Lecture Principles of Marketing - Chapter 11: Retailing and wholesaling

Chapter Eleven
Retailing and Wholesaling


Roadmap: Previewing the Concepts
1. Explain the roles of retailers and
wholesalers in the distribution channel.
2. Describe the major types of retailers and
give examples of each.
3. Identify the major types of wholesalers and
give examples of each.
4. Explain the marketing decisions facing
retailers and wholesalers.

Copyright 2007, Prentice Hall, Inc.

11-2


Case Study
Whole Foods Market – Finding Its Niche
Whole Foods Market

Marketing Efforts

 Has 170 stores worldwide
with $4 billion in sales vs.
5000 stores and sales of
$285 billion for Wal-Mart.
 Offers organic, natural,
and gourmet foods.

 Positions itself AWAY
from Wal-Mart:
“Whole Foods, Whole
People, Whole Planet.”

 Web site reinforces the
company’s positioning.
 Caters to health conscious,
affluent, liberal, educated
consumer base.
 Both in-store and online
shopping is a customer
experience.
 Cares about employees,
customers, & community.


What Is Retailing?
 Retailing:
– includes all the activities involved in
selling products or services directly to
final consumers for their personal, nonbusiness use.

 Most retailing is done by retailers, but
nonstore retailing has recently grown
by leaps and bounds.


Types of Retailers
 Retailers are classified based on:

– Amount of service they offer
– Breadth and depth of product lines
– Relative prices charged
– How they are organized


Amount of Service
 Self-Service Retailers:
– Serve customers who are willing to perform their
own “locate-compare-select” process to save
money.

 Limited-Service Retailers:
– Provide more sales assistance because they carry
more shopping goods about which customers
need information.

 Full-Service Retailers:
– Usually carry more specialty goods for which
customers like to be “waited on.”


Major Store Retailer Types
 Specialty stores
 Department stores
 Supermarkets
– Category Killers







Convenience stores
Discount stores
Off-price retailers
Superstores


Relative Prices Classification
 Discount stores
 Off-price retailers
– Independent off-price retailers
– Factory outlets
• Factory outlet malls
• Value-retail centers
– Warehouse club


Organizational Classification






Corporate chain stores
Voluntary chain
Retailer cooperative
Franchise

Merchandising conglomerates


Retailer Marketing Decisions
 Retailer Strategy:
– Target market
– Retail store positioning
• Until retailers define and profile their
markets, retailers cannot make
meaningful decisions related to the
retailer marketing mix.


Retailer Marketing Decisions
 Retailer Marketing Mix:
– Product assortment and services
– Price
– Promotion
– Place (location)


Assortment and Service
Decisions
 Product assortment
– Should differentiate the retailer while
matching target shoppers’ expectations

 Services mix
 Store atmosphere
– Physical layout can help/hinder shopping

– Experiential retailing helps sell goods
– Unusual, exciting shopping environments
are becoming more common


Price and Promotion
Decisions
 Price policy must fit its target market
and positioning, product and service
assortment, and competition.
 Can use any or all of the promotion
tools—advertising, personal selling,
sales promotion, public relations, and
direct marketing—to reach consumers.


Place Decisions
 Retailers can locate in central business
districts, various types of shopping
centers, strip malls, or power centers.
 Location is key to success.


The Future of Retailing
1.

2.
3.
4.

New Retail Forms
and Shortening
Retail Life Cycles
Growth of
Nonstore Retailing
Retail
Convergence
Rise of the
Megaretailers

5. Growing
Importance of
Retail Technology
6. Global Expansion
of Major Retailers
7. Retail Stores as
“Communities” or
“Hangouts”


Wholesaling
 Wholesaling:
– includes all activities involved in selling
goods and services to those buying for
resale or business use.

 Wholesalers add value for producers
by performing one or more channel
functions.

Functions Provided by
Wholesalers
 Selling and
promoting
 Buying and
assortment
building
 Bulk-breaking
 Warehousing
 Transportation

 Financing
 Risk bearing
 Market
information
 Management
services and
advice


Types of Wholesalers
 Merchant Wholesalers
– Largest group of wholesalers
– Account for 50% of wholesaling
– Two broad categories:
• Full-service wholesalers
• Limited-service wholesalers

Types of Wholesalers
 Brokers and Agents
– Do not take title to goods
– Perform fewer functions
– Brokers bring buyers and sellers together
– Agents represent buyers on more
permanent basis
– Manufacturers’ agents are most common
type of agent wholesaler


Types of Wholesalers
 Manufacturers’ Sales Branches and
Offices
– Wholesaling by sellers or buyers
themselves rather than through
independent wholesalers.


Wholesaler Marketing
Decisions
 Wholesaler Strategy:
– Target market
– Service positioning

 Wholesaler Marketing Mix:
– Product assortment and services
– Price
– Promotion
– Place (location)

Trends in Wholesaling
 Fierce resistance to price increases.
 Winnowing out of suppliers who are
not adding value based on cost and
quality.
 Distinction between large retailers and
wholesalers is blurry.
 Will continue to increase the services
provided to retailers.
 Wholesalers are now going global.


Rest Stop: Reviewing the Concepts
1. Explain the roles of retailers and
wholesalers in the distribution channel.
2. Describe the major types of retailers and
give examples of each.
3. Identify the major types of wholesalers and
give examples of each.
4. Explain the marketing decisions facing
retailers and wholesalers.

Copyright 2007, Prentice Hall, Inc.

11-23