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Chapter 15. Wholesale, Retail, and Food Service Marketing. Definitions. Chain: 11 or more stores under one ownership Independent: one or as many as 10 stores under one ownership Affiliate: independent retailer associated with a wholesaler Voluntary affiliate Cooperative affiliate.

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chapter 15

Chapter 15

Wholesale, Retail, and

Food Service Marketing

  • Chain: 11 or more stores under one ownership
  • Independent: one or as many as 10 stores under one ownership
  • Affiliate: independent retailer associated with a wholesaler
    • Voluntary affiliate
    • Cooperative affiliate
geography of distribution for w rs
Geography of Distributionfor W-Rs
  • Generally organized around larger metropolitan areas
  • 53 distribution areas cover the U.S.
  • Typical area served by 10 or fewer chains and affiliate groups
  • Economies of scale and vertical integration help competitive advantage
private label store brands
Private Label (Store)Brands
  • Private label products give retailer higher margins and consumers lower prices
  • Private brands still less popular
    • Possible consumer fears about quality
    • Consumer loyalty to national brand
    • Higher price on national brand may connote higher quality
  • Retailers believe private brands can develop consumer loyalty to store
retail market structure
Retail Market Structure
  • Retail structure concentrated at local level
  • Consumers tend to shop for food within three miles of home
  • In most MAs, a few chains have over half of market
  • Entry by new stores not easy
competing for customers
Competing for Customers
  • New formats
    • Growth of convenience stores
    • Growth of superstores
    • Growth of combination stores
  • Location, merchandising, atmosphere
    • Non-price competition
    • New services, better service


competing for customers continued
Competing for Customers(continued)
  • Promotion
    • Advertising helps create store’s image
    • In-store promotions often paid for by company providing product; slotting fees charged
    • Promotional devices less popular today
  • Pricing
    • Variable price merchandising (VPM)
    • Price specializing
    • Everyday low pricing (ELP)
food service industry
Food Service Industry
  • Public eating places
    • Restaurants, fast-food, bars, amusement venues, clubs
  • Institutional food sector
    • Referred to as HRI (hotels, restaurants, institutions)
    • Schools, colleges, military service, hospitals, prisons, etc.
  • Food service industry has steadily eroded market share of food retailers
  • Franchise (owner of trade name and concept) licenses franchisees to operate under name and format
  • Franchisees typically pay royalty fees
  • Multi-unit franchisees growing more popular
food service and procurement
Food Serviceand Procurement
  • Institutional middlemen
    • Principal supplier of food service industry
    • Processors use brokers to sell to middlemen
    • Meat purveyors buy carcassas and fabricate cuts, ground beef
  • Procurement by large buyers
    • Larger buyers and fast-food chains have organized procurement systems
    • Have expertise and buying power to set tight specs and use competitive bids
class exercise
Class Exercise
  • Visit the restaurant assigned to you and then prepare a report that includes the following information:
    • Marketing style
    • Atmosphere
    • Clientele
    • Food types served
    • Pricing
  • Ask manager how restaurant is supplied, how procurement decisions are made.