14Managing Retailing, Wholesaling,

and Logistics

Chapter Questions

What major types of marketing intermediaries?What marketing decisions do these marketing intermediaries make?What are the major trends in retailing, wholesaling, and logistics?

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Retailing

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Retailing includes all of the activities involved in selling goods or services directly to final consumers for personal, nonbusiness use.A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing.

Major Retailer Types

Specialty storeDepartment storeSupermarketConvenience store

Discount storeOff-price retailerSuperstoreCatalog showroom

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Levels of Retail Service

Self serviceSelf selectionLimited serviceFull service

Retail Positioning Map

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Nonstore Retailing

Direct sellingDirect marketingAutomatic vendingBuying service

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Corporate Retailing

Corporate chain storeVoluntary chainRetailer cooperativeConsumer cooperativeFranchise organizationMerchandising conglomerate

What is a Franchising System?A franchising systemis a system of individual franchisees, a tightly knit group of enterprises whose systematic operations are planned, directed, and controlled by the operation’s franchisor.

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CharacteristicsThe franchisor owns a trade or service mark and licenses it to franchisees in return for royalty paymentsThe franchisee pays for the right to be part of the systemThe franchisor provides its franchisees with a system for doing business

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The New Retail EnvironmentNew retail forms and combinationsCompetition between store-based and non-store-based retailingGrowth of giant retailersDecline of middle market retailersGrowing investment in technologyGlobal profile of major retailersGrowth of shopper marketing

Retailers’ Marketing Decisions

Target marketProduct assortmentProcurementPricesServices

Store atmosphereStore activitiesStore experiencesCommunicationsLocation

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Store Atmosphere and ExperiencesWallsLightingSignageProduct placementFloorsSurface space Music

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Location Decision

Central business districtsRegional shopping centersCommunity shopping centersShopping stripsLocation within a larger store

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Keep shoppers in the storeHonor the transition zoneDon’t make them huntMake merchandise available to the reach and touchNote that men do not ask questionsRemember women need spaceMake checkout easy

Tips for Increasing Salesin Retail Space

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Indicators of Sales Effectiveness

Number of people passing byPercent who enter storePercent who buyAverage amount spent per sale

Retail Category Management

Define the category

Figure out its role

Set goals

Choose the audience

Implement the plan

Figure out tactics

Assess performance

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Retailer Services Mix

Prepurchase services

Postpurchase services

Ancillary services

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Private labels are everywhereConsumer accepts private labelsPrivate-label buyers come from all socioeconomic strataPrivate labels are not a recessionary phenomenonConsumer loyalty shifts from manufacturers to retailers

Private Label Brands

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TransportationFinancingRisk bearingMarket informationManagement services and counseling

Wholesaling Functions

Selling and promotingBuying and assortment buildingBulk breakingWarehousing

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Major Wholesaler Types

MerchantFull-serviceLimited-serviceBrokers and agentsManufacturersSpecialized

Market LogisticsSupply Chain Management

Supply chain management starts before physical distribution and means strategically

procuring the right inputs (raw materials, components and capital equipment);

converting them efficiently into finished products; and dispatching

them to the final destinations.

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Market Logistics PlanningSTEP 1: Deciding on the company’s value

proposition to its customersSTEP 2: Deciding on the best channel design

and network strategySTEP 3: Developing operational excellenceSTEP 4: Implementing the solution

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What are Integrated Logistics Systems?

An integrated logistics system (ILS) includes materials management, material

flow systems, and physical distribution, aided by information technology.

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Market Logistics

Sales forecastingDistribution schedulingProduction plansFinished-goods inventory decisionsPackaging

In-plant warehousingShipping-room processingOutbound transportationField warehousingCustomer delivery and servicing

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Market Logistics Decisions

How should orders be handled?Where should stock be located?How much stock should be held?How should goods be shipped?

Determining Optimal Order Quantity

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Transportation Factors

SpeedFrequencyDependabilityCapabilityAvailabilityTraceabilityCost