Copyright © Houghton Mifflin Company. All rights reserved. 15–1 Retailing Transactions in which...

Copyright © Houghton Mifflin Company. All rights reserved. 15–1

Retailing

• Transactions in which ultimate consumers are the buyers

• Retailers

–Organizations that purchase products for the purpose of reselling them to ultimate consumers• Retailers add value—shopping convenience,

services, and purchasing assistance to customers

• Retailers create utility—time, place, possession, and form


Table 15.1


General-Merchandise Retailers

• Offer a variety of product lines

• Department Stores

– Large retail organizations characterized by wide product mixes and organized into separate departments to facilitate marketing efforts and internal management

• Discount Stores

– Self-service, general merchandise stores offering brand name and private brand products at low prices

• Supermarkets

– Large, self-service stores that carry a complete line of food products, along with some nonfood products


General-Merchandise Retailers (cont’d)

• Superstores

– Giant retail outlets that carry food and nonfood products found in supermarkets, as well as most routinely purchased consumer products

• Hypermarkets

– Stores that combine supermarket and discount shopping in one location

• Warehouse Clubs

– Large-scale, members-only establishments that combine features of cash-and-carry wholesaling with discount retailing


General-Merchandise Retailers (cont’d)

• Warehouse Showrooms

–Retail facilities in large, low-cost buildings with large, on-premise inventories and minimal services

• Catalog Showrooms

–A form of warehouse showroom where consumers can shop from a catalog and products are stored out of buyers’ reach


Specialty Retailers

• Traditional Specialty Retailers

–Carry a narrow product mix with deep product lines (e.g., pet supplies)

–Also called “limited-line” and “single-line” retailers

–Have higher costs and higher margins

–Provide more product selection (first-line brands), product expertise, and high levels of personal service


Specialty Retailers (cont’d)

• Category Killers

– Concentrate on a major product category and compete on the basis of low prices and product availability

• Off-Price Retailers

– Buy manufacturers’ seconds, overruns, returns, and off-season merchandise for resale to consumers at deep discounts

– Charge less than do department stores for comparable merchandise and offer few customer services

– Have established long-term relationships with suppliers for continuing supplies of reduced-price goods


Strategic Issues in Retailing

• Retail Store Location

–Factors affecting location• Intended target market

• Kinds of products

• Suitability of site for customer access

• Characteristics of existing retail operations

• Types of Locations

–Free-standing structures

–Shopping malls and centers

–Traditional business districts


Types of Traditional Shopping Centers

• Neighborhood Shopping Centers

– Usually consist of several small convenience and specialty stores

• Community Shopping Centers

– Include one or more department stores (anchors), some specialty stores, and convenience stores

• Regional Shopping Centers

– Have the largest department stores, the widest product mix, and the deepest product lines of all shopping centers


Types of Nontraditional Shopping Centers

• Factory Outlet Malls

– Shopping centers that feature discount and factory outlet stores carrying traditional brand name products

• Miniwarehouse Mall

– Loosely planned centers that lease space to retailers running retail stores out of warehouse bays

• Nonanchored Malls

– Do not have traditional department store anchors; instead combine off-price and category killer stores in a “power center” format


Strategic Issues in Retailing

• Retail Positioning

– Identifying an unserved or underserved market segment and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment

• Store Image

– Atmospherics• The physical elements in a store’s design that appeal to

consumers’ emotions and encourage buying

• Interior layout, colors, furnishings, and lighting

• Exterior storefront and entrance design, display windows, and traffic congestion


Wholesaling

• Transactions in which products are bought for resale, for making other products, or for general business operations

• Wholesaler

–An individual or organization that facilitates and expedites wholesale transactions• Handles the physical distribution

of goods

• Furnishes channel information to facilitate and manage the supply channel


Major Wholesaling Functions

• Supply-Chain Management

• Promotion

• Warehousing, Shipping, and Product Handling

• Inventory Control and Data Processing

• Risk Taking

• Financing and Budgeting

• Marketing Research and Information Systems


Services Provided by Wholesalers

• Serve as an extension of the producer’s sales force through contact with suppliers and retailers

• Lend financial assistance for the distribution channel

• Transport and warehouse inventories

• Assume credit risks of buyers/customers

• Purchase producers’ entire output: convert producer’s output immediately to working capital

• Channel information from and to sellers and buyers


Types of Wholesalers

• Merchant Wholesalers

–Independently owned businesses that take title to goods, assume ownership risks, and buy and resell products to other wholesalers, business customers, or retailers• Provide market coverage

• Make sales contacts

• Store inventory

• Handle orders

• Collect market information

• Furnish customer support


Types of Wholesalers

• Manufacturers’ Sales Branches and Offices

–Sales branches• Manufacturer-owned intermediaries that sell

products and provide support services to the manufacturer’s sales force

–Sales offices• Manufacturer-owned operations

that provide services normally associated with agents

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