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Chapter
Retailing and
Wholesaling
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Chapter Questions
• What major types of marketing intermediaries occupy this
sector?
• What marketing decisions do these marketing
intermediaries make?
• What are the major trends with marketing intermediaries?
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Starbucks Hear Music Coffeehouse
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What is Retailing?
• All the activities involved in selling goods
or services directly to final consumers for
their personal, nonbusiness use.
• Retailers - businesses whose sales come
primarily from retailing.
• Retailers can be classified as:
–Store retailers such as Home Depot, Sears,
Walmart
–Nonstore retailers such as the mail, telephone,
and Internet.
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Classification of Retail Stores
Amount of Service
Self-Service, Limited-Service and
Full-Service Retailers
Product Line
Length and Breadth of the Product
Assortment
Relative Prices
Pricing Structure that is Used
by the Retailer
Retail Organizations
Independent, Corporate, or Contractual
Ownership Organization
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Classification By Product Line
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
Limited Line of High-Turnover Convenience
Goods
Superstores
Large Assortment of Routinely Purchased
Food & Nonfood Products, Plus Services
Category Killers
Giant Specialty Store that Carries a Very
Deep Assortment of a Particular Line
Hypermarkets
Huge Superstores
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Department Store Model:
Strong Retail Brand Approach
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Department Store Model:
The Showcase Store
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Classification By Retail
Organization
Merchandising
Conglomerates
Franchise
Organizations
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Corporate
Chains
Retail
Organizations
Retailer
Cooperatives
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Voluntary
Chains
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III- Corporate Retail Organizations
Features of corporate retailing:
• Greater purchasing power
• Achieve economies of scale
• Wider brand recognition
• Better trained employees
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III- Corporate Retail Organizations
Major Types:
• Corporate chain store
• Two or more outlets commonly owned and controlled, selling similar lines of
merchandise, buy in large volumes at lower price, highly skilled employees.
• Voluntary chain.
•
- It is wholesaler-sponsored group of independent retailers who have bulk
buying and have common merchandise.
• Retailer cooperative.
• Independent retailers who set up a central buying organization and conduct
joint promotion efforts
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• Consumer cooperative
• A retail firm owned by its customers who elect a group to manage it and
receive patronage dividends.
• Franchise organization
• Contractual association between franchiser (manufacturers, wholesalers,
service organizations) and franchisee who are authorized to use the brand
name. McDonalds ….
• Merchandize conglomerate
• Several diversified retailing lines under central ownership with integration in
management and distribution.
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Characteristics of Direct Marketing
Privacy
Response
Measurement
Testing
Targeted
Individuals
Key
Characteristics
of
Direct
Marketing
Higher
Response
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Customized
Offer
Immediate
Orders
Continuous
Relationship
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Types of NonStore Retailing
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Nonstore Retailing Accounts for More Than 14% of All Consumer
Purchases, and May Account for 33% of All Sales by 2000.
Direct Marketing
Direct Selling
Automatic Vending
Catalogs & Direct Mail
TV Shopping Shows
Online Shopping
 Copyright 1999 Prentice Hall
Home & Office Parties
Retailer Marketing Decisions
Retailer Marketing
Mix
Retailer Strategy
Target Market
Retail Store
Positioning
Product and
Service
Assortment
Prices
Promotion
Place (Location)
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Click
to add
title Assortment and
Retailer’s
Product
Services Decisions
Product Assortment Decisions
• Width and Depth of Assortment
• Quality of Products
• Product Differentiation Strategies
Services Mix
Key Tool of Nonprice Competition
for Setting One Store Apart From
Another.
Store’s Atmosphere
• Physical Layout
• “Feel” That Suits the Target Market
and Moves Customers to Buy
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Retailer Services Mix
Prepurchase services
Postpurchase services
Ancillary services
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Click
to add
title
Retailer’s
Price,
Promotion, and
Place Decisions
Price Decisions
Target Market
Product & Services Assortment
Competition
Promotion Decisions
Using Advertising, Personal Selling,
Sales Promotion and Public
Relations to Reach Customers.
Place Decisions
Shopping Centers, Central Business
Districts, Power Centers, or Outlet
Malls. Location!
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Location Decision
• General business districts
• Regional shopping centers
• Community shopping centers
• Strip malls
• Location within a larger store
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Indicators of Sales Effectiveness
Number of people passing by
% who enter store
% of those who buy
Average amount
spent per sale
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Wall Mart’s Factors of Success:
• Listen to the customers.
• Treat employees as partners.
• Big sign reading (Satisfaction guaranteed), (we sell for
less).
• Customers often welcome by greeter
• Low price and speed stock replenishment.
• Expanded their stories outside of US
 Copyright 1999 Prentice Hall
The Future of Retailing
New Retail Forms and Shortening
Retail Lifecycles
Growth of Nonstore Retailing
Increasing Intertype Competition
Rise of Megaretailers
Growing Importance of
Retail Technology
Global Expansion of Major Retailers
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Trends in Retailing
• New retail forms has been emerged.
•
• New retailers are facing shorter life span, they are rapidly copied and
lose novelty. It is familiar in our areas.
• Growth of non store retailing.
• Competition is increasing between different types of stores, like
Discount stores, Catalog showrooms, Department stores. All are
competing the same customers.
• All retailers now moving to one of 2 poles, either mass merchandiser,
or as specialty retailer. Super power retailers emerging.
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Trends in Retailing cont.
• Department stores - one stop shopping convenience. Gradually they
gave up to Malls where customers can find every thing.
• Technology became critical, Retailers using computers to manage
better Inventory, Ordering, etc..
• Retailers with unique formats and strong positioning are moving to
other countries, Like
•
McDonalds. 18% of US retailers moved out, 40% of Europeans, and
31% of Far East.
 Copyright 1999 Prentice Hall
What is Wholesaling?
• All the activities involved in
selling goods and services to
those buying for resale or
business use.
• Wholesaler - those firms
engaged primarily in wholesaling
activity.
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Why are Wholesalers Used?
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Wholesalers are Often Better at Performing One
or More of the Following Channel Functions:
Management
Services & Advice
Market
Information
Risk Bearing
Selling and
Promoting
Wholesaler
Functions
Financing
Buying and
Assortment Building
Bulk Breaking
Warehousing
Transporting
 Copyright 1999 Prentice Hall
Types of Wholesalers
Merchant
Wholesaler
Independently Owned
Business that Takes
Title to the
Merchandise
it Handles.
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Brokers/ Agents
They Don’t Take Title to
the Goods, and They
Perform Only a Few
Functions.
Manufacturers’
Sales Branches
and Offices
Wholesaling by Sellers
or Buyers Themselves
Rather Than Through
Independent
Wholesalers.
 Copyright 1999 Prentice Hall
Wholesaler Marketing Decisions
Wholesaler Marketing
Mix
Wholesaler Strategy
Target Market
Retail Store
Positioning
Product and
Service
Assortment
Prices
Promotion
Place (Location)
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Trends in Wholesaling
Wholesaling Developments to Consider
Must Learn to Compete Effectively Over
Wider and More Diverse Areas
Increasing Consolidations Will Reduce
Number of Wholesalers
Surviving Wholesalers Will Grow Larger
Through Acquisitions and Mergers
Vertical Integration Will Remain Strong
Global Expansion
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Market logistics
It involves, Planning, Implementing, and
controlling the physical flow of materials and final goods till from points of
origin to points of use.
* Market logistics starts from the point of sales forecasting which planning
for other activities depend on such as scheduling distribution, production
and inventory levels.
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Market-logistics objectives
Getting the right goods to the right places
at the right time for the least cost.
Ex.
Rail shipments or air shipments?
Cheaper containers to minimize cost?
Low Inventories, will lead to increase stakeouts,
back orders, more paper work, special
production runs will lead to high-cost fast
freight shipments.
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Each market system will lead to the follow
– M = T+FW+VW+S
– M = Total market – logistics cost of proposed system
–
T = Total freight cost of proposed system
– FW = Total fixed warehouse cost of proposed system
– VW = Total variable Warehouse cost (include inventory).
–
S = Total cost of lost sales due to average delivery delay under
proposed system.
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Market Logistic Decisions
• Four major decision must be made:
– Order Processing “system of ordering”
– Warehousing ”where should stocks be located”
– Inventory “how much stock should be held”
– Transportation “how should goods be shipped”
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Organizational Lessons about Marketing Log
• Market logistics decisions must be based on profit
maximizing rather than cost consideration
• Electronic links among all parties should be established
• Logistics goals should match or exceed competitors’
service standards.
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Market Logistics Decisions
• How should orders be handled?
• Where should stock be located?
• How much stock should be
held?
• How should goods be shipped?
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Transportation Factors
• Speed
• Frequency
• Dependability
• Capability
• Availability
• Traceability
• Cost
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Containerization
 Copyright 1999 Prentice Hall