Retailing and Wholesaling

Chapter 11
Page 362

LO1: Explain the role of retailers in the distribution channel and describe the major types of
retailers.
LO2: Discuss how retailers are using omni-channel retailing to meet the cross-channel
shopping behavior of today’s digitally connected consumers.
LO3: Describe the major retailer marketing decisions.
LO4: Discuss the major trends and developments in retailing.
LO5: Explain the major types of wholesalers and their marketing decisions.

Retailing:
LO1: Explain the role of retailers in the distribution channel and describe the major types of
retailers.
- Retailing:
- All the activities involved in selling goods or services directly to final consumers
for their personal, nonbusiness use.
- Retailer:
- A business whose sales come primarily from retailing.
Retailing: Connecting Brands with Consumers:
- Shopper Marketing:
- Focusing the entire marketing process on turning shoppers into buyers as they
move along toward the points of sale, whether during in-store, online or mobile
shopping.
The Shopping Retailing Model:
- Omni-Channel Retailing:
- Creating a seamless cross-channel buying experience that integrates in-store,
online, and mobile shopping.
Types of Store Retailers:
- Characterised by the following:
1. Amount of Service:
- Retailers may offer one of three serve levels:
1. Self-Service:
- serve customers who are willing to perform their own
locate-compare-select process to save time or money.
2. Limited Service:
- such as Home Depot or Best Buy, provide more sales assistance
because they carry more shopping goods about which customers
need information. Their increased operating costs result in higher
prices.
3. Full Service:
 - assist customers in every phase of the shopping process.
Full-service stores usually carry more specialty goods for which
customers need or want assistance or advice.
2. Product Line:
- Specialty Stores:
- A retail store carries a narrow product line with a deep assortment within
that line.
- Department Stores:
- A retail store that carries a wide variety of product lines, each operated as
a separate department managed by specialist buyers or merchandisers.
- Supermarkets:
- A large, low-cost,, low-margin, high-volume, self-service store that carries
a wide variety of grocery and household products.
- Convenience Stores:
- A small store, located near a residential area, that is open long hours
seven days a week and carries a limited line of high-turnover convenience
goods.
- Superstore:
- A store much larger than a regular supermarket that offers a large
assortment of routinely purchased food products, nonfood items, and
services.
- Category Killer:
- A giant specialty store that carries a very deep assortment of a particular
line.
- Service Retailer:
- A retailer product line is actually a service; examples include hotels,
airlines, banks, colleges, and many clothes.
3. Relative Prices:
-
Discount Stores:
- Discount Stores:
- A retail operation that sells standard merchandise at lower prices by
accepting lower margins and selling at higher volume.
Off-Price Retailers:
- Off-Price Retailers:
- A retailer that buys at less-than-regular wholesale prices and sells at less
than retail.
- Independent Off-Price Retailer:
- An off-price retail that is independently owned and operated or a division
of a larger retail corporation.
- Factory Outlet:
- An off-price retailing operation that is owned and operated by a
manufacturer and normally carries the manufacturer’s surplus,
discounted, or irregular goods.
 -Warehouse Clubs:
- An off-price retailer that sells a limited selection of brand name grocery
items, appliances, clothing, and other goods at deep discounts to
members who pay annual membership fees.
4. Organizational Approach:
- Corporate Chains:
- Two or more outlets that are commonly owned and controlled.
- Franchise:
- A contractual association between a manufacturer, wholesaler, or service
organization (a franchisor) and independent businesspeople )franchisees)
who buy the right to own and operate one or more units in the franchise
system.

Omni-Channel Retailing: Blending In-Store, online, Mobile, and social Media

Channels:
LO2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping
behavior of today’s digitally connected consumers.

Retailer Marketing Decisions:

LO3: Describe the major retailer marketing decisions.
- Major marketing decisions:
Segmentation, Targeting, Differentiation, and Positioning Decisions:
- By positioning itself away from McDonald’s and other large competitors, In-N-Out has
developed a cult-like following.
Product Assortment and Services Decisions:
- Retailers must decide on three major product variables: product assortment, services
mix, and store atmosphere.
Price Decision:
- everyday low pricing (EDLP)
- high-low pricing—charging higher prices on an everyday basis coupled with frequent
sales and other price promotions to increase store traffic, create a low-price image, or
attract customers who will buy other goods at full prices (Macy’s, JCPenney, for
example).
Promotion Decision:
-
Place Decision:
- A group of retail businesses built on a site that is planned, developed, owned, and
managed as a unit.

Retailing Trends and Developments:

LO4: Discuss the major trends and developments in retailing.
Tighter Consumer Spending:
- When reacting to economic shifts, retailers must be careful that their short-run actions
don’t damage their long-run images and positions.
New Retail Forms, Shortening Retail Life Cycles, and Retail Convergence:
- Pop-up shops
- Flash sales
The Rise of Megaretailers:
- With their size and buying power, these giant retailers can offer better merchandise
selections, good service, and strong price savings to consumers. As a result, they grow
even larger by squeezing out their smaller, weaker competitors.
Growing Importance of Retail Technology:
- Using artificial intelligence, they can tailor merchandise, promotions, recommendations,
and service to individual customer profiles.
- augmented (AR) and virtual reality (VR) to enhance the shopping experience.
Green Retailing:
- Green retailing yields both top- and bottom-line benefits. Sustainable practices lift a
retailer’s top line by attracting consumers looking to support environmentally friendly
sellers and products. They also help the bottom line by reducing costs.
Global Expansion of Major Retailers:
- Instead, when going global, retailers must understand and meet the needs of local
markets.

Wholesaling:
LO5: Explain the major types of wholesalers and their marketing decisions.
- Wholesaling:
- All the activities involved in selling goods and services to those buying for resale
of business use.
- Wholesaler:
- A firm engaged primarily in wholesaling activities.
- most wholesalers, it operates behind the scenes, selling mostly to other
businesses.
- Wholesalers add value by performing one or more of the following channel functions:
1. Selling and Promotion:
2. Buying and Assortment Building:
3. Bulk Breaking:
4. Warehousing:
5. Transportation:
6. Financing:
7. Risk Bearing:
8. Market Information:
9. Management Services and Advice:
Types of Wholesalers:
1. Merchant Wholesalers:
- Merchant Wholesalers:
- An independently owned wholesale business that takes title to the
merchandise it handles.
- Full-Service Wholesalers:
 - Provide a full line of services: carrying stock, maintaining a sales
force, offering credit, making deliveries, and providing
management assistance. Full-service wholesalers include
wholesale merchants and industrial distributors.
- Limited-Service Wholesalers:
- Cash-and-Carry Wholesalers:
- Truck Wholesalers:
- Drop Shippers:
- Rack Jobbers:
- Producers’ Cooperatives:
- Mail-Order or Web Wholesalers:
2. Brokers and Agents:
- Broker:
- A wholesaler who does not take title to goods and whose function is to
bring buyers and sellers together and assist in negotiation.
- Agent:
- A wholesaler who represents buyers or sellers on a relatively permanent
basis, performs only a few functions, and does not take title to goods.
- Brokers and agents differ from merchant wholesalers in two ways: They do not
take title to goods, and they perform only a few functions.
-
3. Manufacturers’ and Retailers’ Branches and Offices:
- Manufacturers’ and Retailers’ Branches and Offices:
- Wholesaling by selling or buyers themselves rather than through
independent wholesalers.
Wholesaler Marketing Decisions:
- heir marketing decisions include choices of segmentation and targeting, differentiation
and positioning, and the marketing mix—product and service assortments, price,
promotion, and distribution
1. Segmentation, Targeting, Differentiation, and Positioning Decisions:
-
2. Marketing Mix Decisions:
-
Trends in Wholesaling:
-
Quiz:
1. Which types of stores are characterized by specialty goods for which customers need
assistance and higher operating costs that are passed along to customers as higher prices?
- Full-service stores
2. Electronics Storage is a wholesaler that holds inventories, thereby reducing carrying costs
and risks for both suppliers and customers. Which channel function does Electronics Storage
primarily provide?
- Warehousing
3. Hamilton Wholesaling, an electronics wholesaling firm, provides many services to customers
including buying, storing, and transporting expensive and delicate electronics equipment.
Hamilton takes title of ownership to all goods that the firm handles. Hamilton is most likely
a(n) ________.
- Merchant wholesaler
4. Foot Locker has mastered online and mobile efforts that link seamlessly with store
operations, offering options such as "buy online, ship from store" and "buy online, reserve in
store" for pickup. This is an example of ________.
- Omni-channel retailing
5. Rotanna's, a leading fashion brand, sets up small temporary boutiques across numerous
locations during its year-end sale, promoting its outdated products at half the price. These
temporary boutiques are referred to as ________.
- Pop-up stores
6. ________ have filled the ultralow-price, high-volume gap by buying at less-than-regular
wholesale prices and charging consumers less than retail.
- Off-price retailers
7. A ________ is a small open-air mall with upscale stores, convenient locations, and nonretail
activities such as a playground, hotel, dining establishments, and a movie theater.
- Lifestyle centre
8. Which type of retailer typically carries deep product assortments of narrow product lines?
- Specialty store
9. Solutions Inc. negotiates the sale of materials between lumberyards and commercial
construction companies, receiving a 15 percent commission on all transactions. Solutions
Inc. is considered a ________.
- Broker
10. Which contractual system is distinguished by the fact that it is normally based on some
unique product or service; method of doing business; or trade name, goodwill, or patent that
has been developed?
- Fanchise
11. Retailers must decide on three major product variables: product assortment, services mix,
and ________.
- Store atomosphere
12. Bikers and non-bikers alike enjoy dining at the Harley Davidson Café in Las Vegas. Several
Harley Davidson models are on display as well as a very large, uniquely crafted American
flag. Menu items include the Easy Rider, the Choppers Cobb salad, and the Harley Hog
sandwich. The Harley Davidson Café most likely uses ________.
 - Experiential retailing
13. ________ focuses the entire marketing process-from product and brand development to
logistics, promotion, and merchandising-toward turning shoppers into buyers as they move
along toward the point of sale.
- Shopper marketing