chapter 14 retailers, wholesalers, and direct marketers

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter 14 Retailers, Wholesalers, and

Direct Marketers


Objectives1. Explain the wheel of retailing.2. Explain how retailers select target markets.3. Show how the elements of the marketing mix apply to

retailing strategy.4. Explain the concepts of retail convergence and

scrambled merchandising.5. Identify the functions performed by wholesaling

intermediaries.6. Identify the major types of independent wholesaling

intermediaries and the situations appropriate for each.7. Compare the basic types of direct marketing and

nonstore retailing.8. Explain ways in which the Internet has altered the

wholesaling, retailing, and direct marketing environments.


Retailing Describes the activities involved in selling

merchandise to ultimate consumers. Represent the distribution channel to most consumers Determine

– locations,– store hours,– quality and quantity of salespeople,– store layouts,– merchandise selections and– return policies.


Wheel of Retailing

• Explains the patterns of change in retailing.• A new type of retailer gains a competitive

foothold by offering customers lower prices.• Maintains profits by reducing or eliminating

services.• Once established the innovator adds more

services and prices gradually rise.


High-end strategy• High prices• Excellent facilities and services

• Upscale consumers

Low-end strategy• Low prices• Limited facilities and services

• Price-sensitive consumers Medium strategy

• Moderate prices• Improved facilities• Broader base of value- and service-conscious consumers

Wheel of Retailing


Retailing StrategyControllable variables• Selecting a target market• Developing a retailing mix

– Retailing mix specifies:• Merchandise

strategy• Customer service

standards• Pricing guidelines• Target market

analysis• Promotion goals• Location/distribution

decisions• Store atmosphere

Retailing Strategy

Uncontrollable variables

• Consumers• Competition• Technology• Economic

conditions• Seasonality• Legal

restrictions


Markup

• The amount that a retailer adds to a product’s cost to set the final selling price.

• The amount of the markup typically results from:1. The services performed by the retailer.2. The inventory turnover rate.

• Typically state markups as percentages.• Marketers determine markups based partly on

their judgments.


Location Decisions

Type of merchandise

Financial resources

Target market

Site availability


Planned Shopping Center

• A group of retail stores designed, coordinated, and marketed as a unit to shoppers in a geographical trade area.

• Provide a single convenient location for shoppers.

• Free parking.• Facilitate shopping by maintaining uniform

hours of operation.


Four Main Types of Planned Shopping Centers

1.Neighborhood Shopping Center• Consists of a supermarket and group of smaller

stores.• Provides convenient shopping for 5,000 to 50,000

shoppers who live within a few minutes’ commute.• Contains 5 to 15 stores.• Product mix is usually confined to convenient

goods and some shopping goods.



2.Community Shopping Center• Serves 20,000 to 100,000 people in a trade area

extending a few miles from its location. • Contains anywhere from 10 to 30 retail stores.• A Branch of a local department store or some other

large store as the primary tenant.• Encompasses more stores featuring shopping goods.• Some professional office.• A branch bank.• Maybe a movie theater or supermarket.• Tenants often share some promotion costs.



3. Regional Shopping Center• At least 400,000 square feet of shopping

space.• Emphasizes one or more major department

stores.• Supplemented by as many as 200 smaller

stores.• Needs a location within 30 minutes’ driving

time of at least 250,000 people.


West Edmonton Mall

• Promoted as the world’s largest mall.

• Over 800 stores.• There are 110 eating

establishments.• Seven world class attractions.

http://www.westedmall.com/home/index.asp



4. Power Center• Located near a regional or superregional mall.• Brings together several huge specialty stores.• Rising in popularity during the 1990s.

5. Lifestyle Center• Offers a combination of shopping, entertainment

and restaurant.• At least 300,000 square feet.• Offer the intimacy and easy access of

neighborhood retailing with a fashionable cachet.• No big anchor stores.


Mall of America

Not just a mall but a destination.– Has over 520 stores.– Employs more than 12,000 people.– Has between 35 and 42 million visitors per

year.– Mall of America is one of the most visited

destinations in the United States, attracting more visitors annually than Disney World, Graceland and the Grand Canyon combined.

Source: Mall of America web site


Retailers by Form of Ownership

• Chain Stores– Chain stores are groups of retail outlets that

operate under central ownership and management and handle the same product lines.

– Major advantage: economies of scale.– May advertise in a variety of media.

• Independent Retailers– Account for about 43 percent of all retail sales.– Traditional advantage of independent stores is

friendly, personalized service.


Shopping by Store Type

• Convenience retailers focus their marketing appeals on accessible locations, long store hours, rapid checkout service, and adequate parking facilities.

• Shopping stores include furniture stores, appliance retailers, clothing outlets, and sporting goods stores.– Consumers usually compare prices.

• Specialty retailers combine carefully defined product lines, services, and reputations.


Classification by Services

Consists of three retailer types:

1. Self-service2. Self-selection3. Full-service retailers

http://www.kioskmarketplace.com/


Self Service … Look For It ComingTo A Store Near You! “SYDNEY, Australia --

NCR Corp. will introduce its FastLane self-checkout lanes to consumers in Australia early next year. Two Big W stores in New South Wales will install eight of the units.”

Source: KioskMarketplace.com

http://www.kioskmarketplace.com/cgi-bin/redirect.pl?url=http://www.ncr.com

http://www.kioskmarketplace.com/cgi-bin/redirect.pl?url=http://www.bigw.com.au/

http://www.kioskmarketplace.com/


Classification by Product Lines

1. Specialty store typically handles only part of a single product.

• Stocks in considerable depth or variety. • Typically carry convenience and shopping goods.

2. Limited-line retailers• Customers find a large assortment of products

within one product line or a few related lines. • Typically develops in areas with a large enough

population to sufficiently support it.3. General Merchandise retailer

• Carry a wide variety of product lines that are all stocked in some depth.


Convergence and Scrambled Merchandising• Retail convergence, whereby similar merchandise

is available from multiple retail outlets distinguished by price more than any other factor.

• Scrambled merchandising - in which a retailer combines dissimilar product lines in an attempt to boost sales volume.


Independent Wholesaling

• Two categories:– Merchant wholesalers– Agents and brokers

• Two types of wholesalers:– Full function merchant wholesalers– Limited function merchant

wholesalers

chapter 14 retailers, wholesalers, and direct marketers

Documents

division of thomson

nonstore retailing

retailing mixretailing

direct marketers copyright

marketing mix

direct marketing environments

new type of retailer

store layouts