Retailing Retailing and and
WholesalingWholesaling
Chapter 14Chapter 14
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Objectives
Understand the roles of retailers and Understand the roles of retailers and wholesalers in the marketing wholesalers in the marketing channel.channel.Know the major types of retailers.Know the major types of retailers.Know the major types of Know the major types of wholesalers.wholesalers.Understand the marketing decisions Understand the marketing decisions facing retailers and wholesalers.facing retailers and wholesalers.
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Huge product Huge product assortment assortment
Prices are 20%–30% Prices are 20%–30% below hardware below hardware storesstores
Obsessed with Obsessed with offering high quality offering high quality customer servicecustomer service
Lifetime value of Lifetime value of customers: $25,000customers: $25,000
Well-trained, highly Well-trained, highly motivated salespeople motivated salespeople earn above average earn above average salariessalaries
Customer problem-Customer problem-solving is encouragedsolving is encouraged
Internet site offers many Internet site offers many home improvement tipshome improvement tips
One of today’s most One of today’s most successful retailerssuccessful retailers
cHome DepotHome Depot
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Definitions
RetailingRetailing All activities involved All activities involved
in selling goods or in selling goods or services directly to services directly to final consumers final consumers for their personal, for their personal, nonbusiness use.nonbusiness use.
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Definitions
RetailerRetailer Business whose Business whose
sales come sales come primarilyprimarily from from retailing.retailing.
Can be brick and Can be brick and mortar, 100% mortar, 100% virtual, or click virtual, or click and mortarand mortar
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ZanyBrainy.com Video Clip
ZanyBrainy.com is a click and mortar toy retailer.
BusinessNow
Click the picture above to play video
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How is web How is web retailing retailing different? In different? In your opinion, your opinion, what “works what “works on the web” on the web” that won’t work that won’t work in a typical in a typical store?store?
Discussion Question
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Retailers
Types of RetailersTypes of Retailers
Specialty StoresSpecialty Stores
Department Department StoresStores
SupermarketsSupermarkets
Discount StoresDiscount Stores
Convenience Convenience StoresStores
Off-Price RetailersOff-Price RetailersSuperstoresSuperstores
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Retailing
Self-service retailersSelf-service retailers Customers are willing to Customers are willing to
self-serve to save moneyself-serve to save money Discount storesDiscount stores
Limited-service retailersLimited-service retailers Most department storesMost department stores
Full-service retailersFull-service retailers Salespeople assist Salespeople assist
customers in every waycustomers in every way High-end department High-end department
storesstores Specialty storesSpecialty stores
Amount of Amount of serviceserviceProduct linesProduct linesRelative pricesRelative pricesOrganizational Organizational approachapproach
Retailers are Retailers are Classified by:Classified by:
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Retailing
Specialty storesSpecialty stores Narrow product lines with Narrow product lines with
deep assortmentsdeep assortments
Department storesDepartment stores Wide variety of product Wide variety of product
lineslines
SupermarketsSupermarketsConvenience storesConvenience stores Limited lineLimited line
SuperstoresSuperstores Sell food, nonfood, and Sell food, nonfood, and
servicesservices
Category killersCategory killers Giant specialty storesGiant specialty stores
Amount of Amount of serviceserviceProduct linesProduct linesRelative pricesRelative pricesOrganizational Organizational approachapproach
Retailers are Retailers are Classified by:Classified by:
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Outlet malls and category complete are popular with consumers
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Retailing
Discount storesDiscount stores Low margins are offset Low margins are offset
by high volumeby high volume
Off-price retailersOff-price retailers Independent off-price Independent off-price
retailersretailers TJ Maxx, Marshall’sTJ Maxx, Marshall’s
Factory outletsFactory outlets Levi Strauss, ReebokLevi Strauss, Reebok
Warehouse clubsWarehouse clubs Sam’s Club, CostcoSam’s Club, Costco
Amount of Amount of serviceserviceProduct linesProduct linesRelative pricesRelative pricesOrganizational Organizational approachapproach
Retailers are Retailers are Classified by:Classified by:
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Retailing
Corporate chain storesCorporate chain stores Commonly owned/controlledCommonly owned/controlled
Voluntary chainsVoluntary chains Wholesaler-sponsored Wholesaler-sponsored
groups of independent groups of independent retailersretailers
Retailer cooperativesRetailer cooperatives Groups of independent Groups of independent
retailers who buy in bulkretailers who buy in bulk
Franchise organizationsFranchise organizations Based on uniquenessBased on uniqueness
Merchandising Merchandising conglomeratesconglomerates Diversified retailing lines Diversified retailing lines
under central ownershipunder central ownership
Amount of Amount of serviceserviceProduct linesProduct linesRelative pricesRelative pricesOrganizational Organizational approachapproach
Retailers are Retailers are Classified by:Classified by:
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Figure 14-1:
Retailer Marketing Mix Decisions
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The product assortment, the services The product assortment, the services mix, and the store atmosphere are mix, and the store atmosphere are used by retailers to differentiate their used by retailers to differentiate their business from the competition.business from the competition.
Select two retailers from your local area Select two retailers from your local area and discuss how each store differs with and discuss how each store differs with respect to the three variables above.respect to the three variables above.
Discussion Question
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Retailer Marketing MixRetailer Marketing Mix PricePrice
High markup or high volume?High markup or high volume? PromotionPromotion
Public relations, sales promotions, Public relations, sales promotions, advertising, direct marketingadvertising, direct marketing
PlacePlace Location, location, location!Location, location, location!
Retailing
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The Future of RetailingThe Future of Retailing New retail forms and New retail forms and
shortening retail life cyclesshortening retail life cycles Wheel-of-retailing conceptWheel-of-retailing concept
Growth of nonstore retailingGrowth of nonstore retailing Mail-order, television, phone, Mail-order, television, phone,
online shopping online shopping Retail convergenceRetail convergence
Retailing
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Rise of megaretailersRise of megaretailers Growing importance Growing importance
of retail technologyof retail technology Global expansion of Global expansion of
major retailersmajor retailers Retail stores as Retail stores as
“Communities” or “Communities” or “Hangouts”“Hangouts”
Retailing
The Future of Retailing ContinuedThe Future of Retailing Continued
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Mall of America hosts over 520 specialty stores, 49 restaurants, and a theme park
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Retailing
Retailer Communities: Check out Playstation.com
Playstation.com
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Definitions
WholesalingWholesaling All activities involved in selling goods All activities involved in selling goods
and services to those and services to those buying for resale buying for resale or business use.or business use.
WholesalingWholesaling A firm engaged A firm engaged
primarily in primarily in wholesaling activity.wholesaling activity.
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Wholesalers add value Wholesalers add value by performing the by performing the following functions:following functions: Selling and promotingSelling and promoting Buying and assortment Buying and assortment
buildingbuilding Bulk-breakingBulk-breaking WarehousingWarehousing TransportationTransportation
Wholesaling
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Wholesalers add Wholesalers add value by performing value by performing the following the following functions:functions: FinancingFinancing Risk bearingRisk bearing Marketing informationMarketing information Management services Management services
and adviceand advice
Wholesaling
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Wholesaling
Full-service wholesalersFull-service wholesalers Wholesale merchantsWholesale merchants Industrial distributorsIndustrial distributors
Limited service Limited service wholesalerswholesalers Cash-and-carry Cash-and-carry
wholesalerswholesalers Truck wholesalers Truck wholesalers
(jobbers)(jobbers) Drop shippersDrop shippers Rack jobbersRack jobbers Producer’s cooperativesProducer’s cooperatives Mail-order wholesalersMail-order wholesalers
Merchant Merchant WholesalersWholesalersBrokers and Brokers and Agents Agents Manufacturers’ Manufacturers’ and retailers’ and retailers’ branches and branches and officesoffices
Types of Types of WholesalersWholesalers
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Wholesaling
BrokersBrokers Bring buyers and Bring buyers and
sellers together and sellers together and assist in negotiationassist in negotiation
AgentsAgents Manufacturers’ agentsManufacturers’ agents Selling agentsSelling agents Purchasing agentsPurchasing agents Commission Commission
merchantsmerchants
Merchant Merchant WholesalersWholesalersBrokers and Brokers and Agents Agents Manufacturers’ Manufacturers’ and retailers’ and retailers’ branches and branches and officesoffices
Types of Types of WholesalersWholesalers
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Wholesaling
Sales branches and Sales branches and officesoffices Branches carry inventory: Branches carry inventory:
lumber, auto equipment, lumber, auto equipment, partsparts
Offices do not carry Offices do not carry inventory: dry goodsinventory: dry goods
Purchasing officersPurchasing officers Perform roles similar to Perform roles similar to
brokers and agents, brokers and agents, however these individuals however these individuals are employees of the are employees of the organizationorganization
Merchant Merchant WholesalersWholesalersBrokers and Brokers and Agents Agents Manufacturers’ Manufacturers’ and retailers’ and retailers’ branches and branches and officesoffices
Types of Types of WholesalersWholesalers
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Figure 14-2:
Wholesaler Marketing Mix Decisions
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Wholesaler Marketing DecisionsWholesaler Marketing Decisions Targeting may be made on the Targeting may be made on the
basis of:basis of: Size of customerSize of customer Type of retailerType of retailer Need for serviceNeed for service
PositioningPositioning
Wholesaling
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Wholesaler Marketing DecisionsWholesaler Marketing Decisions Marketing mix decisionsMarketing mix decisions
Product and service assortment:Product and service assortment: inventory, line inventory, line
Pricing:Pricing: usual markup on COG is 20% usual markup on COG is 20% Promotion:Promotion: largely disorganized and largely disorganized and
unplanned unplanned Place:Place: location, facilities location, facilities
Wholesaling
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Trends in WholesalingTrends in Wholesaling Price competition is still intensePrice competition is still intense Successful wholesalers must Successful wholesalers must
add value by increasing add value by increasing efficiency and effectivenessefficiency and effectiveness
The distinction between large The distinction between large retailers and wholesalers retailers and wholesalers continues to blurcontinues to blur
Wholesaling
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More Trends in More Trends in WholesalingWholesaling More services will More services will
be provided to be provided to retailersretailers
Many wholesalers Many wholesalers are going globalare going global
Wholesaling
Wholesaler McKesson offers pharmacists a Wholesaler McKesson offers pharmacists a wide range of online resourceswide range of online resources