MARKETING MANAGEMENT12th edition

Kotler Keller

16 Managing Retailing,

Wholesaling, and Logistics

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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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Retailing

Includes all the activities involved inselling goods or services directlyto final consumers for personal,

nonbusiness use.

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Table 16.1 Major Retailer Types

Specialty store Department store Supermarket Convenience store

Discount store Off-price retailer Superstore Catalog showroom

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Levels of Retail Service

Self-service Self-selection Limited service Full service

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Nonstore Retailing

Direct selling Direct marketing Automatic vending Buying service

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Major Types of Corporate Retail Organizations Corporate chain store Voluntary chain Retailer cooperative Consumer cooperative Franchise organization Merchandising conglomerate

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Retailers’ Marketing Decisions

Target market Product assortment Service/store atmosphere Price Communication Location

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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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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

Number of people passing by location Percentage who enter store Percentage of those who enter who also

buy Average amount spent per sale

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Trends in Retailing

New retail forms and combinations Growth of intertype competition Competition between store-based and non-

store-based retailing Growth of giant retailers Decline of middle market retailers Growing investment in technology Global presence of major retailers

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Wholesaling Functions

Selling and promoting Buying and

assortment building Bulk breaking Warehousing

Transportation Financing Risk bearing Market information Management services

and counseling

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Major Wholesaler Types

Merchant Full service Limited service

Brokers and agents Manufacturers Specialized

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Wholesalers’ Marketing Decisions

Target market Product assortment Price Promotion Place

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Market Logistics Planning

Deciding on the company’s value proposition to its customers

Deciding on the best channel design and network strategy

Developing operational excellence Implementing the solution

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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?

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Transportation Factors

Speed Frequency Dependability Capability Availability Traceability Cost

Retailing includes all the activities involved in selling goods or services directly to final consumers for personal, non-business use

A retailer or Retail store: is any business enterprise whose sales volume comes primarily from retailing

Retail Life-cycle:Like products Retail-store pass through stages of growth and decline

What is Retailing?What is Retailing?

Major Retailer TypesMajor Retailer Types

Specialty store

Department store

Supermarket

Convenience store

Discount store

Off-price retailer

Superstore

Catalog showroom

1. Self–Service: customers carry out their own- locate, compare, and select process to save money

2. Self-Selection: customers find their own goods, although they can ask for assistance

3. Limited services: these retailers carry more shopping goods and services such as credit and merchandise return privilege. Customer need more assistance and information

4. Full service: salespeople are ready to assist in every phase of the - locate, compare, and select process

Retailers Level of ServiceRetailers Level of Service

Non-store RetailingNon-store Retailing• Direct selling: companies selling door-to-door or at

home sales parties, it can be:o One-to-oneo One-to-manyo Multilevel marketing network

• Direct marketing: include telemarketing, television direct –response marketing , and electronic shopping

Non-store RetailingNon-store Retailing

• Buying service: is a store-less retailer serving a specific clientele “usually employees of large organization“ who are entitled to buy from a list of retailers that have agreed to give discounts in return for member ship

• Automatic vending: vending machines are found in many places as: factories, offices, large retail store

Japan has the most vending machines

• Corporate chain store: two or more out lets owned and controlled, employing central buying merchandise and selling similar lines of merchandise

• Voluntary chain: a wholesaler- sponsored group of independent retailers engaged in bulk buying and common merchandising

Major Types of Corporate Major Types of Corporate Retail OrganizationsRetail Organizations

• Retailer cooperative: Independent retailers using a central buying organization efforts

• Consumer cooperative: a retail firm owned by its customers. Members contribute money to open their own store , vote on its polices, elect a group to manage it, and receive dividends

Major Types of Corporate Major Types of Corporate Retail OrganizationsRetail Organizations

• Franchise organization: contractual association between a franchisor and franchisees

• Merchandising conglomerate: a corporate that combines several diversified retailing in lines and forms under central ownership

Major Types of Corporate Major Types of Corporate Retail OrganizationsRetail Organizations

Franchising SystemFranchising System

A franchising system is a system of individual franchisees, a tightly knit group of enterprises whose systematic operations are planned, directed, and controlled by the operation’s franchisor.Characteristics of Franchises• The franchisor owns a trade or service mark and

licenses it to franchisees in return for royalty payments

• The franchisee pays for the right to be part of the system

• The franchisor provides its franchisees with a system for doing business

Changes in the Retail Changes in the Retail EnvironmentEnvironment

• New retail forms and combinations• Growth of intertype competition• Competition between store-based and non-

store-based retailing• Growth of giant retailers• Decline of middle market retailers• Growing investment in technology• Global profile of major retailers

Retailers’ Marketing DecisionsRetailers’ Marketing Decisions

• Target market

• Product assortment:o Must match target market expectationo Decide product assortment breadth and depth

• Procurement

• Prices:o Must be decided in relation to the target market, the

product assortment and the competition

Retailers’ Marketing DecisionsRetailers’ Marketing Decisions

• Services:o Pre-purchase services as advertising and accept telephone

and mail orders

o Post-purchase services as gift wrapping and shipping and delivery

o Ancillary services as parking, general information and rest room

• Store atmosphere as walls, lighting, Product placement, and floor

• Store activities

• Communications tools as ads, run special sales, and issue

money saving coupons

Retailers’ Marketing DecisionsRetailers’ Marketing Decisions

• Location decision:o Central business district “down town”o Regional shopping centerso Community shopping centerso Shopping strips “cluster of stores”o A location within a larger store

Retail Category ManagementRetail Category Management

Tips for Increasing SalesTips for Increasing Sales in Retail Space in Retail Space

• Attract and Keep shoppers in the store• Honor the transition zone• Don’t make them hunt• Make merchandise available to the reach

and touch• Note that men do not ask questions• Remember women need space• Make checkout easy

Indicators of Sales Indicators of Sales EffectivenessEffectiveness

• Number of people passing by• Percent who enter store• Percent who buy• Average amount spent per sale

Private Label BrandsPrivate Label Brands

A privatee- label brand( a reseller, store, house)

is a brand that retailers and wholesalers develop

Why do intermediaries bother to sponsor their own brands?

• They can be more profitable• Retailers develop exclusive store to differentiate

themselves from competitors

Ex: Canadian company LOBLAW which start as local store brand and then become global

Wholesaling Wholesaling

Wholesaling includes all the activities in selling goods or services to those who for resale or business use

Ex:

Wholesaling Functions Wholesaling Functions

Major Wholesaler TypesMajor Wholesaler Types

Market Logistics Market Logistics

Market logistic includes planning the infrastructure to meet demand, then implementing and controlling the physical flow of materials and goods from points of origin to points of use to meet customer requirements at profit

Market Logistics PlanningMarket Logistics Planning

• Deciding on the company’s value proposition to its customers

• Deciding on the best channel design and network strategy

• Developing operational excellence• Implementing the solution

What are What are Integrated Logistics Systems?Integrated Logistics Systems?

An integrated logistics system (ILS) includes materials management, material flow systems, and physical distribution, aided by information technology.

Market Logistics ActivitiesMarket Logistics Activities

• Sales forecasting• Distribution scheduling• Production plans• Finished-goods inventory

decisions• Packaging

• In-plant warehousing• Shipping-room

processing• Outbound

transportation• Field warehousing• Customer delivery and

servicing

Market Logistics DecisionsMarket Logistics Decisions

• How should orders be handled?(Order processing)

• Where should stock be located?(Warehousing)• How much stock should be held?(Inventory)• How should goods be shipped?

( Transportation)