A Global Perspective
Philip Kotler
Gary Armstrong
Swee Hoon Ang
Siew Meng Leong
Chin Tiong Tan
Oliver Yau Hon-Ming
13
Retailing and
Wholesaling
PowerPoint slides adapted by
Oliver Yau Hon-Ming
13-1
Learning Objectives
After studying this chapter, you should be
able to:
1. Explain the roles of retailers and wholesalers
in the distribution channel
2. Describe the major types of retailers and give
examples of each
3. Identify the major types of wholesalers and
give examples of each
4. Explain the marketing decisions facing
retailers and wholesalers
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Chapter Outline
1. Retailing
2. Wholesaling
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Retailing
• Retailing includes all the activities in selling
products or services directly to final
consumers for their personal, non-business
use.
• Retailers are businesses whose sales come
primarily from retailing.
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Retailing
• Non-store retailing includes selling to final
consumers through:
• Direct mail
• Catalogs
• Telephone
• Internet
• TV shopping
• Home and office parties
• Door-to-door sales
• Vending machines
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Retailing
Types of Retailers
• Classified in terms of
• Amount of service
• Product lines
• Relative price
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Retailing
Types of Retailers
• Amount of service
• Self-service
• Limited service
• Full service
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Retailing
Amount of Service
• Self-service retailers serve customers who
are willing to perform their own locatecompare-select process to save money.
• Wal-Mart
• Supermarkets
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Retailing
Amount of Service
• Limited service retailers provide more sales
assistance because they carry more shopping
goods about which customers need more
information.
• Sears, Sasa, etc.
• JC Penney
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Retailing
Amount of Service
• Full-service retailers assist customers in
every phase of the shopping process,
resulting in higher costs that are passed on to
the customer as higher prices.
• Department stores
• Specialty stores
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Retailing
Types of Retailers: Amount of Service
• Specialty stores carry narrow product lines
with deep assortments within the product
lines.
• Department stores carry a wide variety of
product lines.
• Convenience stores carry a limited line of
high-turnover convenience goods.
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Retailing
Types of Retailers: Amount of Service
• Superstores offer a large assortment of
routinely purchased food products, non-food
items, and services.
• Supercenters have very large combination
food and discount stores.
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Retailing
Types of Retailers: Amount of Service
• Category killers are large stores that carry a
very deep assortment of a particular line with
knowledgeable staff.
• Service retailers’ product lines are actually
service.
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Retailing
Types of Retailers: Relative Prices
• Discount stores
• Off-price retailers
• Factory outlets
• Warehouse clubs
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Retailing
Types of Retailers: Relative Prices
• Discount stores sell standard merchandise
at lower prices by accepting lower margins
and selling higher volume.
• Off-price retailers buy at less than regular
wholesale prices and charge customers less
than retail.
• Independent off-price retailers are either
owned and run by entrepreneurs or are
divisions of larger retail corporations.
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Retailing
Types of Retailers: Relative Prices
• Factory outlets are
producer-operated stores.
• Warehouse clubs are large,
warehouse-like facilities with
few frills and offer ultra-low
prices.
© Joe Bennett
13-16
Retailing
Types of Retailers: Organization Approach
• Corporate chain stores
• Voluntary chain stores
• Retailer cooperatives
• Franchise organizations
• Merchandising conglomerates
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Retailing
Types of Retailers: Organization Approach
• Corporate chains are two or more outlets
that are commonly owned and controlled.
• Size allows them to buy in large quantities at
lower prices and gain promotional economies.
• Sears
• Watsons
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Retailing
Types of Retailers: Organization Approach
• Voluntary chains are wholesale-sponsored
groups of independent retailers that engage in
group buying and common merchandising.
• IGA
• Lukfook Jewellery
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Retailing
Types of Retailers: Organization Approach
• Retailer cooperative is a group of
independent retailers that band together to
set up a jointly-owned, central wholesale
operation, and to conduct joint merchandising
and promotion efforts.
• Mitre 10
• Associated Grocers
13-20
Retailing
Types of Retailers: Organization Approach
• Franchise organizations are based
• On some unique product or service
• On a method of doing business
• On the trade name, good will, or patent that
the franchisor has developed
• McDonald’s, Pizza Hut, etc.
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Retailing
Types of Retailers: Organization Approach
• Merchandising conglomerates are
corporations that combine several retailing
forms under central ownership.
• Limited Brands
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Retailing
Retailer Marketing Decisions
• Target marketing and positioning
• Product assortment and services
• Price
• Promotion
• Place
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Retailing
Retailer Marketing Decisions
• Target market and positioning involves the
definition and profile of the market so the
other retail marketing decisions can be made.
• Product assortment and service decisions
include:
• Product assortment
• Services mix
• Store atmosphere
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Retailing
Retailer Marketing Decisions
• Product assortment should differentiate the
retailer while matching target shoppers’
expectations.
• Offers merchandise that no other competitor
carries.
• Private or national brands
• Merchandising events
• Highly targeted product assortment
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Retailing
Retailer Marketing Decisions
• Services mix should also serve to
differentiate the retailer from the competition.
• Customer support
• Store atmosphere is the physical layout that
makes moving around the store hard or easy.
• Experiential retailing
• Test driving
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Retailing
Retailer Marketing Decisions:
Price Decisions
• Price policy must fit the target market and
positioning, product and service assortment,
and competition.
• High markup on lower volume
• Low markup on higher volume
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Retailing
Retailer Marketing Decisions:
Price Decisions
• High-low pricing involves charging higher
prices on an everyday basis, coupled with
frequent sales and other price promotions to
increase store traffic, clear out unsold
merchandise, create a low price images, or
attract customers who will buy other goods at
full price.
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Retailing
Retailer Marketing Decisions:
Price Decisions
• Everyday low prices (EDLP) involves
charging a constant, everyday low price with
few sales or discounts.
© Wal-Mart Stores, Inc.
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Retailing
Retailer Marketing Decisions:
Promotion Decision
• Advertising
• Personal selling
• Sales promotion
• Public relations
• Direct marketing
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Retailing
Retailer Marketing Decisions:
Place Decision
• Location
• Accessibility
• Consistent with positioning
13-31
Retailing
Retailer Marketing Decisions:
Place Decision
© Florian Pusch
• Central business districts are located in
cities and include department and specialty
stores, banks, and movie theaters.
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Retailing
Retailer Marketing Decisions:
Place Decision
• A shopping center is a group of retail businesses
planned, developed, owned, and managed as a unit.
• Regional shopping centers
• Community shopping centers
• Neighborhood shopping centers
• Power centers
• Lifestyle centers
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Retailing
The Future of Retailing
• Retailers have to choose target segments carefully,
position themselves strongly, and consider the
following developments as they plan and execute
their competitive strategies:
• Non-store retailing
•
•
•
•
Retail convergence
Megaretailers
Retail technology
Global expansion
• Retail stores as communities
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Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
• The wheel-of-retailing concept states that many
types of retailing forms begin as low-margin, lowprice, low-status operations and challenge
established retailers.
• As they succeed, they upgrade their facilities and
offer more services, increasing their costs and
forcing them to increase prices, eventually becoming
the retailers they replaced.
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Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
• Growth of non-store retailing includes:
• Mail order
• Television
• Phone
• Online
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Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
• Retail convergence involves
• The merging of consumers, producers, prices, and
retailers
• Creates greater competition for retailers and greater
difficulty differentiating offerings
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Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
• The rise of megaretailers involves the rise of mass
merchandisers and specialty superstores, the
formation of vertical marketing systems, and a rash
of retail mergers and acquisitions.
• Superior information systems
• Buying power
• Large selection
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Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
• Retail technology includes video-casts, inventory
control, electronic ordering, transfer of information,
scanning, online transaction processing, improved
merchandise handling systems, and the ability to
connect with customers.
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Wholesaling
Wholesaling
• Wholesalers add value by performing channel
functions
• Selling and promoting
• Financing
• Buying and
assortment building
• Risk bearing
• Bulk breaking
• Warehousing
• Market information
• Management services
and advice
• Transportation
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Wholesaling
• Selling and promoting involves the
wholesaler’s sales force helping the
manufacturer reach many smaller customers
at lower cost.
• Buying and assortment building involves
the selection of items and building of
assortments needed by their customers,
saving the customers work.
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Wholesaling
• Bulk breaking involves the wholesaler
buying in larger quantity and breaking into
smaller lots for its customers.
• Warehousing involves the wholesaler
holding inventory, reducing its customers’
inventory cost and risk.
• Transportation involves the wholesaler
providing quick delivery due to its proximity
to the buyer.
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Wholesaling
• Financing involves the wholesaler providing
credit and financing suppliers by ordering
earlier and paying on time.
• Risk bearing involves the wholesaler
absorbing risk by taking title and bearing the
cost of theft, damage, spoilage, and
obsolescence.
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Wholesaling
• Market information involves the wholesaler
providing information to suppliers and
customers about competitors, new products,
and price developments.
• Management services and advice involves
wholesalers helping retailers train their sales
clerks, improve store layouts, and set up
accounting and inventory control systems.
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Wholesaling
Types of Wholesaler
• Merchant wholesalers
• Agents and brokers
• Manufacturers’ sales branches and offices
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Wholesaling
Types of Wholesaler
• Merchant wholesalers is the largest group of
wholesalers and includes
• Full-service wholesalers who provide a full set
of services
• Limited-service wholesalers who provided few
services and specialized functions.
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Wholesaling
Types of Wholesaler
• Brokers and agents do not take title, perform
a few functions, and specialize by product line
or customer type.
• Brokers bring buyers and sellers together and
assist in negotiations.
• Agents represent buyers or sellers.
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Wholesaling
Types of Wholesaler
• Manufacturers’ sales branches and offices
is a form of wholesaling by sellers or buyers
themselves rather than through independent
wholesalers.
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Wholesaling
Wholesaler Marketing Decisions
• Target market and positioning decisions
• Marketing mix decisions
13-49
Wholesaling
Wholesaler Marketing Decisions
• Target market and positioning decisions
• Size of customer
• Type of customer
• Need for service
13-50
Wholesaling
Wholesaler Marketing Decisions
• Marketing mix decisions
• Product
• Price
• Promotion
• Place
13-51
Wholesaling
Trends in Wholesaling
• Challenges
• Resistance to price increases
• Lack of suppliers
• Changing customer needs
• Adding value by increasing efficiency and
effectiveness
13-52