Principles Chapter 13

Chapter Thirteen
Retailing and Wholesaling
Copyright © 2009 Pearson Education, Inc.

Chapter 13- slide 1
Publishing as Prentice Hall
Retailing and Wholesaling
Topic Outline
• Retailing
• Retailer Marketing Decisions
• The Future of Retailing
• Wholesaling

Chapter 13- slide 2
Retailing
Retailing includes all the
activities in selling
products or services
directly to final
consumers for their
personal, non-business
use
Retailers are businesses
whose sales come
primarily from retailing

Chapter 13- slide 3
Retailing
• Retailers can be classified as:

– Store retailers such as Home Depot, Sears,
Walmart
– NonStore retailers such as the mail, telephone,
and Internet.

Chapter 13- slide 4
Major Store Retailer Types

Chapter 13- slide 5
Classification of Retail Stores
Amount of Service
Self-Service, Limited-Service and
Full-Service Retailers
Product Line
Length and Breadth of the Product
Assortment
Relative Prices
Pricing Structure that is Used
by the Retailer
Retail Organizations
Independent, Corporate, or Contractual
Ownership Organization

Chapter 13- slide 6
Retailing
Types of Retailers
Amount of service
• Self-service
• Limited service
• Full service

Chapter 13- slide 7
Retailing
Types of Retailers
• Self service retailers: serve customers who
are willing to perform their own process to
save time or money such as supermarkets
• Limited service retailers: such as Sears
provide more sales assistance because they
carry more shopping goods about which
customers need information. Their
increased operating costs result in higher
prices
Chapter 13- slide 8
Retailing
Types of Retailers
• Full service retailers : salespeople 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.
• Result in higher operating costs , which is
passed along to customers as higher prices.

Chapter 13- slide 9
Classification By Product Line
Store Type Length and Breadth of Product

Assortment
Specialty Stores Narrow Product Line, Deep Assortment
Wide Variety of Product Lines i.e. Clothing,

Department Stores Home Furnishings, & Household Items
Wide Variety of Food, Laundry, & Household
Supermarkets Products
Limited Line of High-Turnover Convenience
Convenience Stores Goods, a small store located near the area
Large Assortment of Routinely Purchased
Superstores Food & Nonfood Products, Plus Services
Giant Specialty Store that Carries a Very Deep
Category Killers Assortment of a Particular Line
Hypermarkets Huge Superstores

Chapter 13- slide 10
Another model
Product Line
Specialty stores
• Narrow product line with deep assortment
Department stores
• Wide variety of product lines
Convenience stores
• Limited line of high-turnover goods
Superstores
• Non-food goods
Category killers
• Deep in category with sales staff
Department Store Model:
The Showcase Store

Retailing
Types of Retailers
Relative Prices
Discount Off-price
stores retailers
Factory Warehouse
outlets clubs

Relative prices
• Discount store: a retail operation that sells standard
merchandise at lower prices by accepting low
margins and selling at higher volume.
• Off price retailer: a retailer that buys at less than
regular wholesale prices and sells at less than retail
• The three main types of the off price retailers are
independents, factory outlets and warehouse
divisions of larger retail corporations

Relative prices
a) Independent off price retailer: an off price retailer
that is either independently owned and run or is a
division of a larger retail corporation.
b) Factory outlet: which is owned and operated by a
manufacturer and that normally carries the
manufacturer’s surplus, discontinued or irregular
goods.
c) Warehouse club: which sells a limited selection of
brand name grocery items, clothing or other goods
at deep discounts to members who pay annual
membership
Copyright feesInc.
© 2010 Pearson Education,
Retailing
Types of Retailers
Organizational Approach
Corporate Voluntary Retailer

chains chains cooperatives
Franchise Merchandising
organizations conglomerates

Corporate Retail Organizations
Features of corporate retailing:

• Greater purchasing power
• Achieve economies of scale
• Wider brand recognition
• Better trained employees

Retailing
Types of Retailers
Corporate chains are two or more outlets
that are commonly owned and controlled
• Size allows them to buy in large quantities
at lower prices and gain promotional
economies
• selling similar lines of merchandise,
highly skilled employees.
• Sears

Retailing
Types of Retailers
Voluntary chains are wholesale-sponsored
groups of independent retailers that
engage in group buying and common
merchandising
• IGA
• Western Auto

Retailing
Types of Retailers
Retailer cooperatives is a group of

independent retailers that band together
to set up a joint-owned, central wholesale
operation and conduct joint
merchandising and promotion effort
• Ace Hardware
• Associated Grocers

Retailing
Types of Retailers
• Franchise organizations are
based on some unique
product or service; on a
method of doing business; or
on the trade name, good will,
or patent that the franchisor
has developed
• Contractual association
between franchiser
(manufacturers, wholesalers,
service organizations) and
franchisee who are authorized
to use the brand name.
McDonalds ….
Retailing
Types of Retailers
• Merchandising conglomerates are

corporations that combine several retailing
forms under central ownership
• Limited Brands
• Several diversified retailing lines with
integration in management and
distribution.
Characteristics of Direct Marketing
Privacy Targeted
Individuals
Response Key Customized

Measurement Characteristics Offer
of
Immediate
Testing Direct
Orders
Marketing
Higher Continuous
Response Relationship

Types of NonStore Retailing
Nonstore Retailing Accounts for More Than 14% of All Consumer Purchases,
and May Account for 33% of All Sales by 2010
Direct Marketing
Direct Selling
Automatic Vending
Catalogs & Direct Mail
TV Shopping Shows
Online Shopping
Copyright © 2010 Pearson Education, Inc. Home & Office Parties

Retailing
Retailer Marketing Decisions

Retailing
Segmentation targeting,
differentiation, and
positioning involves the
definition and profile of the
market so the other retail
marketing decisions can be
made

Retailing

Product Assortment and Service
Product assortment and service decisions include:

• Product assortment
• Services mix
• Store atmosphere

Retailer’s
Click Product
to add title Assortment and
Services Decisions
Product Assortment Decisions
• Width and Depth of Assortment
• Quality of Products
• Product Differentiation Strategies
Services Mix
Key Tool of Non price Competition
for Setting One Store Apart From
Another.
Store’s Atmosphere
• Physical Layout
• “Feel” That Suits the Target Market
and Moves Customers to Buy

Retailer Services Mix
Prepurchase services
Postpurchase services
Ancillary services

Retailer’s
Click Price,
to add Promotion, and
title
Place Decisions
Price Decisions
Target Market
Product & Services Assortment
Competition
Promotion Decisions
Using Advertising, Personal Selling,
Sales Promotion and Public
Relations to Reach Customers.
Place Decisions
Shopping Centers, Central Business
Districts, Power Centers, or Outlet
Malls. Location!
Retailing
Price Decision
Price policy must fit the target market and
positioning, product and service assortment, and
competition
• High markup on
lower volume
(most specialty
stores)
• Low markup on
higher
volume(mass
merchandiser and
Copyrightdiscount stores)
© 2010 Pearson Education, Inc.
Retailing

Price Decision
High-low pricing involves charging higher

prices on an everyday basis, coupled with
frequent sales and other price promotions
Everyday low price (EDLP) involves charging
constant, everyday low prices with few
sales or discounts

Retailing
Promotion Decision
Personal Sales
Advertising
selling promotion
Public Direct
relations marketing
Place Decision
• General business districts
• Regional shopping centers
• Community shopping centers
• Strip malls
• Location within a larger store

Retailing
Place Decision
Central business districts are located in cities and
include department and specialty stores, banks, and
movie theaters
Shopping center is a group of retail businesses planned,
developed, owned, and managed as a unit

Indicators of Sales Effectiveness
Number of people passing by
% who enter store
% of those who buy
Average amount
spent per sale

Wall Mart’s Factors of Success:
• Listen to the customers.
• Treat employees as partners.
• Big sign reading (Satisfaction guaranteed), (we sell for less).
• Customers often welcome by greeter
• Low price and speed stock replenishment.
• Expanded their stories outside of US

The Future of Retailing
New Retail Forms and Shortening
Retail Lifecycles
Growth of Nonstore Retailing
Increasing Intertype Competition
Rise of Megaretailers
Growing Importance of
Retail Technology
Global Expansion of Major Retailers

Trends in Retailing
• New retail forms has been emerged.
• New retailers are facing shorter life span, they are
rapidly copied and lose novelty. It is familiar in our areas.
• Growth of non store retailing.
• Competition is increasing between different types of
stores, like Discount stores, Catalog showrooms,
Department stores. All are competing the same
customers.
• All retailers now moving to one of 2 poles, either mass
merchandiser, or as specialty retailer. Super power
retailers emerging.

Trends in Retailing cont.
• Department stores - one stop shopping convenience.
Gradually they gave up to Malls where customers can
find every thing.
• Technology became critical, Retailers using computers to

manage better Inventory, Ordering, etc..
• Retailers with unique formats and strong positioning are

moving to other countries, Like
• McDonalds 18% of US retailers moved out, 40% of

Europeans, and 31% of Far East.

Retailing
New Retailing Forms and Shortening Life Cycles
Wheel-of-retailing concept states that many new

types of retailing forms begin as low-margin,
low-price, low-status operations, and challenge
established retailers. As they succeed they
upgrade their facilities and offer more services,
increasing their costs and forcing them to
increase prices, eventually becoming the
retailers they replaced.

Retailing
Growth of non-store retailing includes:

• Mail order
• Television
• Phone
• Online

Retailing
Retail convergence involves the merging of

consumers, producers, prices, and
retailers, creating greater competition for
retailers and greater difficulty
differentiating offerings

Retailing
The rise of megaretailers involves the rise of

mass merchandisers and specialty
superstores, the formation of vertical
marketing systems, and a rash of retail
mergers and acquisitions
• Superior information systems
• Buying power
• Large selection
Retailing
Growing importance of retail technology provides

better forecasts, inventory control, electronic
ordering, transfer of information, scanning,
online transaction processing, improved
merchandise handling systems, and the ability
to connect with customers

Wholesaling
Wholesaling includes all activities involved in selling goods and
services to those buying for resale or business use
Selling and promoting

Buying assortment building
Bulk breaking
Warehousing
Transportation
Financing
Risk bearing
Market information
Management services and advice
Wholesaling
Wholesaling
Selling and promoting involves the

wholesaler’s sales force helping the
manufacturer reach many smaller
customers at lower cost
Buying assortment building involves the
selection of items and building of
assortments needed by their customers,
saving the customers work

Wholesaling
Wholesaling
Bulk breaking involves the wholesaler buying

in larger quantity and breaking into
smaller lots for its customers
Warehousing involves the wholesaler holding
inventory, reducing its customers’
inventory cost and risk

Wholesaling
Wholesaling
Transportation involves the wholesaler

providing quick delivery due to its
proximity to the buyer
Financing involves the wholesaler providing
credit and financing suppliers by ordering
earlier and paying on time

Wholesaling
Wholesaling
Risk bearing involves the wholesaler

absorbing risk by taking title and bearing
the cost of theft, damage, spoilage, and
obsolescence
Market information involves the wholesaler
providing information to suppliers and
customers about competitors, new
products, and price developments

Wholesaling
Wholesaling
Management services and

advice involves wholesalers
helping retailers train their
sales clerks, improve store
layouts, and set up
accounting and inventory
control systems

Types of Wholesalers
Merchant
Wholesaler Brokers/ Agents
They Don’t Take Title to
Independently Owned the Goods, and They
Business that Takes Perform Only a Few
Title to the Functions.
Merchandise
it Handles.
Manufacturers’
Sales Branches
and Offices
Wholesaling by Sellers
or Buyers Themselves
Rather Than Through
Independent
Wholesalers.
Wholesaling
Merchant wholesalers is the largest group of

wholesalers and include:
• Full-service wholesalers who provide a full
set of services
• Limited service wholesalers who provide
few services and specialized functions

Wholesaling
Brokers and agents do not take title, perform

a few functions, and specialize by product
line or customer type
• Brokers bring buyers and sellers together
and assist in negotiations
• Agents represent buyers or sellers

Wholesaling
Manufacturers’ sales branches and offices is

a form of wholesaling by sellers or buyers
themselves rather than through
independent wholesalers

Wholesaling
Wholesaler Marketing Decisions

Trends in Wholesaling
Wholesaling Developments to Consider
Must Learn to Compete Effectively Over
Wider and More Diverse Areas
Increasing Consolidations Will Reduce

Number of Wholesalers
Surviving Wholesalers Will Grow Larger

Through Acquisitions and Mergers
Vertical Integration Will Remain Strong
Global Expansion

Wholesaling
Target market and positioning decisions

• Size of customer
• Type of customer
• Need for service

Wholesaling
Marketing mix
decisions
• Product
• Price
• Promotion
• Place
Wholesaling
Trends in Wholesaling
Challenges
• Resistance to price increases
• Lack of suppliers
• Changing customer needs
• Adding value by increasing efficiency and
effectiveness
Market logistics
– It involves, Planning, Implementing, and

controlling the physical flow of materials and
final goods till from points of origin to points of
use.
* Market logistics starts from the point of sales
forecasting which planning for other activities
depend on such as scheduling distribution,
production and inventory levels.

Market-logistics objectives
–Getting the right goods

to the right places at
the right time for the
least cost.

Organizational Lessons about
Marketing Logistics:
• Market logistics decisions must be based

on profit maximizing rather than cost
consideration
• Electronic links among all parties should be
established
• Logistics goals should match or exceed
competitors’ service standards.


Principles Chapter 13

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Principles Chapter 13

Uploaded by

Copyright:

Available Formats

Chapter Thirteen

Retailing and Wholesaling

Copyright © 2009 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

• Retailers can be classified as:

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Store Type Length and Breadth of Product

Specialty Stores Narrow Product Line, Deep Assortment

Wide Variety of Product Lines i.e. Clothing,

Hypermarkets Huge Superstores

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Corporate Voluntary Retailer

Copyright © 2010 Pearson Education, Inc.

Features of corporate retailing:

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Retailer cooperatives is a group of

Copyright © 2010 Pearson Education, Inc.

• Merchandising conglomerates are

Response Key Customized

Copyright © 2010 Pearson Education, Inc.

Catalogs & Direct Mail

Copyright © 2010 Pearson Education, Inc. Home & Office Parties

Copyright © 2010 Pearson Education, Inc.

Retailer Marketing Decisions

Copyright © 2010 Pearson Education, Inc.

Retailer Marketing Decisions

Product assortment and service decisions include:

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Retailer Marketing Decisions

High-low pricing involves charging higher

Copyright © 2010 Pearson Education, Inc.

• General business districts

• Regional shopping centers

• Community shopping centers

• Location within a larger store

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Number of people passing by

% who enter store

% of those who buy

Copyright © 2010 Pearson Education, Inc.

• Treat employees as partners.

• Big sign reading (Satisfaction guaranteed), (we sell for less).

• Customers often welcome by greeter

• Low price and speed stock replenishment.

• Expanded their stories outside of US

Copyright © 2010 Pearson Education, Inc.

Growth of Nonstore Retailing

Increasing Intertype Competition

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.