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Retailing, Direct Marketing, and

Wholesaling

Principles of Marketing

Chapter 16

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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

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Specialty Retailers

• Traditional specialty

• Category killers

• Barnes and Noble

• Pet Smart

• Starbucks

• Off-price retailers

• Marshall’s

• TJ Maxx

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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

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Direct Marketing & Direct Selling

Direct Marketing

• Catalog

• Direct-response

• Telemarketing

• Television home

shopping

• Online retailing

Direct Selling

• Face-to face sales

• Automatic vending

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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.

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WHOLESALINGTransactions where all products are purchased for resale to another business

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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

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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

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Agents and Brokers

Agents

• Manufacturers’ agents

• Selling agents

• Commission merchants

Brokers

• Food

• Real estate

• Securities

• Insurance

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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

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