4P: Place
(Channel Management)
Part II:
Retailing, Wholesaling,
and Market Logistics
Kolter and Keller Ch. 16
18-1
Copyright © 2003 Prentice-Hall, Inc.
Kotler on
Marketing
Successful “go-tomarket” strategies
require integrating
retailers, wholesalers,
and logistical
organizations.
18-2
Copyright © 2003 Prentice-Hall, Inc.
Table 16.1: Major Retailer Types
Specialty Store: Narrow product line with a deep assortment. A clothing store
would be a single-line store; a men’s clothing store would be a limited-line
store; and a men’s custom-shirt store would be a superspecialty store.
Examples: Athlete’s Foot, Tall Men, The Limited, The Body Shop.
Department Store: Several product lines—typically clothing, home
furnishings, and household goods—with each line operated as a separate
department managed by specialist buyers or merchandisers. Examples:
Sears, JCPenney, Nordstrom, Bloomingdale’s.
Supermarket: Relatively large, low-cost, low-margin, high volume, selfservice operation designed to serve total needs for food, laundry, and
household products. Examples: Kroger, Food Emporium, Jewel.
Convenience Store: Relatively small store located near residential area,
open long hours, seven days a week, and carrying a limited line of highturnover convenience products at slightly higher prices, plus takeout
sandwiches, coffee, soft drinks. Examples: 7-Eleven, Circle K.
See text for complete table
18-3
Copyright © 2003 Prentice-Hall, Inc.
Major Retailer Types: With
Psychical Stores
 Convenience store
 Small size
 Located in busy traffic
 Long business hours, even 24 hours/ 7 days
 Limited product lines
 Convenience and efficiency
 Higher price
18-4
Copyright © 2003 Prentice-Hall, Inc.
Major Retailer Types: With
Psychical Stores
 Supermarket
 The size is between convenience store and
department store
 Usually one floor
 Shorter business hours than convenience stores
 Longer product lines than convenience stores
 Lower price than convenience stores
 EX: Welcome
18-5
Copyright © 2003 Prentice-Hall, Inc.
Major Retailer Types: With
Psychical Stores
 Department store
 Large size
 Sales on consumer products with diversified
product lines
 Products with higher quality and higher prices
 Multiple choices can be made with good quality
and product image
 Not only a shopping place but also a
recreation center
18-6
Copyright © 2003 Prentice-Hall, Inc.
Major Retailer Types: With
Psychical Stores
 Hypermarket
 Generally not located in city centers to avoid land
costs
 Diversified product combinations; a mix of
department stores and supermarket
 Sales on large quantity (family size)
 Limited services
 EDLP
18-7
Copyright © 2003 Prentice-Hall, Inc.
Major Retailer Types: With
Psychical Stores
 Specialty store (limited-line store)
 Limited width of product lines but with long
product lines
 Provide a total solution
 attract with famous brands, product uniqueness
and store design
 Hypermarketization is a trend.
18-8
Copyright © 2003 Prentice-Hall, Inc.
Nonstore Retailing
 Direct selling
 Oldest selling approach
 Can sell almost everything
 Personnel training
 Warranty services
 Door-by-door selling, selling party
 Focused individual consumers’ needs
 Can be pushy for consumers
18-9
Copyright © 2003 Prentice-Hall, Inc.
Nonstore Retailing
 Direct marketing (direct-response marketing)
 Sales channels：public media, letters, catalogs
 Sells products such as books, CD , skincare,
healthcare products or equipments, electronic
appliances (3C products)
 advantage：convenient and in-time purchases
 disadvantage：consumer profiles might be easily
released, privacy violations
 Ex: Telemarketing, Television direct-response
marketing and Electronic shopping
18-10
Copyright © 2003 Prentice-Hall, Inc.
Nonstore Retailing
 Vending machine (Automatic vending)
 Taiwan: drinks
 Europe, American, and Japan: diversified
(drinks, newspaper, magazines, snake food, sucks,
cosmetics, CD, T-shirts, etc.)
 Advantage：need only a small space, save
personnel costs
 Disadvantage：higher maintenance fee
(machine), violated or stolen machines and
products, need monitoring cost (CCTV)
18-11
Copyright © 2003 Prentice-Hall, Inc.
Retailing
 Product-differentiation Strategy Possibilities
 Feature exclusive national brands that are not
available at competing retailers
 Feature mostly private branded merchandise
 Feature blockbuster distinctive merchandise events
 Feature surprise or ever-changing merchandise
 Feature the latest or newest merchandise first
 Offer merchandise customizing services
 Offer a highly targeted assortment
18-12
Copyright © 2003 Prentice-Hall, Inc.
Trends in Retailing
1.
2.
3.
4.
5.
6.
7.
New retail forms and combinations
Growth of intertype competition
Growth of giant retailers
Growing investment in technology
Global presence of major retailers
Selling an experience, not just goods
Competition between store-based
and non-store-based retailing
18-13
Copyright © 2003 Prentice-Hall, Inc.
Wholesaling
 Wholesalers’ functions:
 Selling and promoting
 Buying and assortment building
 Bulk breaking
 Warehousing
 Transportation
 Financing
 Risk bearing
 Market information
 Management services and counseling
 The Growth and Types of Wholesaling
18-14
Copyright © 2003 Prentice-Hall, Inc.
Table 16.4: Major Wholesaler Types
Merchant Wholesalers: Independently owned businesses that take
title to the merchandise they handle. They are called jobbers,
distributors, or mill supply houses and fall into two categories: full
service and limited service.
Full-Service Wholesalers: Carry stock, maintain a sales force, offer
credit, make deliveries, and provide management assistance. There
are two types of full-service wholesalers: (1) Wholesale merchants
sell primarily to retailers and provide a full range of services. Generalmerchandise wholesalers carry several merchandise lines. Generalline wholesalers carry one or two lines. Specialty wholesalers carry
only part of a line. (2) Industrial distributors sell to manufacturers
rather than to retailers and provide several services—carrying stock,
offering credit, and providing delivery.
See text for complete table
18-15
Copyright © 2003 Prentice-Hall, Inc.
Wholesaling
 Trends in Wholesaling
 Narus and Anderson identified four ways to
strengthen relationships with manufacturers
 Sought clear agreement about their expected
function in the marketing channel
 Gained insight into the manufacturers’
requirements by visiting their plants
 Fulfilled commitments by
meeting volume targets
 Identified and offered value-added
services to help their suppliers
18-16
Copyright © 2003 Prentice-Hall, Inc.
Market Logistics
 Inventory
 Inventory cost increases at an accelerating rate
as the customer service level approaches 100%
 Order (reorder) point
 Order-processing costs
 Inventory-carrying costs
18-17
Copyright © 2003 Prentice-Hall, Inc.
Figure 16.2: Determining Optimal Order Quantity
18-18
Copyright © 2003 Prentice-Hall, Inc.
Market Logistics
 Just-In-Time production (JIT)
 Transportation
 Containerization







Piggyback
Fishyback
Trainship
Airtruck
Private carrier
Contract carrier
Common carrier
18-19
Copyright © 2003 Prentice-Hall, Inc.
Summary






Types of retailers
Types of nonstore retailing
Trends of retailing
Wholesaling
Trends of wholesaling
Market logistics
18-20
Copyright © 2003 Prentice-Hall, Inc.