MGMT 120
Principles of Marketing
Lecture 23:
Place:
Retailing and Wholesale
Planning a Retailer’s Strategy
Convenience
Product Selection
Key Economic
Factors
Affecting
Consumers’
Retail Choice
Fairness in Dealings
Helpful Information
Prices
Social Image
Shopping
Exhibit 12-1
Conventional Retailers – Try to Avoid Price Competition
MGMT120 Lecture Notes
©Professor Freddy Lee
Store Retailing
•
Retail stores
•
Classification based on
– All shapes and sizes
– Location, location, location!
– Amount of service
– Product line
– Relative price
– Control of outlets
Amount of Service
•
•
•
Self-service retailers
Limited-service retailers
Full-service retailers
• Classify these stores
Product Line
•
•
•
Classified by the width and depth of their product assortment
Six types of assortments
Specialty stores carry a narrow product line with a deep assortment within that line.
2. Department stores
•
Carry a wide array of lines, typically clothing, home furnishing, and household goods, with each
line operated as a separate department.
3. Supermarkets
•
•
•
Large, high-volume, self-service stores that carry a wide variety of food, laundry, and
household products.
Most are owned by chains.
Practice “scrambled merchandising”
Specialty
stores
Department
stores
“designer shops”
Discounters
sales promotion
MGMT120 Lecture Notes
©Professor Freddy Lee
4. Convenience stores
•
•
•
•
•
Carry a limited line of high-turnover convenience products
Location
Business hours
An increasing range of products and services
Some goes “upscale”
5. Superstores
•
Much larger than regular supermarkets, and carry a large assortment of routinely purchased
food and nonfood items.
•
Category killers
– A hybrid of superstore and specialty stores.
– A wide assortment of a particular line with a knowledgeable staff.
•
Hypermarkets
– Mega-, huge superstores.
6. Service Retailers
•
•
Hotels, motels, banks, airlines, movie, theatres, …
Grows faster than product retailers.
Relative Prices
• Most retailers
– Normal price, normal quality goods and service
– Higher price, higher quality goods and service
• “Low price” retailers
– Discount stores
• Standard merchandise at lower price
• Lower margins and higher volume
– Off-price Retailers
• Factory outlets
• Warehouse (or wholesale) clubs
Control of Outlets
•
Independent, owner-operated stores
•
Chains
– Over 20% of US retailers belong to some type of chain.
– In the grocery sector, 65% of the market is controlled by chains.
Corporate Chains
An organization operating four or more retail outlets in the same kind of business, under the
same legal ownership.
Statistics Canada
MGMT120 Lecture Notes
©Professor Freddy Lee
Voluntary Chains
Wholesaler-sponsored voluntary groups of independent retailers that engage in group buying
and common merchandising.
Independent Grocers' Alliance
Retail Cooperatives
Group of independent retailers who set up a central buying organization and conduct joint
promotion.
e.g., Home Hardware,
Mountain Equipment Co-op.
Franchise
•
A contract between a manufacturer, wholesaler, or service organization (the franchiser) and
independent businesspeople (the franchisee) who buy the right to own and operate one or more
units in the franchise system.
•
Many of them, and still increasing:
–
–
–
–
Ford dealers
McDonald’s
7-Eleven
…
Non-Store Retailing
•
•
•
Direct marketing
– Direct mail
– Catalogue selling
– Television retailing
– On-line shopping
Direct selling (door-to-door)
Automatic vending
Direct Marketing Provides Coverage
MGMT120 Lecture Notes
©Professor Freddy Lee
Exhibit 12-2
Online vs. In-Store Shopping
Retailer Marketing Decisions
Retailer Marketing Mix
Retailer Strategy
Seven Ps
- Target market
- Retail
positioning
Product assortment and quality
Price
Place
Promotion
Personalized services
Physical facilities
Personnel
MGMT120 Lecture Notes
©Professor Freddy Lee
Trends of Retailing
•
•
•
•
•
•
People, Financial and Technology management
Increasing intertype competition
Growth of non-store retailing
The rise of global mega-retailers
Fast-changing retail technology
Retail stores as “communities” or “hangouts”
Why Retailers Evolve and Change
AND
Scrambled
Merchandising =
Higher Profits
Product Life
Cycle Applies to
Retailing
Ethical Issues
May Arise
Exhibit 12-4
Wholesaling and Wholesalers
MGMT120 Lecture Notes
©Professor Freddy Lee
•
•
Wholesaling includes all activities involved in selling goods and services to those buying for
resale or business use. (Costco??)
Major wholesaler types
Wholesalers Defined
•
Merchant wholesalers take title to the merchandise they handle
•
Brokers and agents do not take title to goods
•
Manufacturers’ branches and offices
– Brokers brings buyers and sellers together and assist in negotiation.
– Agents represent buyers or sellers on a relatively permanent basis.
Exhibit 12-6
Types of Wholesalers
What Will Happen to Retailers & Wholesalers in the Future?
MGMT120 Lecture Notes
©Professor Freddy Lee
Improved
Logistics
Efficiency
Increasing
Competition
New Internet
Applications
Marketers &
Consumers
Can Expect
To See!
Development
of Specialized
Intermediarie
New
Web-Based
Retailers
MGMT120 Lecture Notes
©Professor Freddy Lee