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Chapter 13

Retailing and Wholesaling

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What is Retailing?

Includes all the activities Involved in Selling Goods or Services Directly to Final Consumers for Their Personal, Nonbusiness Use.

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RetailingRetailing can be done in stores (store retailing) or out of a store (nonstore retailing) such as:

Direct mail, Catalogs, Telephone, Home shopping shows, Internet.

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Amount of Service

Self-Service, Limited-Service andFull-Service Retailer

Amount of Service

Self-Service, Limited-Service andFull-Service Retailer

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

ContractualOwnership Organization

Classification of Retailing

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Self-Service Self-Service RetailerRetailer

Provide Few or No Services to Shoppers

i.e. Best Buy

Limited-ServiceLimited-ServiceRetailersRetailers

Provide Only a Limited Number of Services

to Shoppers i.e. SearsFull-ServiceFull-Service

RetailersRetailers

Retailers that Provide a Full Range of Services

to Shoppersi.e. Neiman Marcus

Classification of Retailing:Amount of Service

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Specialty Stores

Department Stores

Supermarkets

Convenience Stores

Superstores

Discount Stores

Narrow Product Line, Deep Assortment i.e. The Limited or

Athlete’s FootWide Variety of Product Lines i.e. Clothing, Home Furnishings, Saks Fifth

AvenueWide Variety of Food, Laundry, & Household Products i.e. KrogerLimited Line of High-Turnover

Convenience Goods i.e. 7-ElevenLarge Assortment of Routinely

Purchased Food & Nonfood Products i.e. Toys R Us

Standard Merchandise at Lower Pricesi.e. Wal-Mart

Off-Price RetailersChanging Collection of Higher-Quality

Goods at a Reduced Price i.e. T.J. Maxx

Warehouse ClubsLimited Selection of Brand-Name

Grocery Items, Appliances, Etc. i.e. Sam’s Club

Classification of Retailing:Product Line (Tab. 13.1)

Store Description

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Low Prices and Offer Lower-Quality Goods and Customer Service

Low Prices and Offer Lower-Quality Goods and Customer Service

Discount Stores

Discount Stores

“Off-Priced” Retailers

“Off-Priced” Retailers

CatalogShowrooms

CatalogShowrooms

Higher Prices and Offer Higher-Quality Goods and Customer Service

Higher Prices and Offer Higher-Quality Goods and Customer Service

Regular Prices and Offer Normal-Quality Goods and Customer Service

Regular Prices and Offer Normal-Quality Goods and Customer Service

Classification of Retailing:Relative Prices

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Voluntary Chain

Franchise Organizations

RetailerCooperatives

Merchandising Conglomerates

Classification of Retailing:Retail Organization

Corporate Chain

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Retailer Marketing Decisions (Fig. 13.1)

Target Market and Positioning Decision

Target has positi oned itself as an “upscale discounte r,” and is jokingly referred to by a Fre nc h-sounding nick name , Tar-zhay.

Wh at posi tion has e ach of th ese Gap-owne d companies tak en:

•Gap?•Banana R epubl ic?•Old Navy?

Click or press spacebar to return.

Wh y do people like it?

RetailerStrategy

Target Market

Retail StorePositioning

RetailerStrategy

Target Market

Retail StorePositioning

RetailerMarketing Mix

Product and service assortment

Prices

Promotion

Place (location)

RetailerMarketing Mix

Product and service assortment

Prices

Promotion

Place (location)

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Product Assortment and Services Decisions

Product Assortment• Width and Depth of Assortment• Quality of Products• Product Differentiation StrategiesServices Mix

Key Tool of Nonprice Competition

for Setting One Store Apart From

AnotherStore’s Atmosphere• Physical Layout• “Feel” That Suits the Target Market and Moves Customers to Buy

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Price Decisions

Target Market,

Product & Service

Assortment,Competition

Place Decisions

Shopping Centers, Central

Business Districts, or

Power Centers, or Online Shopping

Retailer’s Price, Promotion, and Place Decisions

Promotion Decisions

Using Advertising,

Personal Selling, Sales Promotion,

Public Relations, &

Direct Marketing to

Reach Customers

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New Retail Forms and Shortening Retail LifecycleNew Retail Forms and Shortening Retail Lifecycle

Growth of Nonstore RetailingGrowth of Nonstore Retailing

Increasing Intertype CompetitionIncreasing Intertype Competition

Growing Importance of Retail TechnologyGrowing Importance of Retail Technology

Global Expansion of Major RetailersGlobal Expansion of Major Retailers

Retail Stores as “Communities” or “Hangouts”Retail Stores as “Communities” or “Hangouts”

Rise of MegaretailerRise of Megaretailer

The Future of Retailing

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1 = Discount2 = Superstore3 = Warehouse Club4 = Combination Store

1 = Discount2 = Superstore3 = Warehouse Club4 = Combination Store

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High MarginHigh PriceHigh Status

Low MarginLow PriceLow Status

The Wheel of Retailing

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Discussion ConnectionsOnline retailers provide an alternative to shopping the old fashioned way.Discuss the differences in shopping for books and music at www.Amazon.com vs. Barnes & Noble Booksellers.Discuss the differences in shopping for groceries at www.peapod.com vs. your local grocery store.Which do you prefer and why?

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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.Wholesalers buy mostly from producers and sell mostly to: Retailers, Industrial consumers, and Other wholesalers.

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WholesalerFunctions

ManagementServices & Advice

ManagementServices & Advice

Selling andPromoting

Selling andPromoting

MarketInformation

MarketInformation

Buying andAssortment Building

Buying andAssortment Building

Risk BearingRisk Bearing Bulk BreakingBulk Breaking

TransportationTransportation

FinancingFinancing WarehousingWarehousing

Wholesalers are Often Better at Performing One or More of the Following Channel Functions:

Why are Wholesalers Used?

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Types of WholesalersMerchant Wholesaler

Independently Owned Business that Takes Title to

the Merchandise it Handles.

Brokers/ AgentsThey Don’t Take Title

to the Goods, and TheyPerform Only a Few

Functions.

Manufacturers’ Sales Branches and

OfficesWholesaling by Sellers or

Buyers Themselves Rather Than Through

Independent Wholesalers.

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Wholesaler Marketing Decisions (Fig. 13.2)

WholesalerStrategy

Target Market

ServicePositioning

WholesalerStrategy

Target Market

ServicePositioning

WholesalerMarketing Mix

Product and service assortment

Prices

Promotion

Place (location)

WholesalerMarketing Mix

Product and service assortment

Prices

Promotion

Place (location)

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Consolidation within the Industry is Reducing # of WholsalersConsolidation within the Industry is Reducing # of Wholsalers

Distinction Between Large Retailers and Wholesalers BlursDistinction Between Large Retailers and Wholesalers Blurs

Wholesalers Will Continue to Increase the Services ProvidedWholesalers Will Continue to Increase the Services Provided

Wholesalers Are Beginning to Go GlobalWholesalers Are Beginning to Go Global

Trends in Wholesaling

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Review of Concept Connections

Explain the roles of retailers and wholesalers in the distribution channel.Describe the major types of retailers and give examples of each.Identify the major types of wholesalers and give examples of each.Explain the marketing decisions facing retailers and wholesalers.