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Retailing, Direct Marketing, and
Wholesaling
Principles of Marketing
Chapter 16
Chapter 16 PM
Major Types of Retail
Stores
• General- Merchandise retailers
• Department- Younkers
• Discount- Dollar General
• Convenience- Casey’s
• Supermarkets- Hy-Vee
• Superstores- Target
• Hypermarkets- Carrefour (French)
• Warehouse clubs- Sam’s
• Warehouse showrooms- Martin Brothers
Chapter 16 PM
Specialty Retailers
• Traditional specialty
• Category killers
• Barnes and Noble
• Pet Smart
• Starbucks
• Off-price retailers
• Marshall’s
• TJ Maxx
Chapter 16 PM
Strategic Issues
• Location, location, location
• Neighborhood shopping center
• Community shopping center
• Regional shopping center
• Super regional shopping center
• Lifestyle shopping center
• Power shopping center
• Positioning
• Image
• atmospherics
Chapter 16 PM
Direct Marketing & Direct Selling
Direct Marketing
• Catalog
• Direct-response
• Telemarketing
• Television home
shopping
• Online retailing
Direct Selling
• Face-to face sales
• Automatic vending
Chapter 16 PM
Franchising
AdvantagesAdvantages
Start business with limited Start business with limited capitalcapital
Benefit from experience of Benefit from experience of othersothers
Well known franchises bring Well known franchises bring in customers immediatelyin customers immediately
Guidance from franchiserGuidance from franchiser
DisadvantagesDisadvantages
Much of the business Much of the business dictated by Franchiserdictated by Franchiser
Must pay for use of name, Must pay for use of name, products, assistanceproducts, assistance
Up front feeUp front fee
Royalties based on sales Royalties based on sales
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Worldwide Franchise
Activity
Franchise Statistics� Franchising creates almost $2,000,000,000,000 (2 trillion) revenue every
year -- worldwide. Enough to:- equal the 4th largest GNP in the world- blanket the State of Massachusetts (7,600 sq. miles)- circle the earth 6,500 times- stack 137,000 miles high (over 1/2 way to the moon)
http://www.franchiseconsultantsinc.com/home.html
Franchise Stats
by Franchise Consultants, Inc.
�Franchise businesses account for about 50% of all retail sales in the United States.
�Franchise businesses employ more than 15 million Americans.
�More than 75 industries use franchising to distribute goods and services to consumers.
�A U.S. department of commerce study conducted from 1971 to 1997 showed that during that time less than 5% of franchise businesses were closed each year. Compare that to a U.S. Small Business Administration study conducted from 1978 to 1998, which found that 62% of non-franchised businesses closed within the first 6 years of their existence due to failure, bankruptcy, etc.
�1 out of every 12 businesses is a franchised business.
�A new franchised business is opened every 8 minutes of every business day.
Chapter 16 PM
WHOLESALINGTransactions where all products are purchased for resale to another business
Chapter 16 PM
Wholesalers
• Services Provided
• Grading
• Storage/inventory control
• Financial assistance
• Link between producers and retailers
• Distribution component of marketing strategy
• Must add some value-added service
• Wholesaler activities can become part of an integrated
supply chain by a company
Chapter 16 PM
Types of Wholesalers
MerchantMerchant
FullFull--serviceservice
General merchandiseGeneral merchandise
Limited Limited lineline
Can be called Single or General lineCan be called Single or General line
SpecialtySpecialty--lineline
Rack jobbersRack jobbers
Producer’s CooperativesProducer’s Cooperatives
LimitedLimited--serviceservice
Cash and carryCash and carry
Truck wholesalersTruck wholesalers
Drop shippersDrop shippers
MailMail--order wholesalersorder wholesalers
Chapter 16 PM
Agents and Brokers
Agents
• Manufacturers’ agents
• Selling agents
• Commission merchants
Brokers
• Food
• Real estate
• Securities
• Insurance
Chapter 16 PM
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Manufacturers Sales
Branches and Offices
branch
• Company owned
• Sell product
• Provide support to sales force
• Usually near high demand areas or large customers
• Offer :• Credit
• Promotional assistance
• Other services• Repair parts
office
• Company owned
• Provide services normally
associated with agents
• Carry no inventory
Chapter 16 PM
