CHAPTER TWELVE
Retailers, Wholesalers, and Their
Strategy Planning
For use only with
Perreault and McCarthy
texts.
© 2006 McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin
www.mhhe.com/fourps
When we finish this lecture you should
1. Understand how retailers plan their marketing
strategies.
2. Know about the many kinds of retailers that
work with producers and wholesalers as
members of channel systems.
3. Understand the differences among the
conventional and nonconventional retailers—
including Internet merchants and others who
accept the mass-merchandising concept.
4. Understand scrambled merchandising and the
“wheel of retailing.”
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
When we finish this lecture you should
5. See why size or belonging to a chain can be
6.
7.
8.
9.
important to a retailer.
Know what progressive wholesalers are doing
to modernize their operations and marketing
strategies.
Know the various kinds of merchant
wholesalers and agent middlemen and the
strategies that they use.
Understand why retailing and wholesaling
have developed in different ways in different
countries.
See why the Internet is impacting both
retailing and wholesaling.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Wholesalers and Retailers Plan Their Strategies
Must Select Target
Markets and Marketing
Mixes Carefully
Marketers Must
Understand Retailer/
Wholesaler Evolution
Retailing Deals with
Final Customers
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Planning a Retailer’s Strategy
Convenience
Product Selection
Key Factors
Affecting
Consumers’
Retail Choice
Fairness in Dealings
Helpful Information
Prices
Social Image
Shopping Atmosphere
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Exhibit 12-1
Conventional Retailers – Try to Avoid Price Competition
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Exhibit 12-1
Expand Assortment & Service – To Compete at a High Price
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Exhibit 12-1
Evolution of Mass-Merchandising Retailers
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Exhibit 12-1
Some Retailers Focus on Added Convenience
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Vending Machines Are Convenient
+
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Shop at Home in a Variety of Ways
+
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Interactive Exercise: Types of Retail Outlets
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Exhibit 12-1
Retailing on the Internet
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Exhibit 12-2
Online vs. In-Store Shopping
+
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Competitive Effects Influence
Other Retailers
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Retailing Types Are Explained by Consumer Needs Filled
+
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Why Retailers Evolve and Change
The “Wheel of Retailing” Keeps on Rolling!
AND
Scrambled
Merchandising
= Higher Profits
Product Life
Cycle Applies
to Retailing
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Ethical Issues
May Arise
Exhibit 12-4
Retailer Size and Profits
+
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
An Example of a Large Retail Chain
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Big Chains Are Building Market Clout
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Differences in Retailing in Different Nations
Mass-Marketing
Requires Mass
Markets
New Ideas Spread
Some Countries
Block Change
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
What Is a Wholesaler?
Changing With the Times
Producing Products, Not
Chasing Orders
Progressive Wholesalers
Adapt
Goodbye to Some?
Ethical Issues?
New Strategies Needed To
Survive
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Exhibit 12-5
Wholesalers Add Value in Different Ways
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Exhibit 12-6
Types of Wholesalers
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Types of Merchant Wholesalers
Limited Function
Service
• Cash and
Carry
• General
merchandise
• Single line
(or generalline)
Types of
Merchant
Wholesalers
• Drop
Shippers
• Truck
• RackJobbers
• Specialty
• Catalog
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Agent Middlemen Are Strong on Selling
Manufacturer’s
Agents
Brokers
Types of
Agent
Middlemen
Auction
Companies
Selling Agents
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
What Will Happen to Retailers and
Wholesalers in the Future?
Improved
Logistics
Efficiency
Increasing
Competition
New Internet
Applications
Marketers
and
Consumers
Can Expect
New WebBased Retailers
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Development
of Specialized
Intermediaries
Key Terms
• Retailing
• General stores
• Single-line stores
• Limited-line stores
• Specialty shop
• Department stores
• Mass-merchandising
•
•
concept
Supermarkets
Discount houses
• Mass-merchandisers
• Supercenters
• Hypermarkets
• Convenience (food)
•
•
•
•
stores
Automatic vending
Door-to-door selling
Telephone and directmail retailing
Wheel of retailing
theory
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Key Terms
•
•
•
•
•
•
•
•
•
Scrambled
merchandising
Corporate chain
Cooperative chains
Voluntary chains
Franchise operation
Wholesaling
Wholesalers
Manufacturers’ sales
branches
Merchant wholesalers
• Service wholesalers
• General merchandise
•
•
•
•
•
wholesalers
Single-line (or
general-line)
wholesalers
Specialty wholesalers
Limited-function
wholesalers
Cash-and-carry
wholesalers
Drop-shippers
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Key Terms
• Truck wholesalers
• Rack jobbers
• Catalog wholesalers
• Agent middlemen
• Manufacturer’s agents
• Export agents
• Import agents
• Brokers
• Export brokers
• Import brokers
• Selling agents
•
•
Combination export
manager
Auction companies
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
LO6
Retail Marketing
Strategy
List the major tasks
involved in developing
a retail marketing
strategy
Retail Marketing
Strategy
Define & Select
a Target Market
Develop the
“Six Ps”
LO6
Defining a Target
Market
Demographics
STEP 1:
Segment the Market
Geographics
Psychographics
LO6
Biz Flix
LO6
Man’s Favorite
Sport
Choosing the Retailing
Mix
STEP 2:
Choose the
Retailing Mix
LO6
Product
Place
Price
Personnel
Promotion
Presentation
http://www.publix.com
Online
The Retailing Mix
Product
Personnel
Place
Target
Market
Presentation
LO6
Promotion
Price
Choosing the Retailing
Mix
Product
Offering
LO6
The mix of products
offered to the consumer
by the retailer; also
called the product
assortment or
merchandise mix.
Retail Promotion
Strategy
Advertising
Public Relations
Publicity
Sales Promotion
LO6
The Proper Location
Choosing a Community
LO6
Choosing a Site
Economic growth
potential
Freestanding Store
Competition
Shopping Center
Geography
Mall
Important Factors for Site
Choice
 Neighborhood
socioeconomics
 Traffic flows
 Land costs
 Zoning regulations
 Public transportation
 Site’s visibility, parking,
entrances and exits,
accessibility, and safety
LO6
 Fit with other stores
Shopping Center
and Mall
Locations
Advantages
LO6
• Design attracts
•
shoppers
• Activities and anchor •
stores draw
customers
•
• Ample parking
•
• Unified image
• Sharing of common •
area expenses
Disadvantages
Expensive leases
Failure of common
promotion efforts
Lease restrictions
Hours of operation
Anchor store
domination
Retail Prices
Low Price
Good Value
Single Price Point
EDLP
LO6
High Price
Quality
Image
Presentation of the
Retail Store
Atmosphere
LO6
The overall
impression conveyed
by a store’s physical
layout, décor, and
surroundings
Presentation of the
Retail Store
Employee type and density
Merchandise type and density
Fixture type and density
Sound
Odors
LO6
Visual factors
http://www.apple.com
Online
Personnel and
Customer Service
Trading Up
Two Common
Selling
Techniques
Suggestion Selling
LO6
Customer Service
for On-Line
Retailers
Easy-to-use Web site
Product availability
Simple returns
LO6
LO6
REVIEW LEARNING
OUTCOME
Developing a
Retail Marketing
Strategy
LO7
New Developments
in Retailing
Describe new
developments
in retailing
New Developments in Retailing
Interactivity
Consumers are
involved in the
retail experience.
M-commerce
Purchasing goods
through mobile
devices.
LO7