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Chapter 13:
Retailers,Wholesalers, and
Their Strategy
Planning
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Price
Location
Product Selection
Special Services
Helpful Salespeople
Fairness in Dealing
Key
Economic
FactorsAffecting
Consumers’
Retail Choice
Retailing
13-3
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Exhibit 13-1
Conven-tionalofferings
Single-andlimited-linestores
Expanded
assortmentand service
Specialty shops anddepartment stores
Expandedassortment
and/or reducedmargins/service
Supermarkets, discounthouses, mass-merchandisers,catalog showrooms,super centers
Addedconveniencehigher margins
less assortment
Telephone/mail order,vending machines,door-to-door, conveniencestores, electronic shopping
Expandedassortmentreduced marginsmore information
Internet
13-4
Types of Retailers
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Retail Formatsthat Focus on
Convenience
Convenience
(Food) Stores
Door-to-Door Selling
Telephone andDirect Mail
AutomaticVending
13-5
Focusing on Convenience
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13-6
MoreInformation
ShoppingDifferences
Still in
InfancyCompetition
will bringChange
WideAssortment
NewConvenience
Costs areDeceptive
Retailing on the Internet
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Retail Chains
Major Typesof Retail
Chains
CorporateChains
VoluntaryChains
FranchiseChains
Cooperative
Chains
13-7
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The New Face of Wholesaling
New StrategiesNeeded to Survive
Progress of Fail
Producing Profits????????????????
????????????????????????
13-8
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Types of Wholesalers
Exhibit 13-6
13-9
Does wholesaler ownthe products?
Limited-functionmerchant
Wholesalers
Servicemerchant
wholesalers
Agent middlemen
How many functionsdoes the wholesaler
provide?
All the functions
Somefunctions
Yes (merchant wholesaler) No (agent middleman)
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Typesof
MerchantWholesalers
Rack Jobbers
General
Merchandise
Single- or
General-Line
Catalog
Specialty
Drop-Shippers
Truck Cash-and-Carry
13-10
Types of Merchant Wholesalers
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AuctionCompanies Brokers
Other types of Specialists Selling
Agents
Types of
Agent
Middlemen
Manufacturers’ Agents
13-11
Types of Agent Middlemen
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Distribution & Place andDevelopment of
Channel Systems
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Marketing Channels
Sets of interdependent organizationsinvolved in the process of making a
product or service available for use
or consumption.
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Channels and
Marketing Decisions
Push
Strategy
Pull
Strategy
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The Anderson Distribution
Strategy Pyramid
Intermediate Management
Warehouse & Transport
Materials Management
Process
IT
Policies & ProceduresFacilities & Equipment
Channel Management
Channel Design
Network Strategy
Implementation
Structure
Strategy
Distribution Objectives
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Developing Channels Design
Distribution Processes Setting/ Achieving
Distribution Objectives
Controlling Distribution
• Inventory management
through a periodic review of
network
•Integrated supply chain
planning
• Setting up distribution
strategy with alternatives
• Consistently lower
inventory levels in changing
demand
• Demand forecasting based
on Consumer trend
secondary
• Setting distribution
objectives in line with the
demand potential
• Lower Inventories
• Lower trade spends( no
attempts to boost sales
where demand)
• Monitoring of trade spends
• Monitoring of Distributor
• Achieving distribution
objectives by ensuring theright mix of direct coverage
• Controlling trade spends
• Controlling distributor
expenses and service evils
to prevent distributors from
making
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Should the 4 P’s be replaced?
• Solutions
• Information
• Value• Access
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Channel Member Functions
• Gather information
• Develop and disseminate persuasivecommunications
• Reach agreements on price and terms
• Acquire funds to finance inventories
• Assume risks
• Provide for storage
• Provide for buyers’ payment of their bills
• Oversee actual transfer of ownership
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Designing a Marketing Channel System
• Analyze customer needs
• Establish channel objectives• Identify major channel alternatives
• Evaluate major channel alternatives
Channel Service Outputs• Lot size
• Waiting/delivery time
• Spatial convenience• Product variety
• Service backup
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Identifying Channel Alternatives
• Types of intermediaries
• Number of intermediaries• Terms and responsibilities
Number of Intermediaries• Exclusive
• Selective
• Intensive
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Channel-Management
Decisions• Selecting channel members
• Training channel members
• Motivating channel members• Evaluating channel members
• Modifying channel members
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Channel Integration and
SystemsVertical marketing systems
• Corporate VMS
• Administered VMS• Contractual VMS
Horizontal marketing systems
Multichannel systems
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Managing Channel Conflict
• Adoption of super ordinate goals
• Cooptation
• Diplomacy• Mediation
• Arbitration
St t D i i A i Pl
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Strategy Decision Areas in Place
Exhibit 11-1
11-3
Type of channel
Type of physical distribution
facilities needed
How to managechannels
Middlemen/facilitators needed
Degree of marketexposure desired
IndirectDirect
Place objectives
Customer service
level desired
y a rm ay an o se rec
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y a rm ay an o se recChannels
Greater Control
Lower Cost
Value added subsequent toproduction process
Direct contact withCustomer Needs
Quicker Response or Change in Marketing Mix
Suitable Middlemen NotAvailable
SomeReasons
for ChoosingDirect Channels
11-4
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AccumulatingBulk-Breaking
AssortingSorting
Regrouping Activities
11-5
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Vertical Marketing Systems
Exhibit 11-3
11-7
Characteristics
Type of channel
Little or none
Some togood
Fairly goodto good
Complete
NoneEconomicpower andleadership
ContractsOne
companyownership
Typical“inde-
pendents” McDonald’s Florsheim
GeneralElectric
Amount of cooperation
TraditionalVertical marketing systems
Administered Contractual Corporate
Control maintainedby
Examples
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Retailing
Includes all the activities involved inselling goods or services directly
to final consumers for personal,
nonbusiness use.
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Major Retailer Types
• Specialty store
• Department store
• Supermarket• Convenience store
• Discount store
• Off-price retailer
• Superstore• Catalog showroom
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Levels of Retail Service
• Self-service
• Self-selection
• Limited service• Full service
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Nonstore Retailing
• Direct selling
• Direct marketing
• Automatic vending• Buying service
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Major Types of Corporate Retail
Organizations• Corporate chain store
• Voluntary chain
• Retailer cooperative• Consumer cooperative
• Franchise organization
• Merchandising conglomerate
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Retailers’ Marketing Decisions
• Target market
• Product assortment
• Service/store atmosphere• Price
• Communication
• Location
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Retailer Services Mix
• Pre purchase services
• Post purchase services
• Ancillary services
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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 location
• Percentage who enter store
• Percentage of those who enter who alsobuy
• Average amount spent per sale
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Trends in Retailing
• New retail forms and combinations
• Growth of intertype competition
• Competition between store-based andnon-store-based retailing
• Growth of giant retailers
• Decline of middle market retailers• Growing investment in technology
• Global presence of major retailers
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Wholesaling Functions
• Selling and promoting
• Buying and
assortment building
• Bulk breaking• Warehousing
• Transportation
• Financing
• Risk bearing
• Market information
• Management services
and counseling
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Major Wholesaler Types
• Merchant
• Full service
• Limited service
• Brokers and agents
• Manufacturers
• Specialized
Wh l l ’ M k ti
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Wholesalers’ Marketing
Decisions• Target market
• Product assortment
• Price• Promotion
• Place