufacturers’Sales Branches

and Offices

Wholesaling by Sellersor Buyers Themselves Rather Than Through

IndependentWholesalers.

Brokers/ AgentsThey Don’t Take Title to

the Goods, and TheyPerform Only a Few

Functions.

Brokers/ AgentsThey Don’t Take Title to

the Goods, and TheyPerform Only a Few

Functions.


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Wholesaler Marketing DecisionsWholesaler Marketing Decisions

Wholesaler MarketingMix

Wholesaler MarketingMix

Wholesaler StrategyWholesaler Strategy

Target Market

Retail Store Positioning

Product and Service

Assortment

Prices

Promotion

Place (Location)


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Trends in WholesalingTrends in Wholesaling

Wholesaling Developments to Consider

Must Learn to Compete Effectively Over Wider and More Diverse Areas

Must Learn to Compete Effectively Over Wider and More Diverse Areas

Increasing Consolidations Will Reduce Number of Wholesalers

Increasing Consolidations Will Reduce Number of Wholesalers

Surviving Wholesalers Will Grow LargerThrough Acquisitions and Mergers

Surviving Wholesalers Will Grow LargerThrough Acquisitions and Mergers

Vertical Integration Will Remain StrongVertical Integration Will Remain Strong

Global Expansion Global Expansion


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Market logistics

Market logistics

It involves, Planning, Implementing, and

controlling the physical flow of materials and final goods till from points of origin to points of use.

* Market logistics starts from the point of sales forecasting which planning for other activities depend on such as scheduling distribution, production and inventory levels.


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Market-logistics objectives

Market-logistics objectives

Getting the right goods to the right places

at the right time for the least cost.

Ex.

Rail shipments or air shipments?

Cheaper containers to minimize cost?

Low Inventories, will lead to increase stakeouts,

back orders, more paper work, special

production runs will lead to high-cost fastfreight shipments.


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Each market system will lead to the following costs.

Each market system will lead to the following costs.

– M = T+FW+VW+S

– M = Total market – logistics cost of proposed system

– T = Total freight cost of proposed system

– FW = Total fixed warehouse cost of proposed system

– VW = Total variable Warehouse cost (include inventory).

– S = Total cost of lost sales due to average delivery delay under proposed system.


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Market Logistic Decisions

Market Logistic Decisions

• Four major decision must be made:

– Order Processing “system of ordering”

– Warehousing ”where should stocks be located”

– Inventory “how much stock should be held”

– Transportation “how should goods be shipped”


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Organizational Lessons about Marketing Logistics:

Organizational Lessons about Marketing Logistics:

• Market logistics decisions must be based on profit maximizing rather than cost consideration

• Electronic links among all parties should be established

• Logistics goals should match or exceed competitors’ service standards.


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Market Logistics Decisions

Market Logistics Decisions

• How should orders be handled?

• Where should stock be located?

• How much stock should be held?

• How should goods be shipped?


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Transportation Factors

Transportation Factors

• Speed

• Frequency

• Dependability

• Capability

• Availability

• Traceability

• Cost


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Containerization

Containerization

Copyright 1999 Prentice Hall 13-1 Chapter Retailing and Wholesaling.

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Transcript of Copyright 1999 Prentice Hall 13-1 Chapter Retailing and Wholesaling.