copyright 1999 prentice hall 13-1 chapter retailing and wholesaling
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Copyright 1999 Prentice Hall
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ChapterChapter
Retailing and
Wholesaling
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Chapter Questions
Chapter Questions• What major types of marketing intermediaries occupy this
sector?
• What marketing decisions do these marketing intermediaries make?
• What are the major trends with marketing intermediaries?
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Starbucks Hear Music Coffeehouse
Starbucks Hear Music Coffeehouse
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What is Retailing?What is Retailing?
• All the activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use.
• Retailers - businesses whose sales come primarily from retailing.
• Retailers can be classified as:–Store retailers such as Home Depot, Sears,
Walmart
–Nonstore retailers such as the mail, telephone, and Internet.
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Classification of Retail StoresClassification of Retail Stores
Amount of ServiceSelf-Service, Limited-Service and
Full-Service Retailers
Amount of ServiceSelf-Service, Limited-Service and
Full-Service Retailers
Product LineLength and Breadth of the Product
Assortment
Product LineLength and Breadth of the Product
Assortment
Relative PricesPricing Structure that is Used
by the Retailer
Relative PricesPricing Structure that is Used
by the Retailer
Retail OrganizationsIndependent, Corporate, or Contractual
Ownership Organization
Retail OrganizationsIndependent, Corporate, or Contractual
Ownership Organization
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Classification By Product LineClassification By Product Line
Specialty StoresSpecialty Stores
Department StoresDepartment Stores
SupermarketsSupermarkets
Convenience StoresConvenience Stores
SuperstoresSuperstores
Category KillersCategory Killers
Narrow Product Line, Deep AssortmentNarrow Product Line, Deep Assortment
Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items
Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items
Wide Variety of Food, Laundry, & Household Products
Wide Variety of Food, Laundry, & Household Products
Limited Line of High-Turnover Convenience Goods
Limited Line of High-Turnover Convenience Goods
Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services
Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services
Giant Specialty Store that Carries a Very Deep Assortment of a Particular Line
Giant Specialty Store that Carries a Very Deep Assortment of a Particular Line
HypermarketsHypermarkets Huge SuperstoresHuge Superstores
Store Type Length and Breadth of Product Assortment
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Department Store Model: Strong Retail Brand Approach
Department Store Model: Strong Retail Brand Approach
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Department Store Model: The Showcase Store
Department Store Model: The Showcase Store
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Classification By Retail OrganizationClassification By Retail Organization
Corporate Chains
Corporate Chains
Retailer Cooperatives
Retailer Cooperatives
Voluntary Chains
Voluntary Chains
Franchise Organizations
Franchise Organizations
MerchandisingConglomerates
MerchandisingConglomerates
Retail Organizations
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III- Corporate Retail Organizations
III- Corporate Retail Organizations
Features of corporate retailing:
• Greater purchasing power
• Achieve economies of scale
• Wider brand recognition
• Better trained employees
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III- Corporate Retail OrganizationsMajor Types:
III- Corporate Retail OrganizationsMajor Types:
• Corporate chain store
• Two or more outlets commonly owned and controlled, selling similar lines of merchandise, buy in large volumes at lower price, highly skilled employees.
• Voluntary chain.
• - It is wholesaler-sponsored group of independent retailers who have bulk
buying and have common merchandise.
• Retailer cooperative.
• Independent retailers who set up a central buying organization and conduct joint promotion efforts
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• Consumer cooperative
• A retail firm owned by its customers who elect a group to manage it and receive patronage dividends.
• Franchise organization• Contractual association between franchiser (manufacturers, wholesalers,
service organizations) and franchisee who are authorized to use the brand name. McDonalds ….
• Merchandize conglomerate• Several diversified retailing lines under central ownership with integration in
management and distribution.
Copyright 1999 Prentice Hall
13-1313-13Characteristics of Direct MarketingCharacteristics of Direct Marketing
KeyCharacteristics
ofDirect
Marketing
KeyCharacteristics
ofDirect
MarketingImmediate
OrdersImmediate
Orders
ResponseMeasurement
ResponseMeasurement
Targeted IndividualsTargeted
IndividualsPrivacyPrivacy
CustomizedOffer
CustomizedOffer
ContinuousRelationshipContinuousRelationship
HigherResponse
HigherResponse
TestingTesting
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Types of NonStore RetailingTypes of NonStore Retailing
Direct MarketingDirect Marketing
Direct SellingDirect Selling
Automatic VendingAutomatic Vending
Catalogs & Direct MailCatalogs & Direct Mail
TV Shopping ShowsTV Shopping Shows
Online ShoppingOnline Shopping
Home & Office PartiesHome & Office Parties
Nonstore Retailing Accounts for More Than 14% of All Consumer Purchases, and May Account for 33% of All Sales by 2000.
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Retailer Marketing DecisionsRetailer Marketing Decisions
Retailer MarketingMix
Retailer MarketingMix
Retailer StrategyRetailer Strategy
Target Market
Retail Store Positioning
Product and Service
Assortment
Prices
Promotion
Place (Location)
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Click to add titleClick to add titleRetailer’s Product Assortment and Services DecisionsRetailer’s Product Assortment and Services Decisions
Product Assortment Decisions• Width and Depth of Assortment• Quality of Products• Product Differentiation Strategies
Product Assortment Decisions• Width and Depth of Assortment• Quality of Products• Product Differentiation Strategies
Services MixKey Tool of Nonprice Competitionfor Setting One Store Apart From
Another.
Services MixKey Tool of Nonprice Competitionfor Setting One Store Apart From
Another.
Store’s Atmosphere• Physical Layout• “Feel” That Suits the Target Market and Moves Customers to Buy
Store’s Atmosphere• Physical Layout• “Feel” That Suits the Target Market and Moves Customers to Buy
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Retailer Services Mix
Retailer Services Mix
Prepurchase services
Postpurchase services
Ancillary services
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Click to add titleClick to add titleRetailer’s Price, Promotion, and Place DecisionsRetailer’s Price, Promotion, and Place Decisions
Promotion DecisionsUsing Advertising, Personal Selling,
Sales Promotion and Public Relations to Reach Customers.
Promotion DecisionsUsing Advertising, Personal Selling,
Sales Promotion and Public Relations to Reach Customers.
Place DecisionsShopping Centers, Central Business Districts, Power Centers, or Outlet
Malls. Location!
Place DecisionsShopping Centers, Central Business Districts, Power Centers, or Outlet
Malls. Location!
Price DecisionsTarget Market
Product & Services AssortmentCompetition
Price DecisionsTarget Market
Product & Services AssortmentCompetition
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Location Decision
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
Indicators of Sales Effectiveness
Number of people passing by
% who enter store
% of those who buy
Average amount
spent per sale
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Wall Mart’s Factors of Success:
Wall Mart’s Factors of Success:
• Listen to the customers.
• Treat employees as partners.
• Big sign reading (Satisfaction guaranteed), (we sell for less).
• Customers often welcome by greeter
• Low price and speed stock replenishment.
• Expanded their stories outside of US
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New Retail Forms and Shortening Retail Lifecycles
New Retail Forms and Shortening Retail Lifecycles
The Future of RetailingThe Future of Retailing
Growth of Nonstore RetailingGrowth of Nonstore Retailing
Increasing Intertype CompetitionIncreasing Intertype Competition
Rise of MegaretailersRise of Megaretailers
Growing Importance of Retail Technology
Growing Importance of Retail Technology
Global Expansion of Major RetailersGlobal Expansion of Major Retailers
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Trends in Retailing
Trends in Retailing
• New retail forms has been emerged.• • New retailers are facing shorter life span, they are rapidly copied and
lose novelty. It is familiar in our areas.• Growth of non store retailing.
• Competition is increasing between different types of stores, like Discount stores, Catalog showrooms, Department stores. All are competing the same customers.
• All retailers now moving to one of 2 poles, either mass merchandiser, or as specialty retailer. Super power retailers emerging.
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Trends in Retailing cont.
Trends in Retailing cont.
• Department stores - one stop shopping convenience. Gradually they gave up to Malls where customers can find every thing.
• Technology became critical, Retailers using computers to manage better Inventory, Ordering, etc..
• Retailers with unique formats and strong positioning are moving to other countries, Like
• McDonalds. 18% of US retailers moved out, 40% of Europeans, and 31% of Far East.
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What is Wholesaling?What is Wholesaling?
• All the activities involved in selling goods and services to those buying for resale or business use.
• Wholesaler - those firms engaged primarily in wholesaling activity.
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Why are Wholesalers Used?Why are Wholesalers Used?
WholesalerFunctions
ManagementServices & Advice
ManagementServices & Advice
Selling andPromoting
Selling andPromoting
MarketInformation
MarketInformation
Buying andAssortment Building
Buying andAssortment Building
Risk BearingRisk Bearing Bulk BreakingBulk Breaking
TransportingTransporting
FinancingFinancing WarehousingWarehousing
Wholesalers are Often Better at Performing One or More of the Following Channel Functions:
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Merchant Wholesaler
Independently Owned Business that Takes
Title to the Merchandise
it Handles.
Merchant Wholesaler
Independently Owned Business that Takes
Title to the Merchandise
it Handles.Manufacturers’Sales Branches
and Offices
Wholesaling by Sellersor Buyers Themselves Rather Than Through
IndependentWholesalers.
Manufacturers’Sales Branches
and Offices
Wholesaling by Sellersor Buyers Themselves Rather Than Through
IndependentWholesalers.
Brokers/ AgentsThey Don’t Take Title to
the Goods, and TheyPerform Only a Few
Functions.
Brokers/ AgentsThey Don’t Take Title to
the Goods, and TheyPerform Only a Few
Functions.
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Wholesaler Marketing DecisionsWholesaler Marketing Decisions
Wholesaler MarketingMix
Wholesaler MarketingMix
Wholesaler StrategyWholesaler Strategy
Target Market
Retail Store Positioning
Product and Service
Assortment
Prices
Promotion
Place (Location)
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Trends in WholesalingTrends in Wholesaling
Wholesaling Developments to Consider
Must Learn to Compete Effectively Over Wider and More Diverse Areas
Must Learn to Compete Effectively Over Wider and More Diverse Areas
Increasing Consolidations Will Reduce Number of Wholesalers
Increasing Consolidations Will Reduce Number of Wholesalers
Surviving Wholesalers Will Grow LargerThrough Acquisitions and Mergers
Surviving Wholesalers Will Grow LargerThrough Acquisitions and Mergers
Vertical Integration Will Remain StrongVertical Integration Will Remain Strong
Global Expansion Global Expansion
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Market logistics
Market logistics
It involves, Planning, Implementing, and
controlling the physical flow of materials and final goods till from points of origin to points of use.
* Market logistics starts from the point of sales forecasting which planning for other activities depend on such as scheduling distribution, production and inventory levels.
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Market-logistics objectives
Market-logistics objectives
Getting the right goods to the right places
at the right time for the least cost.
Ex.
Rail shipments or air shipments?
Cheaper containers to minimize cost?
Low Inventories, will lead to increase stakeouts,
back orders, more paper work, special
production runs will lead to high-cost fastfreight shipments.
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Each market system will lead to the following costs.
Each market system will lead to the following costs.
– M = T+FW+VW+S
– M = Total market – logistics cost of proposed system
– T = Total freight cost of proposed system
– FW = Total fixed warehouse cost of proposed system
– VW = Total variable Warehouse cost (include inventory).
– S = Total cost of lost sales due to average delivery delay under proposed system.
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Market Logistic Decisions
Market Logistic Decisions
• Four major decision must be made:
– Order Processing “system of ordering”
– Warehousing ”where should stocks be located”
– Inventory “how much stock should be held”
– Transportation “how should goods be shipped”
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Organizational Lessons about Marketing Logistics:
Organizational Lessons about Marketing Logistics:
• Market logistics decisions must be based on profit maximizing rather than cost consideration
• Electronic links among all parties should be established
• Logistics goals should match or exceed competitors’ service standards.
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Market Logistics Decisions
Market Logistics Decisions
• How should orders be handled?
• Where should stock be located?
• How much stock should be held?
• How should goods be shipped?
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Transportation Factors
Transportation Factors
• Speed
• Frequency
• Dependability
• Capability
• Availability
• Traceability
• Cost
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Containerization
Containerization
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