Chapter 13 Retailing and Wholesaling
What is Retailing? Retailing Includes all the activities Involved in Selling Goods or Services Directly to Final Consumers for Their Personal, Nonbusiness Use.
Retailing • Retailing can be done in stores (store retailing) or out of a store (nonstore retailing) such as: • Direct mail, • Catalogs, • Telephone, • Home shopping shows, • Internet.
Retail Organizations Independent, Corporate, or Contractual Ownership Organization Amount of Service Self-Service, Limited-Service and Full-Service Retailer Classification of Retailing Product Line Length and Breadth of the Product Assortment Relative Prices Pricing Structure that is Used by the Retailer
Classification of Retailing:Amount of Service Self-Service Retailer Provide Few or No Services to Shoppers i.e. Best Buy Limited-Service Retailers Provide Only a Limited Number of Services to Shoppers i.e. Sears Full-Service Retailers Retailers that Provide a Full Range of Services to Shoppers i.e. Neiman Marcus
Specialty Stores Narrow Product Line, Deep Assortment i.e. The Limited or Athlete’s Foot Department Stores Wide Variety of Product Lines i.e. Clothing, Home Furnishings, Saks Fifth Avenue Supermarkets Wide Variety of Food, Laundry, & Household Products i.e. Kroger Convenience Stores Limited Line of High-Turnover Convenience Goods i.e. 7-Eleven Superstores Large Assortment of Routinely Purchased Food & Nonfood Products i.e. Toys R Us Discount Stores Standard Merchandise at Lower Prices i.e. Wal-Mart Off-Price Retailers Changing Collection of Higher-Quality Goods at a Reduced Price i.e. T.J. Maxx Warehouse Clubs Limited Selection of Brand-Name Grocery Items, Appliances, Etc. i.e. Sam’s Club Classification of Retailing:Product Line (Tab. 13.1) Store Description
Classification of Retailing:Relative Prices Higher Prices and Offer Higher-Quality Goods and Customer Service Regular Prices and Offer Normal-Quality Goods and Customer Service Low Prices and Offer Lower-Quality Goods and Customer Service Catalog Showrooms Discount Stores “Off-Priced” Retailers
Classification of Retailing:Retail Organization Corporate Chain Merchandising Conglomerates Voluntary Chain Franchise Organizations Retailer Cooperatives
Retailer Marketing Decisions (Fig. 13.1) Retailer Marketing Mix Product and service assortment Prices Promotion Place (location) Retailer Strategy Target Market Retail Store Positioning
Product Assortment • Width and Depth of Assortment • Quality of Products • Product Differentiation Strategies • Store’s Atmosphere • Physical Layout • “Feel” That Suits the Target Market • and Moves Customers to Buy Services Mix Key Tool of Nonprice Competition for Setting One Store Apart From Another Product Assortment and Services Decisions
Price Decisions Target Market, Product & Service Assortment, Competition Promotion Decisions Using Advertising, Personal Selling, Sales Promotion, Public Relations, & Direct Marketing to Reach Customers Place Decisions Shopping Centers, Central Business Districts, or Power Centers, or Online Shopping Retailer’s Price, Promotion, and Place Decisions Location, Location, Location!
New Retail Forms and Shortening Retail Lifecycle Growth of Nonstore Retailing Increasing Intertype Competition Rise of Megaretailer The Future of Retailing Growing Importance of Retail Technology Global Expansion of Major Retailers Retail Stores as “Communities” or “Hangouts”
High Margin High Price High Status 1 3 2 Low Margin Low Price Low Status 3 2 1 1 = Discount 2 = Superstore 3 = Warehouse Club 4 = Combination Store 1 2 3 4 The Wheel of Retailing
Discussion Connections • Online retailers provide an alternative to shopping the old fashioned way. • Discuss the differences in shopping for books and music at www.Amazon.com vs. Barnes & Noble Booksellers. • Discuss the differences in shopping for groceries at www.peapod.com vs. your local grocery store. • Which do you prefer and why?
What is Wholesaling? • All the activities involved in selling goods and services to those buying for resale or business use. • Wholesaler - those firms engaged primarily in wholesaling activity. • Wholesalers buy mostly from producers and sell mostly to: • Retailers, • Industrial consumers, and • Other wholesalers.
Why are Wholesalers Used? Wholesalers are Often Better at Performing One or More of the Following Channel Functions: Management Services & Advice Selling and Promoting Market Information Buying and Assortment Building Wholesaler Functions Bulk Breaking Risk Bearing Financing Warehousing Transportation
Types of Wholesalers Merchant Wholesaler Independently Owned Business that Takes Title to the Merchandise it Handles. Manufacturers’ Sales Branches and Offices Wholesaling by Sellers or Buyers Themselves Rather Than Through Independent Wholesalers. Brokers/ Agents They Don’t Take Title to the Goods, and They Perform Only a Few Functions.
Wholesaler Marketing Decisions (Fig. 13.2) Wholesaler Marketing Mix Product and service assortment Prices Promotion Place (location) Wholesaler Strategy Target Market Service Positioning
Consolidation within the Industry is Reducing # of Wholsalers Distinction Between Large Retailers and Wholesalers Blurs Wholesalers Will Continue to Increase the Services Provided Wholesalers Are Beginning to Go Global Trends in Wholesaling
Review of Concept Connections • Explain the roles of retailers and wholesalers in the distribution channel. • Describe the major types of retailers and give examples of each. • Identify the major types of wholesalers and give examples of each. • Explain the marketing decisions facing retailers and wholesalers.