Retailing and Wholesaling

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• Chapter 13
• Retailing and Wholesaling

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Learning Goals

• Understand the roles of retailers and wholesalers
  in the marketing channel.
• Know the major types of retailers.
• Know the major types of wholesalers.
• Understand the marketing decisions facing
  retailers and wholesalers.

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Case StudyWal-Mart

• Current annual sales approximately 260 billion
• Value proposition is Always Low Prices, Always!
• Wal-Mart executives spend at least two days a
  week visiting stores to stay connected with
  customers
• The first to call employees associates to
  denote the partnership

• Wal-Mart maintains low prices by keeping a sharp
  eye on costs including tough buying practices
• Technological advances in distribution and
  communications systems help efficiency and lowers
  costs.
• Lower advertising as a percentage of sales helps
  keep costs low

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Learning Goals

• Understand the roles of retailers and wholesalers
  in the marketing channel.
• Know the major types of retailers.
• Know the major types of wholesalers.
• Understand the marketing decisions facing
  retailers and wholesalers.

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Definitions

• Retailing
• All activities involved in selling goods or
  services directly to final consumers for their
  personal, nonbusiness use.
• Retailer
• Business whose sales come primarily from
  retailing.

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Retailer The Gap

• Retailers will often use celebrity spokespeople
  to endorse their brand

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Marketing in Action
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Definitions

• Wholesaling
• All activities involved in selling goods and
  services to those buying for resale or business
  use.
• Wholesaler
• A firm engaged primarily in wholesaling activity.

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Learning Goals

• Understand the roles of retailers and wholesalers
  in the marketing channel.
• Know the major types of retailers.
• Know the major types of wholesalers.
• Understand the marketing decisions facing
  retailers and wholesalers.

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Retailing
Types of Retailers

• Specialty Stores
• Department Stores
• Supermarkets

• Discount Stores
• Convenience Stores
• Off-Price Retailers

• Superstores

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Retailing

• Self-service retailers
• Customers are willing to self-serve to save money
• Convenience stores and fast moving shopping goods
• Limited-service retailers
• Most department stores
• Full-service retailers
• Salespeople assist customers in every aspect of
  shopping experience
• High-end department stores and specialty stores

Retailers Are Classified By

• Amount of service
• Product lines
• Relative prices
• Organizational approach

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Discussion QuestionRetailer Level of Service

• Self service checkout scanners are growing in
  use.
• What advantages for retailer? Consumer?
• What are the disadvantages?

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Marketing in Action
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Retailing

• Specialty stores
• Narrow product lines with deep assortments
• Department stores
• Wide variety of product lines
• Supermarkets
• Convenience stores
• Limited line
• Superstores
• Food, nonfood, and services
• Category killers
• Giant specialty stores

Retailers Are Classified By

• Amount of service
• Product lines
• Relative prices
• Organizational approach

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Online Grocers Why are they growing so slowly?
Click on screenshot for website
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Marketing in Action
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Retailing

• Discount stores
• Low margins are offset by high volume
• Off-price retailers
• Independent off-price retailers
• TJ Maxx, Marshalls
• Factory outlets
• Levi Strauss, Reebok
• Warehouse clubs
• Sams Club, Costco

Retailers Are Classified By

• Amount of service
• Product lines
• Relative prices
• Organizational approach

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Discount StoresTarget Corporation

• First store opened in 1902
• Currently has 1,147 stores in 47 states.
• Builds brand name to heighten barriers to entry
  in the market.
• Began a collaboration with Sony in 2002 for Sony
  to design products specifically for Target.
• Successful in building defensible niche with
  middle and upper-end customers with low price but
  high style.

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Marketing in Action
Source Datamonitor
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Target is low price but high style
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Marketing in Action
Source Business Week
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Retailing

• Corporate chain stores
• Commonly owned / controlled
• Voluntary chains
• Wholesaler-sponsored groups of independent
  retailers
• Retailer cooperatives
• Groups of independent retailers who buy in bulk
• Franchise organizations
• Based on something unique
• Merchandising conglomerates
• Diversified retailing lines and forms under
  central ownership

Retailers Are Classified By

• Amount of service
• Product lines
• Relative prices
• Organizational approach

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• The UPS Store is an example of a popular
  franchise. See more franchises by clicking on
  image.

Marketing in Action
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Click on screenshot for website with franchises
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Classifying Retailers

• How would you categorize Best Buy in terms of
• Amount of service
• Product lines
• Relative prices
• Organizational approach

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Marketing in Action
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Learning Goals

• Understand the roles of retailers and wholesalers
  in the marketing channel.
• Know the major types of retailers.
• Know the major types of wholesalers.
• Understand the marketing decisions facing
  retailers and wholesalers.

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Wholesaling

• Wholesalers add value by performing the following
  functions
• Selling and promoting
• Buying and assortment building
• Bulk-breaking
• Warehousing
• Transportation
• Financing
• Risk bearing
• Market information
• Management services and advice

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How might the National Beer Wholesalers
Association add value to retailers?
Click on screenshot for website
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Marketing in Action
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Wholesaling
Types of Wholesalers

• Full-service wholesalers
• Wholesale merchants
• Industrial distributors
• Limited-service wholesalers
• Cash-and-carry wholesalers
• Truck wholesalers (jobbers)
• Drop shippers
• Rack jobbers
• Producers cooperatives
• Mail-order wholesalers

• Merchant Wholesalers
• Brokers and Agents
• Manufacturers and retailers branches and
  offices

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Wholesaling
Types of Wholesalers

• Brokers and agents do not take title of the
  goods.
• Brokers
• Bring buyers and sellers together and assist in
  negotiation
• Agents
• Manufacturers agents
• Selling agents
• Purchasing agents
• Commission merchants

• Merchant Wholesalers
• Brokers and Agents
• Manufacturers and retailers branches and
  offices

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Export trade brokers help manufacturers with
overseas distribution and marketing
Click on screenshot for website
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Marketing in Action
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Wholesaling
Types of Wholesalers

• Sales branches and offices
• Branches carry inventory lumber, auto equipment,
  parts
• Offices do not carry inventory dry goods
• Purchasing officers
• Perform roles similar to brokers and agents
  however, these individuals are employees of the
  organization

• Merchant Wholesalers
• Brokers and Agents
• Manufacturers and retailers branches and
  offices

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Learning Goals

• Understand the roles of retailers and wholesalers
  in the marketing channel.
• Know the major types of retailers.
• Know the major types of wholesalers.
• Understand the marketing decisions facing
  retailers and wholesalers.

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Retailer Marketing DecisionsFigure 13.1
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A retailer like Brooks Brothers chooses to locate
in very high-end shopping districts.
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Marketing in Action
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Retailing

• The Future of Retailing
• New retail forms and shortening retail life
  cycles
• Wheel-of-retailing concept
• Growth of nonstore retailing
• Mail-order, television, phone, online shopping
• Retail convergence
• The merging of consumers, products, prices, and
  retailers

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QVC WebsiteShop online while you watch the show
Click on screenshot for website
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Marketing in Action
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Retailing

• The Future of Retailing
• Rise of mega retailers
• Growing importance of retail technology
• Global expansion of major retailers
• Retail stores as Communities or Hangouts

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• Mall of America is more than just stores. This
  major tourist attraction includes stores, events
  and a 30-ride indoor theme park.

Marketing in Action
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Click on screenshot for website with information
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Wholesaler Marketing DecisionsFigure 13.2
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Wholesaling

• Trends in Wholesaling
• Price competition is still intense
• Successful wholesalers must add value by
  increasing efficiency and effectiveness
• The distinction between large retailers and
  wholesalers continues to blur
• More services will be provided to retailers
• Many wholesalers are going global

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Learning Goals

• Understand the roles of retailers and wholesalers
  in the marketing channel.
• Know the major types of retailers.
• Know the major types of wholesalers.
• Understand the marketing decisions facing
  retailers and wholesalers.