retailing wholesaling

Retailing Retailing and and

WholesalingWholesaling

Chapter 14Chapter 14

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Objectives

Understand the roles of retailers and Understand the roles of retailers and wholesalers in the marketing wholesalers in the marketing channel.channel.Know the major types of retailers.Know the major types of retailers.Know the major types of Know the major types of wholesalers.wholesalers.Understand the marketing decisions Understand the marketing decisions facing retailers and wholesalers.facing retailers and wholesalers.

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Huge product Huge product assortment assortment

Prices are 20%–30% Prices are 20%–30% below hardware below hardware storesstores

Obsessed with Obsessed with offering high quality offering high quality customer servicecustomer service

Lifetime value of Lifetime value of customers: $25,000customers: $25,000

Well-trained, highly Well-trained, highly motivated salespeople motivated salespeople earn above average earn above average salariessalaries

Customer problem-Customer problem-solving is encouragedsolving is encouraged

Internet site offers many Internet site offers many home improvement tipshome improvement tips

One of today’s most One of today’s most successful retailerssuccessful retailers

cHome DepotHome Depot

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Definitions

RetailingRetailing All activities involved All activities involved

in selling goods or in selling goods or services directly to services directly to final consumers final consumers for their personal, for their personal, nonbusiness use.nonbusiness use.

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Definitions

RetailerRetailer Business whose Business whose

sales come sales come primarilyprimarily from from retailing.retailing.

Can be brick and Can be brick and mortar, 100% mortar, 100% virtual, or click virtual, or click and mortarand mortar

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ZanyBrainy.com Video Clip

ZanyBrainy.com is a click and mortar toy retailer.

BusinessNow

Click the picture above to play video

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How is web How is web retailing retailing different? In different? In your opinion, your opinion, what “works what “works on the web” on the web” that won’t work that won’t work in a typical in a typical store?store?

Discussion Question

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Retailers

Types of RetailersTypes of Retailers

Specialty StoresSpecialty Stores

Department Department StoresStores

SupermarketsSupermarkets

Discount StoresDiscount Stores

Convenience Convenience StoresStores

Off-Price RetailersOff-Price RetailersSuperstoresSuperstores

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Retailing

Self-service retailersSelf-service retailers Customers are willing to Customers are willing to

self-serve to save moneyself-serve to save money Discount storesDiscount stores

Limited-service retailersLimited-service retailers Most department storesMost department stores

Full-service retailersFull-service retailers Salespeople assist Salespeople assist

customers in every waycustomers in every way High-end department High-end department

storesstores Specialty storesSpecialty stores

Amount of Amount of serviceserviceProduct linesProduct linesRelative pricesRelative pricesOrganizational Organizational approachapproach

Retailers are Retailers are Classified by:Classified by:

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Retailing

Specialty storesSpecialty stores Narrow product lines with Narrow product lines with

deep assortmentsdeep assortments

Department storesDepartment stores Wide variety of product Wide variety of product

lineslines

SupermarketsSupermarketsConvenience storesConvenience stores Limited lineLimited line

SuperstoresSuperstores Sell food, nonfood, and Sell food, nonfood, and

servicesservices

Category killersCategory killers Giant specialty storesGiant specialty stores



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Outlet malls and category complete are popular with consumers

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Retailing

Discount storesDiscount stores Low margins are offset Low margins are offset

by high volumeby high volume

Off-price retailersOff-price retailers Independent off-price Independent off-price

retailersretailers TJ Maxx, Marshall’sTJ Maxx, Marshall’s

Factory outletsFactory outlets Levi Strauss, ReebokLevi Strauss, Reebok

Warehouse clubsWarehouse clubs Sam’s Club, CostcoSam’s Club, Costco



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Retailing

Corporate chain storesCorporate chain stores Commonly owned/controlledCommonly owned/controlled

Voluntary chainsVoluntary chains Wholesaler-sponsored Wholesaler-sponsored

groups of independent groups of independent retailersretailers

Retailer cooperativesRetailer cooperatives Groups of independent Groups of independent

retailers who buy in bulkretailers who buy in bulk

Franchise organizationsFranchise organizations Based on uniquenessBased on uniqueness

Merchandising Merchandising conglomeratesconglomerates Diversified retailing lines Diversified retailing lines

under central ownershipunder central ownership



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Figure 14-1:

Retailer Marketing Mix Decisions

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The product assortment, the services The product assortment, the services mix, and the store atmosphere are mix, and the store atmosphere are used by retailers to differentiate their used by retailers to differentiate their business from the competition.business from the competition.

Select two retailers from your local area Select two retailers from your local area and discuss how each store differs with and discuss how each store differs with respect to the three variables above.respect to the three variables above.

Discussion Question

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Retailer Marketing MixRetailer Marketing Mix PricePrice

High markup or high volume?High markup or high volume? PromotionPromotion

Public relations, sales promotions, Public relations, sales promotions, advertising, direct marketingadvertising, direct marketing

PlacePlace Location, location, location!Location, location, location!

Retailing

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The Future of RetailingThe Future of Retailing New retail forms and New retail forms and

shortening retail life cyclesshortening retail life cycles Wheel-of-retailing conceptWheel-of-retailing concept

Growth of nonstore retailingGrowth of nonstore retailing Mail-order, television, phone, Mail-order, television, phone,

online shopping online shopping Retail convergenceRetail convergence

Retailing

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Rise of megaretailersRise of megaretailers Growing importance Growing importance

of retail technologyof retail technology Global expansion of Global expansion of

major retailersmajor retailers Retail stores as Retail stores as

“Communities” or “Communities” or “Hangouts”“Hangouts”

Retailing

The Future of Retailing ContinuedThe Future of Retailing Continued

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Mall of America hosts over 520 specialty stores, 49 restaurants, and a theme park

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Retailing

Retailer Communities: Check out Playstation.com

Playstation.com

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Definitions

WholesalingWholesaling All activities involved in selling goods All activities involved in selling goods

and services to those and services to those buying for resale buying for resale or business use.or business use.

WholesalingWholesaling A firm engaged A firm engaged

primarily in primarily in wholesaling activity.wholesaling activity.

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Wholesalers add value Wholesalers add value by performing the by performing the following functions:following functions: Selling and promotingSelling and promoting Buying and assortment Buying and assortment

buildingbuilding Bulk-breakingBulk-breaking WarehousingWarehousing TransportationTransportation

Wholesaling

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Wholesalers add Wholesalers add value by performing value by performing the following the following functions:functions: FinancingFinancing Risk bearingRisk bearing Marketing informationMarketing information Management services Management services

and adviceand advice

Wholesaling

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Wholesaling

Full-service wholesalersFull-service wholesalers Wholesale merchantsWholesale merchants Industrial distributorsIndustrial distributors

Limited service Limited service wholesalerswholesalers Cash-and-carry Cash-and-carry

wholesalerswholesalers Truck wholesalers Truck wholesalers

(jobbers)(jobbers) Drop shippersDrop shippers Rack jobbersRack jobbers Producer’s cooperativesProducer’s cooperatives Mail-order wholesalersMail-order wholesalers

Merchant Merchant WholesalersWholesalersBrokers and Brokers and Agents Agents Manufacturers’ Manufacturers’ and retailers’ and retailers’ branches and branches and officesoffices

Types of Types of WholesalersWholesalers

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Wholesaling

BrokersBrokers Bring buyers and Bring buyers and

sellers together and sellers together and assist in negotiationassist in negotiation

AgentsAgents Manufacturers’ agentsManufacturers’ agents Selling agentsSelling agents Purchasing agentsPurchasing agents Commission Commission

merchantsmerchants



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Wholesaling

Sales branches and Sales branches and officesoffices Branches carry inventory: Branches carry inventory:

lumber, auto equipment, lumber, auto equipment, partsparts

Offices do not carry Offices do not carry inventory: dry goodsinventory: dry goods

Purchasing officersPurchasing officers Perform roles similar to Perform roles similar to

brokers and agents, brokers and agents, however these individuals however these individuals are employees of the are employees of the organizationorganization



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Figure 14-2:

Wholesaler Marketing Mix Decisions

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Wholesaler Marketing DecisionsWholesaler Marketing Decisions Targeting may be made on the Targeting may be made on the

basis of:basis of: Size of customerSize of customer Type of retailerType of retailer Need for serviceNeed for service

PositioningPositioning

Wholesaling

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Wholesaler Marketing DecisionsWholesaler Marketing Decisions Marketing mix decisionsMarketing mix decisions

Product and service assortment:Product and service assortment: inventory, line inventory, line

Pricing:Pricing: usual markup on COG is 20% usual markup on COG is 20% Promotion:Promotion: largely disorganized and largely disorganized and

unplanned unplanned Place:Place: location, facilities location, facilities

Wholesaling

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Trends in WholesalingTrends in Wholesaling Price competition is still intensePrice competition is still intense Successful wholesalers must Successful wholesalers must

add value by increasing add value by increasing efficiency and effectivenessefficiency and effectiveness

The distinction between large The distinction between large retailers and wholesalers retailers and wholesalers continues to blurcontinues to blur

Wholesaling

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More Trends in More Trends in WholesalingWholesaling More services will More services will

be provided to be provided to retailersretailers

Many wholesalers Many wholesalers are going globalare going global

Wholesaling

Wholesaler McKesson offers pharmacists a Wholesaler McKesson offers pharmacists a wide range of online resourceswide range of online resources