Chapter 15 Managing Retailing, Wholesaling, and Market Logistics PowerPoint by Yu Hongyan Business School of Jilin University Objectives • Retailing • Wholesaling • Logistic 1. Retailing Retailing Basics • Types of retailers • Marketing decisions • Retailing trends • • • • Retail life cycle Wheel-of-retailing Service levels Retail positioning strategies • Nonstore retailing • Corporate retailing 1. Retailing (cont’d) • What is retailing? – Retailing includes all of the activates involved in selling goods or services directly to final consumers for personal , nobusiness use • What means retailer? – A retailer is any business enterprise whose sales volume comes primarily from retailing 1. Retailing (cont’d) Store Type Length and Breadth of Product Assortment Specialty Stores Narrow Product Line, Deep Assortment Department Stores Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items Supermarkets Wide Variety of Food, Laundry, & Household Products Convenience Stores Discount Stores Limited Line of High-Turnover Convenience Goods Broad Product Line, Low Margin, High Volume Off-Price Retailer Inexpensive, Overruns, Irregulars, and Leftover Goods Superstores Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services Catalog Showroom Broad Selection, Fast Turnover, Discount Prices Retailing • Retail-store types pass through the retail life cycle. – Store 副食品商店 – 百货公司 • Wheel-of-retailing Wheel of Retailing • . Low Price Low Status Low Margin Mid Price Mid Status Mid Margin High Price High Status High Margin 1. Retailing (cont’d) • Four Levels of Retail Service – Self-service • Locate, compare, and select process – Self-selection • Find, and can ask help – Limited-service • Need more information and assistance – Full-service Give me example Discussion Scenario “Catalogue retailers,” popular in the 1980’s, are now all but extinct. Customers at such stores would view display items in a showroom, submit “tickets” listing desired items to clerks, and await delivery of their purchases at checkout via conveyor belt. What retail form precipitated the decline of catalogue retailers? Can you identify an emerging retail form or one that is in decline? Retail Positioning Strategy Map Breadth of product line Broad Bloomingdale’s 卓展 Wal-Mart 卖场 Tiffany Specialty Nike Sunglass Hut Shoe Narrow Value added High Low 1. Retailing (cont’d) • Four broad retail positioning strategies include: – – – – Bloomingdale’s Tiffany Sunglass Hut Wal-Mart • Non-store retailing has been growing faster than store retailing 1. Retailer (cont’d) Direct Selling Direct Marketing Automatic Vending Buying Services 安利 NonStore Retailing Accounts for More Than 12% of All Consumer Purchases, and is trending up. Type of nonstore retailing 1. Retailing (cont’d) Retailing Basics • Types of retailers • Marketing decisions • Retailing trends • Target market • Product assortment and placement • Services mix and store atmosphere • Price • Promotion== • Place Promotion • • • • • • • • Advertising Special sales Money saving coupons Frequent shopper rewards In store sampling In store coupon Rebate Any more? Retailing General Business District Location Options for Retailers Community Shopping Center Location within a larger store or operation Regional Shopping Center Strip mall (Shopping Strip) Discussion Scenario Restaurants such as McDonald’s and Subway have attempted to expand their distribution by opening stores within gas stations, or mass merchandisers such as Wal-Mart. In some instances, stores offer limited menus or drive-thru service only. Aside from fast food restaurants, what other types of retail businesses have followed a similar strategy? Retailing Retailing Basics • Types of retailers • Marketing decisions • Retailing trends • New retail forms and combinations • Intertype competition • Growth of giant retailers • Technology • Global expansion • Selling experiences • Competition between storebased and non-store-based retailing 2. Wholesaling Wholesaling • • • • Wholesaling basics Types of wholesalers Marketing decisions Wholesaling trends • Wholesaling excludes manufacturers, farmers, and retailers • Wholesalers differ from retailers in three key ways • Wholesalers handle many functions more efficiently than do manufacturers 2. Wholesaling (cont’d) • Difference between R and W – Wholesale pay less attention to promotion, atmosphere and location because they are dealing with business customers rather than final consumer – Wholesale are usually larger than retail transaction, and cover a larger trade areas than retailers – The government deals with wholesalers and retailer differently regards legal regulations and tax Why Are Wholesalers Used? Management Services & Advice Market Information Risk Bearing Selling and Promoting Buying and Assortment Building Wholesaler Functions Financing Bulk Breaking Warehousing Transporting 2. Wholesaling (cont’d) Wholesaling • Wholesaling basics • Growth and types of wholesalers • Marketing decisions • Wholesaling trends • Wholesalers vary in type and function • Wholesaling has been growing due to two key factors: – Many factories are located far from buyers – An increasing need to adapt product quantities, features, or packages to meet buyer needs 2. Wholesaling (cont’d) Major Wholesaler Types • Merchant wholesalers • Full-service wholesalers • Limited-service wholesalers • Brokers & agents • Brokers • Agents • Manufacturers’ and retailers’ branches and offices • Miscellaneous wholesalers 2. Wholesaling (cont’d) Wholesaling • • • • Wholesaling basics Types of wholesalers Marketing decisions Wholesaling trends • Target market • Product assortment and placement • Price • Promotion • Place 2. Wholesaling (cont’d) Wholesaling • • • • Wholesaling basics Types of wholesalers Marketing decisions Wholesaling trends • Direct buying trends initially threatened wholesalers • Wholesalers have adapted by: – Adding value – Reducing costs – Strengthening relationships with manufacturers 3. Market Logistics Interrelated Aspects of Market Logistics Value Network Market Logistics Offset Physical Distribution Compensation Deal Demand Chain Planning Supply Chain Management Integrated Logistics Systems 3. Market Logistics (cont’d) Key Elements • Market-logistics objectives • Market-logistics decisions • Market logistics lessons • Logistics involve trade-offs between costs and customer service • Maximizing profits, not sales, is key • A total system basis should be considered • Designing a system that will minimize the cost of achieving objectives should be the outcome 3. Market Logistics (cont’d) Calculating the Cost of Market-Logistics Systems M = T + FW + VW + S Where . . . M = T = FW = VW = S = total market-logistics cost of proposed system; total freight cost of proposed system; total fixed warehouse cost of proposed system; total variable warehouse cost of proposed system total cost of lost sales due to average delivery delay 3. Market Logistics (cont’d) Key Elements • Market-logistics objectives • Market-logistics decisions • Market logistics lessons • Order processing • Warehousing – Storage, distribution, automated warehouses • Inventory – Determine reorder point, relevant cost comparison, optimal order quantity • Transportation – Containerization – Private vs. contract carriers 3. Market Logistics (cont’d) Costs Order Processing Minimize Costs of Attaining Logistics Objectives Submitted Processed Shipped Logistics Transportation Water, Truck, Rail, Pipeline & Air Functions Warehousing Storage Distribution Inventory When to order How much to order Just-in-time Transportation Modes Rail Nation’s largest carrier, cost-effective for shipping bulk products, piggyback Truck Flexible in routing & time schedules, efficient for short-hauls of high value goods Water Low cost for shipping bulky, low-value goods, slowest form Pipeline Ship petroleum, natural gas, and chemicals from sources to markets Air High cost, ideal when speed is needed or to ship high-value, low-bulk items 3. Market Logistics (cont’d) Key Elements • Market-logistics objectives • Market-logistics decisions • Market logistics lessons • A senior V.P. is needed as the single contact point for all logistical elements • Senior V.P. must maintain close control • Software and systems are essential for competitively superior logistics performance Review • Retailing • Wholesaling • Logistics