1. CHAPTER TWELVE For use only with Perreault/Cannon/McCarthy or Perreault/McCarthy texts. 2008 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Retailers, Wholesalers, and Their Strategy Planning www.mhhe.com/fourps

2. When we finish this lecture you should

Understand how retailers plan their marketing strategies.

Know about the many kinds of retailers that work with producers and wholesalers as members of channel systems.

Understand the differences among the conventional and nonconventional retailersincluding Internet merchants and others who accept the mass-merchandising concept.

Understand scrambled merchandising and the wheel of retailing.

See why size or belonging to a chain can be important to a retailer.

3. When we finish this lecture you should

Know what progressive wholesalers are doing to modernize their operations and marketing strategies.

Know the various kinds of merchant wholesalers and agent middlemen and the strategies they use.

Understand why retailing and wholesaling have developed in different ways in different countries.

See why the Internet is impacting both retailing and wholesaling.

4. Marketing Strategy Planning Process 5. Marketing Strategy Planning for Retailers and Wholesalers(Exhibit 12-1) CH 12:Retailers, Wholesalers & Their Strategy Planning Strategy planning for retailers CH 10:Place and Development of Channel Systems Nature of retailing Future of retailing and wholesaling CH 11:Distribution Customer Service & Logistics Strategy planning for wholesalers 6. Wholesalers and Retailers Plan Their Strategies Must Select Target Markets and Marketing Mixes Carefully Marketers Must Understand Retailer/ Wholesaler Evolution Must Select Target Markets and Marketing Mixes Carefully Marketers Must Understand Retailer/ Wholesaler Evolution Retailing Deals with Final Customers 7. Planning a Retailers Strategy Convenience Product Selection Fairness in Dealings Helpful Information Prices Social Image Key Features Affecting Consumers Retail Choice Convenience Product Selection Fairness in Dealings Helpful Information Prices Social Image Shopping Atmosphere 8. Conventional Retailers Try to Avoid Price Competition (Exhibit 12-2) RitzCamera, Coach, Gap, Macys Conventional Offerings Single- & limited- line stores Expanded assortment &/or reduced margins &service Supermarkets, disc. houses, mass merch.,super-, club- Stores, + Safeway, IKEA, Home Depot, Costco Added conv.,higher margins, reducedassortment C-stores,vending, door- to-door, phone, mail, somee-tail 7-11, Pepsi vending, Avon, Lands End, QVC Expanded assortment, reduced margins, more information Internet eBay, Amazon, Zappos, Netflix, Dell Expanded assortment & service Specialty shops & dept. stores 9. Conventional Retailers Try to Avoid Price Competition(Exhibit 12-2) Conventional Offerings Single- & limited- line stores Expanded assortment & service Specialty shops & dept. stores Ritz Camera, Coach, Gap, Macys 10. Conventional Retailers Try to Avoid Price Competition(Exhibit 12-2) RitzCamera, Coach, Gap, Macys Conventional Offerings Single- & limited- line stores Expanded assortment &/or reduced margins &service Supermarkets, disc. houses, mass merch.,super-, club- Stores, + Safeway, IKEA, Home Depot, Costco Expanded assortment & service Specialty shops & dept. stores 11.

Parties R Us is a large store containing nothing but party

supplies. The store carries everything from costumes to

party favors, decorations to invitations, and paper plates to

birthday candles. The selection is huge and prices are low.

There is even a party consultant on hand to help plan

parties. Parties R Us is a:

department store.

catalog retailer.

category killer.

convenience store.

Checking your knowledge 12. Conventional Retailers Try to Avoid Price Competition(Exhibit 12-2) RitzCamera, Coach, Gap, Macys Conventional Offerings Single- & limited- line stores Expanded assortment &/or reduced margins &service Supermarkets, disc. houses, mass merch.,super-, club- Stores, + Safeway, IKEA, Home Depot, Costco Added conv.,higher margins, reducedassortment C-stores,vending, door- to-door, phone, mail, somee-tail 7-11, Pepsi vending, Avon, Lands End, QVC Expanded assortment & service Specialty shops & dept. stores 13. Vending Machines Are Convenient 14. Shop at Home in a Variety of Ways 15. Conventional Retailers Try to Avoid Price Competition (Exhibit 12-2) RitzCamera, Coach, Gap, Macys Conventional Offerings Single- & limited- line stores Expanded assortment &/or reduced margins &service Supermarkets, disc. houses, mass merch.,super-, club- Stores, + Safeway, IKEA, Home Depot, Costco Added conv.,higher margins, reducedassortment C-stores,vending, door- to-door, phone, mail, somee-tail 7-11, Pepsi vending, Avon, Lands End, QVC Expanded assortment, reduced margins, more information Internet eBay, Amazon, Zappos, Netflix, Dell Expanded assortment & service Specialty shops & dept. stores 16. Online versus In-store Shopping(Exhibit 12-3) In-Store Shopping Online shopping Cross-section, depends on store Customer characteristics Younger, better educated upscale More purchases on the weekend More purchases on weekdays Day-of-week emphasis Varies, usually better than online Weak but improving Customer service More routine purchases More emphasis on one-time purchase Products purchased Can inspect for immediate use Not available for inspection or use Availability of product Cross-section, depends on store Younger, better educated upscale Customer characteristics More purchases on the weekend More purchases on weekdays Day-of-week emphasis Varies, usually better than online Weak but improving Customer service More routine purchases More emphasis on one-time purchase Products purchased 17. Online versus In-store Shopping(Exhibit 12-3) In-Store Shopping Online shopping Often weak maybe only on packaging Comparative information More extensive, sometimes poorly organized Often a social experience A media experience Entertainment value Prices and taxes higher no delivery charges Prices often lower, shipping/handling costs Charges Depends on store and available transportation Completely flexible Shopping hours and preparation Often weak maybe only on packaging Comparative information More extensive, sometimes poorly organized Often a social experience A media experience Entertainment value Prices and taxes higher no delivery charges Prices often lower, shipping/handling costs Charges 18. Four Online Retailer Approaches More efficientthan competitors Complementtheir stores/catalogs Supplementtheir stores FourOnline Retailer Approaches More efficientthan competitors Complementtheir stores/catalogs Supplementtheir stores Very focusedon specific needs of target 19. Interactive Exercise: Types of Retail Outlets 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 20. Competitive Effects Influence Other Retailers 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 21. Why Retailers Evolve and Change Product Life Cycle Appliesto Retailing Scrambled Merchandising = Higher Profits The Wheel of Retailing Keeps on Rolling! Product Life Cycle Appliesto Retailing Scrambled Merchandising = Higher Profits AND Ethical Issues May Arise 22.

Walgreens, CVS, and other drugstores have become

scaled-down versions of mass-merchandisers by adding

small appliances, housewares, food, and other items to

their traditional lines. This type of scrambled

merchandising is meant to deal with the increasing desire

that consumers have for:

personal service.

convenience.

low prices.

prestigious brand names.

quality.

Checking your knowledge 23. An Example of a Large Retail Chain 24. Big Chains Are Building Market Clout 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 25. Differences in Retailing in Different Nations Mass-Marketing Requires Mass Markets New Ideas Spread New Ideas Spread Mass-Marketing Requires Mass Markets Some Countries Block Change 26. What Is a Wholesaler? Progressive Wholesalers Adapt Changing With the Times Goodbye to Some? Producing Value and Profits, Not Chasing Orders Ethical Issues? Progressive Wholesalers Adapt Changing With the Times Producing Products, Not Chasing Orders Goodbye to Some? Ethical Issues? New Strategies Needed To Survive 27. Wholesalers Add Value in Different Ways(Exhibit 12-5) 28. Types of Wholesalers(Exhibit 12-6) 29. Types of Merchant Wholesalers

General merchandise

Single line (or general-line)

Specialty

Cash and Carry

Drop Shippers

Truck

Rack-Jobbers

Catalog

Types of Merchant Wholesalers Service Limited -Function 30. Agent Middlemen Are Strong on Selling Selling Agents Brokers Manufacturers Agents Types ofAgentMiddlemen Manufacturers Agents Brokers Selling Agents Auction Companies 31.

Atlantic Music distributes various types of musical

instruments, sheet music, and accessories that are sold

through independent music stores. It carries many different

brands, such as Remo and Ludwig drums, and brass

instruments from Yamaha, Hohner, and other

manufacturers. Atlantic takes title to the musical

instruments and supplies it resells, and provides a wide

variety of services to its customers. Atlantic Music is a(n):

merchant wholesaler.

limited-service merchant wholesaler.

auction company.

manufacturers broker.

agent middleman.

Checking your knowledge 32. What Will Happen to Retailers and Wholesalers in the Future? New Web-Based Retailers Development of Specialized Intermediaries New Internet Applications Improved Logistics Efficiency Marketers and Consumers Can ExpectNew Web-Based Retailers Development of Specialized Intermediaries New Internet Applications Improved Logistics Efficiency Increasing Competition 33. You now

Understand how retailers plan their marketing strategies.

Know about the many kinds of retailers that work with producers and wholesalers as members of channel systems.

Understand the differences among the conventional and nonconventional retailersincluding Internet merchants and others who accept the mass-merchandising concept.

Understand scrambled merchandising and the wheel of retailing.

See why size or belonging to a chain can be important to a retailer.

34. You now

Know what progressive wholesalers are doing to modernize their operations and marketing strategies.

Know the various kinds of merchant wholesalers and agent middlemen and the strategies that

Understand why retailing and wholesaling have developed in different ways in different countries.

See why the Internet is impacting both retailing and wholesaling.

35. Key Terms

Retailing

General stores

Single-line stores

Limited-line stores

Specialty shop

Department stores

Mass-merchandising concept

Supermarkets

Discount houses

Mass-merchandisers

Supercenters

Hypermarkets

Convenience (food) stores

Automatic vending

Door-to-door selling

Telephone and direct-mail retailing

Wheel of retailing theory

36. Key Terms

Scrambled merchandising

Corporate chain

Cooperative chains

Voluntary chains

Franchise operation

Wholesaling

Wholesalers

Manufacturers sales branches

Merchant wholesalers

Service wholesalers

General merchandise wholesalers

Single-line (or general-line) wholesalers

Specialty wholesalers

Limited-function wholesalers

Cash-and-carry wholesalers

Drop-shippers

37. Key Terms

Truck wholesalers

Rack jobbers

Catalog wholesalers

Agent middlemen

Manufacturers agents

Export agents

Import agents

Brokers

Export brokers

Import brokers

Selling agents

Combination export manager

Auction companies