marketing principals

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Chapter 13:

Retailers,Wholesalers, and

Their Strategy

Planning



Price

Location

Product Selection

Special Services

Helpful Salespeople

Fairness in Dealing

Key

Economic

FactorsAffecting

Consumers’

Retail Choice

Retailing

13-3



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



Retail Formatsthat Focus on

Convenience

Convenience

(Food) Stores

Door-to-Door Selling

Telephone andDirect Mail

AutomaticVending

13-5

Focusing on Convenience



13-6

MoreInformation

ShoppingDifferences

Still in

InfancyCompetition

will bringChange

WideAssortment

NewConvenience

Costs areDeceptive

Retailing on the Internet



Retail Chains

Major Typesof Retail

Chains

CorporateChains

VoluntaryChains

FranchiseChains

Cooperative

Chains

13-7



The New Face of Wholesaling

New StrategiesNeeded to Survive

Progress of Fail

Producing Profits????????????????

????????????????????????

13-8



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)



Typesof

MerchantWholesalers

Rack Jobbers

General

Merchandise

Single- or

General-Line

Catalog

Specialty

Drop-Shippers

Truck Cash-and-Carry

13-10

Types of Merchant Wholesalers



AuctionCompanies Brokers

Other types of Specialists Selling

Agents

Types of

Agent

Middlemen

Manufacturers’ Agents

13-11

Types of Agent Middlemen



Distribution & Place andDevelopment of

Channel Systems



Marketing Channels

Sets of interdependent organizationsinvolved in the process of making a

product or service available for use

or consumption.



Channels and

Marketing Decisions

Push

Strategy

Pull

Strategy



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



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



Should the 4 P’s be replaced?

• Solutions

• Information

• Value• Access



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



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



Identifying Channel Alternatives

• Types of intermediaries

• Number of intermediaries• Terms and responsibilities

Number of Intermediaries• Exclusive

• Selective

• Intensive



Channel-Management

Decisions• Selecting channel members

• Training channel members

• Motivating channel members• Evaluating channel members

• Modifying channel members



Channel Integration and

SystemsVertical marketing systems

• Corporate VMS

• Administered VMS• Contractual VMS

Horizontal marketing systems

Multichannel systems



Managing Channel Conflict

• Adoption of super ordinate goals

• Cooptation

• Diplomacy• Mediation

• Arbitration

St t D i i A i Pl



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



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



AccumulatingBulk-Breaking

AssortingSorting

Regrouping Activities

11-5



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



Retailing

Includes all the activities involved inselling goods or services directly

to final consumers for personal,

nonbusiness use.



Major Retailer Types

• Specialty store

• Department store

• Supermarket• Convenience store

• Discount store

• Off-price retailer

• Superstore• Catalog showroom



Levels of Retail Service

• Self-service

• Self-selection

• Limited service• Full service



Nonstore Retailing

• Direct selling

• Direct marketing

• Automatic vending• Buying service



Major Types of Corporate Retail

Organizations• Corporate chain store

• Voluntary chain

• Retailer cooperative• Consumer cooperative

• Franchise organization

• Merchandising conglomerate



Retailers’ Marketing Decisions

• Target market

• Product assortment

• Service/store atmosphere• Price

• Communication

• Location



Retailer Services Mix

• Pre purchase services

• Post purchase services

• Ancillary services



Location Decision

• General business districts

• Regional shopping centers

• Community shopping centers• Strip malls

• Location within a larger store



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



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



Wholesaling Functions

• Selling and promoting

• Buying and

assortment building

• Bulk breaking• Warehousing

• Transportation

• Financing

• Risk bearing

• Market information

• Management services

and counseling



Major Wholesaler Types

• Merchant

• Full service

• Limited service

• Brokers and agents

• Manufacturers

• Specialized

Wh l l ’ M k ti



Wholesalers’ Marketing

Decisions• Target market

• Product assortment

• Price• Promotion

• Place

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