Chapter 16: Managing Retailing, Wholesaling, and Logistics

1. What major types of marketing intermediaries occupy this sector?

Retailers

Retailing includes all the activities involved in selling goods or services directly to final consumers for
personal, nonbusiness use.

Major Retailer Types

• Specialty store
• Department store
• Supermarket
• Convenience store: Small store in residential area
• Discount store: The Loot
• Off-price retailer: Damaged goods etc sold at less than retail, factory outlets
• Superstore: supermarket with services (laundry, shoe repair)
• Catalog showroom: Goods sold by catalog

Levels of Retail Service

 Self-service
 Self-selection: Customers find their own goods but can ask for assistance
 Limited service: These retailers carry more goods and services like credit and merchandise
return privileges. Customers need more info and assistance.
 Full service

Nonstore Retailing

 Direct selling: Goods displayed in stores

 Direct marketing: telemarketing and Internet selling Eg: Indiatimes
 Automatic vending: ATMs, beverages
 Buying service: Storeless retailer serving a specific clientele, usually employees of a large
organization who are entitled to buy from a list of retailers that have agreed to give
discounts in return for membership.

Corporate Retailing: corporate chain stores like Shopper’s stop, retailer’s cooperative like National
Egg Coordination Committee, consumer’s cooperative like Super Bazaar and franchise organizations
like McDonalds.

Tips for Increasing Sales in Retail Space

 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 Effectiveness

 Number of people passing by

 % who enter store
 % of those who buy
 Average amount spent per sale

Franchises

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

Private Label Brands

A private label brand is a brand that retailers and wholesalers develop. Generics are unbranded,
plainly packaged, less expensive versions of common products.

• Private labels are ubiquitous

• Consumers accepts private labels
• Private-label buyers come from all socioeconomic strata
• Private labels are not a recessionary phenomenon
• Consumer loyalty shifts from manufacturers to retailers

Major Wholesaler Types

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

 Merchant
 Full-service
 Limited-service
 Brokers and agents
 Manufacturers
 Specialized
Wholesaling Functions

• Selling and promoting: Wholesalers’ sales forces help manufacturers reach many small
business customers at a relatively low cost.
• Buying and assortment building: Wholesalers are able to select items and build the
assortments their customers need.
• Bulk breaking: Wholesalers buy large carload lots and break the bulk into smaller units,
reducing costs for customers
• Warehousing: Hold inventories, reducing inventory costs and risks to suppliers and
customers
• Transportation: Quicker delivery as they are closer to buyers
• Financing: Wholesalers finance customers by granting credit and finance suppliers by
ordering early and paying bills on time
• Risk bearing: Absorb some risk by bearing the cost of theft, damage, spoilage and
obsolescence
• Market information: Wholesalers supply info to suppliers and customers regarding
competitor activities
• Management services and counselling: Wholesalers often help retailers improve their
operations by training sales clerks, helping with store layouts and displays and setting up
accounting and inventory control systems.

Logistics

Market logistics includes planning the infrastructure to meet demand, then implementing and
controlling the physical flows of materials and final goods from points of origin to points of use, to
meet customer requirements at a profit.

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

Functions of market logistics

• 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

2. What marketing decisions do these marketing intermediaries make?

Retailers’ Marketing Decisions

 Target market
 Product assortment: Breadth (product categories) and depth (items in each category)
 Procurement: Retailer must establish merchandise sources, policies and practices
 Prices
 Services: Prepurchase services (accepting telephone and mail orders, fitting rooms),
Postpurchase services (shipping and delivery, gift wrapping), Ancillary services (parking, rest
rooms)
 Store atmosphere: Walls, Lighting, Signage (big pictures of healthy food to suggest meal
ideas for time starved shoppers), Product placement, Floors, Surface space, Music
 Store activities
 Communications: place ads, issue money saving coupons
 Locations: Central business districts, Regional shopping centers, Community shopping
centers, Shopping strips, Location within a larger store

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

Market Logistics Decisions

• How should orders be handled?

• Where should stock be located?
• How much stock should be held?
• How should goods be shipped?

3. What are the major trends with marketing intermediaries?

Changes in the Retail Environment

• New retail forms and combinations: Some supermarkets include bank branches. Gas
stations include food stores. Combination retailers, Pop-ups (limited time only stores),
Showcase stores (vendors take care of stock, staff and even selling space, and pay a
percentage of sales to the store owner)
• Growth of intertype competition
• Competition between store-based and non-store-based retailing: consumers receive sales
offers through direct mail, tv channels, internet, telephone
• Growth of giant retailers
• Decline of middle market retailers: Growth seems to be centered at the top and the
bottom. Eg: Malls and local stores. Departmental stores less popular now
 • Growing investment in technology
• Global profile of major retailers: Benetton, Wal-Mart

Trends in wholesaling

 Wholesalers are facing pressures from manufacturers who say they don’t promote their
products enough, over charge, act like order takers, don’t carry enough inventory, don’t give
the manufacturer up to date info and don’t attract high calibre managers.
 One major drive by wholesalers has been to increase asset productivity by managing
inventories and receivables better.
 They’re also reducing operating costs by investing in more advanced material handling
technology, information systems and the Internet.
 Finally, they’re improving their strategic decisions about target markets, product assortment
and services, price, communication and distribution.