Transcript chapter #14.ppt

Retailing and
Wholesaling
Chapter 14
Objectives
Understand the roles of retailers and
wholesalers in the marketing
channel.
Know the major types of retailers.
Know the major types of
wholesalers.
Understand the marketing decisions
facing retailers and wholesalers.
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Homec Depot
Huge product
assortment
Prices are 20%–30%
below hardware
stores
Obsessed with
offering high quality
customer service
Lifetime value of
customers: $25,000
Well-trained, highly
motivated salespeople
earn above average
salaries
Customer problemsolving is encouraged
Internet site offers many
home improvement tips
One of today’s most
successful retailers
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Definitions
Retailing
 All activities involved
in selling goods or
services directly to
final consumers
for their personal,
nonbusiness use.
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Definitions
Retailer
 Business whose
sales come
primarily from
retailing.
 Can be brick and
mortar, 100%
virtual, or click
and mortar
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BusinessNow
ZanyBrainy.com Video Clip
ZanyBrainy.com
is a click and
mortar toy
retailer.
Click the picture above to play video
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Discussion Question
How is web
retailing
different? In
your opinion,
what “works
on the web”
that won’t work
in a typical
store?
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Retailers
Types of Retailers
Specialty Stores
Discount Stores
Department
Convenience
Stores
Stores
Supermarkets
Off-Price Retailers
Superstores
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Retailing
Retailers are
Classified by:
Amount of
service
Product lines
Relative prices
Organizational
approach
Self-service retailers
 Customers are willing to
self-serve to save money
 Discount stores
Limited-service retailers
 Most department stores
Full-service retailers
 Salespeople assist
customers in every way
 High-end department
stores
 Specialty stores
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Retailing
Retailers are
Classified by:
Specialty stores
 Narrow product lines with
deep assortments
Department stores
Amount of
service
Product lines
Relative prices
Organizational
approach
 Wide variety of product
lines
Supermarkets
Convenience stores
 Limited line
Superstores
 Sell food, nonfood, and
services
Category killers
 Giant specialty stores
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Retailing
Retailers are
Classified by:
Discount stores
Amount of
service
Product lines
Relative prices
Organizational
approach
Off-price retailers
 Low margins are offset
by high volume
 Independent off-price
retailers
 TJ Maxx, Marshall’s
 Factory outlets
 Levi Strauss, Reebok
 Warehouse clubs
 Sam’s Club, Costco
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Outlet malls
and category
complete are
popular with
consumers
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Retailing
Retailers are
Classified by:
Amount of
service
Product lines
Relative prices
Organizational
approach
Corporate chain stores
 Commonly owned/controlled
Voluntary chains
 Wholesaler-sponsored
groups of independent
retailers
Retailer cooperatives
 Groups of independent
retailers who buy in bulk
Franchise organizations
 Based on uniqueness
Merchandising
conglomerates
 Diversified retailing lines
under central ownership
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Figure 14-1:
Retailer Marketing Mix
Decisions
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Discussion Question
The product assortment, the services
mix, and the store atmosphere are
used by retailers to differentiate their
business from the competition.
Select two retailers from your local area
and discuss how each store differs with
respect to the three variables above.
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Retailing
Retailer Marketing Mix
 Price

High markup or high volume?
 Promotion

Public relations, sales promotions,
advertising, direct marketing
 Place

Location, location, location!
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Atmosphere
Smell
Music
 Time
Crowding
 Negatively associated
Touch
 We don’t want to give it back
 Once a customer tries it on, it becomes
“theirs
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The Right Hand “Sweet Spot”
When you walk into a store, which
direction do you normally go?
Most people turn right
 Drive on the right side of the street
 Right handed
Then proceed through the store counterclockwise
Stores often put best selling (and high
profit) items in the right hand sweet spot
Sales can go up by as much as 15% by
moving the cash register from the right
to the left
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Concept of Space
Big Grocery Stores
 Most people shop the perimeter
 Stores try to lure consumers down the
aisles with end cap displays
We’re buying less, right?
 Cavernous Stores, Humvee-size carts,
and pillowcase-size produce bags give
the impression that customers are
buying less, but really spending more
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Slow Shoppers Down
Mountain of Portobello mushrooms
blocking produce aisle of Central
Market
Table of $25 lotions and bath salts
blocking cosmetics counter at Saks
Mirrors
A place to sit down
Shoppertainment web
Transition zone
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Who does a good job with
atmosphere?
Who does a bad job?
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Retailing
The Future of Retailing
 New retail forms and
shortening retail life cycles

Wheel-of-retailing concept
 Growth of nonstore retailing

Mail-order, television, phone,
online shopping
 Retail convergence
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Retailing
The Future of Retailing Continued
 Rise of megaretailers
 Growing importance
of retail technology
 Global expansion of
major retailers
 Retail stores as
“Communities” or
“Hangouts”
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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
Wholesaling
 All activities involved in selling goods
and services to those
buying for resale
or business use.
Wholesaling
 A firm engaged
primarily in
wholesaling activity.
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Wholesaling
Wholesalers add value
by performing the
following functions:
 Selling and promoting
 Buying and assortment
building
 Bulk-breaking
 Warehousing
 Transportation
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Wholesaling
Wholesalers add
value by performing
the following
functions:




Financing
Risk bearing
Marketing information
Management services
and advice
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Wholesaling
Types of
Wholesalers
Full-service wholesalers
Merchant
Wholesalers
Brokers and
Agents
Manufacturers’
and retailers’
branches and
offices
Limited service
wholesalers
 Wholesale merchants
 Industrial distributors
 Cash-and-carry
wholesalers
 Truck wholesalers
(jobbers)
 Drop shippers
 Rack jobbers
 Producer’s cooperatives
 Mail-order wholesalers
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Wholesaling
Types of
Wholesalers
Merchant
Wholesalers
Brokers and
Agents
Manufacturers’
and retailers’
branches and
offices
Brokers
 Bring buyers and
sellers together and
assist in negotiation
Agents




Manufacturers’ agents
Selling agents
Purchasing agents
Commission
merchants
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Wholesaling
Types of
Wholesalers
Merchant
Wholesalers
Brokers and
Agents
Manufacturers’
and retailers’
branches and
offices
Sales branches and
offices
 Branches carry inventory:
lumber, auto equipment,
parts
 Offices do not carry
inventory: dry goods
Purchasing officers
 Perform roles similar to
brokers and agents,
however these individuals
are employees of the
organization
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Figure 14-2:
Wholesaler Marketing Mix
Decisions
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Wholesaling
Wholesaler Marketing Decisions
 Targeting may be made on the
basis of:
Size of customer
 Type of retailer
 Need for service

 Positioning
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Wholesaling
Wholesaler Marketing Decisions
 Marketing mix decisions
Product and service assortment:
inventory, line
 Pricing: usual markup on COG is 20%
 Promotion: largely disorganized and
unplanned
 Place: location, facilities

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Wholesaling
Trends in Wholesaling
 Price competition is still intense
 Successful wholesalers must
add value by increasing
efficiency and effectiveness
 The distinction between large
retailers and wholesalers
continues to blur
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Wholesaling
More Trends in
Wholesaling
 More services will
be provided to
retailers
 Many wholesalers
are going global
Wholesaler McKesson offers pharmacists a
wide range of online resources
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