Chapter 13 Retailing and Wholesaling

1. Chapter 13 Retailing and Wholesaling

2. 13 - 2 Learning Goals Understand the roles of retailers and wholesalers in the marketing channel. Know the major types of retailers. Know the major types of wholesalers. Understand the marketing decisions facing retailers and wholesalers.

3. Current annual sales approximately $260 billion Value proposition is �Always Low Prices, Always!� Wal-Mart executives spend at least two days a week visiting stores to stay connected with customers The first to call employees �associates� to denote the partnership Wal-Mart maintains low prices by keeping a sharp eye on costs including �tough� buying practices Technological advances in distribution and communications systems help efficiency and lowers costs. Lower advertising as a percentage of sales helps keep costs low Case StudyWal-Mart

4. 13 - 4 Learning Goals Understand the roles of retailers and wholesalers in the marketing channel. Know the major types of retailers. Know the major types of wholesalers. Understand the marketing decisions facing retailers and wholesalers.

5. 13 - 5 Definitions Retailing All activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use. Retailer Business whose sales come primarily from retailing.

6. Retailer � The Gap Retailers will often use celebrity spokespeople to endorse their brand

7. 13 - 7 Definitions Wholesaling All activities involved in selling goods and services to those buying for resale or business use. Wholesaler A firm engaged primarily in wholesaling activity.

8. 13 - 8 Learning Goals Understand the roles of retailers and wholesalers in the marketing channel. Know the major types of retailers. Know the major types of wholesalers. Understand the marketing decisions facing retailers and wholesalers.

9. 13 - 9 Retailing Specialty Stores Department Stores Supermarkets Discount Stores Convenience Stores Off-Price Retailers

10. 13 - 10 Retailing Amount of service Product lines Relative prices Organizational approach Self-service retailers Customers are willing to self-serve to save money Convenience stores and fast moving shopping goods Limited-service retailers Most department stores Full-service retailers Salespeople assist customers in every aspect of shopping experience High-end department stores and specialty stores

11. Discussion QuestionRetailer Level of Service Self service checkout scanners are growing in use. What advantages for retailer? Consumer? What are the disadvantages? Advantages for retailer � lower costs through less personnel. Advantages for consumer � can control their speed of checkout, can see prices and change mind. Disadvantages � more work for the consumer, consumers need to learn, no customer interaction, theft.Advantages for retailer � lower costs through less personnel. Advantages for consumer � can control their speed of checkout, can see prices and change mind. Disadvantages � more work for the consumer, consumers need to learn, no customer interaction, theft.

12. 13 - 12 Retailing Amount of service Product lines Relative prices Organizational approach Specialty stores Narrow product lines with deep assortments Department stores Wide variety of product lines Supermarkets Convenience stores Limited line Superstores Food, nonfood, and services Category killers Giant specialty stores

13. Online Grocers � Why are they growing so slowly? Online Grocers have had little success. Most of them have closed down and only 1 or 2 are operating in a handful of markets. There have been several models, some gathering product from their warehouses, and others directly from stores. Problems with the warehouses have included spoilage, late delivery and high overhead costs. In general, many consumers still prefer to touch and choose their produce and meats and actually enjoy the act of grocery shopping.Online Grocers have had little success. Most of them have closed down and only 1 or 2 are operating in a handful of markets. There have been several models, some gathering product from their warehouses, and others directly from stores. Problems with the warehouses have included spoilage, late delivery and high overhead costs. In general, many consumers still prefer to touch and choose their produce and meats and actually enjoy the act of grocery shopping.

14. 13 - 14 Retailing Amount of service Product lines Relative prices Organizational approach Discount stores Low margins are offset by high volume Off-price retailers Independent off-price retailers TJ Maxx, Marshall�s Factory outlets Levi Strauss, Reebok Warehouse clubs Sam�s Club, Costco

15. Discount StoresTarget Corporation First store opened in 1902 Currently has 1,147 stores in 47 states. Builds brand name to heighten barriers to entry in the market. Began a collaboration with Sony in 2002 for Sony to design products specifically for Target. Successful in building defensible niche with middle and upper-end customers with low price but high style.

16. Target is low price but high style

17. 13 - 17 Retailing Amount of service Product lines Relative prices Organizational approach Corporate chain stores Commonly owned / controlled Voluntary chains Wholesaler-sponsored groups of independent retailers Retailer cooperatives Groups of independent retailers who buy in bulk Franchise organizations Based on something unique Merchandising conglomerates Diversified retailing lines and forms under central ownership

18. The UPS Store is an example of a popular franchise. See more franchises by clicking on image.

19. Classifying Retailers How would you categorize Best Buy in terms of Amount of service Product lines Relative prices Organizational approach Amount of service � limited service Product lines � category killer Relative prices - discount Organizational approach � corporate chain Amount of service � limited service Product lines � category killer Relative prices - discount Organizational approach � corporate chain

20. 13 - 20 Learning Goals Understand the roles of retailers and wholesalers in the marketing channel. Know the major types of retailers. Know the major types of wholesalers. Understand the marketing decisions facing retailers and wholesalers.

21. 13 - 21 Wholesaling Wholesalers add value by performing the following functions: Selling and promoting Buying and assortment building Bulk-breaking Warehousing Transportation Financing Risk bearing Market information Management services and advice

22. How might the National Beer Wholesalers Association add value to retailers? This association represents the 2,200 licensed beer wholesales who represent the middle in a three-tier system (manufacturer, wholesaler, retailer). The beer wholesaler breaks down orders, delivers to retailers and helps in marketing.This association represents the 2,200 licensed beer wholesales who represent the middle in a three-tier system (manufacturer, wholesaler, retailer). The beer wholesaler breaks down orders, delivers to retailers and helps in marketing.

23. 13 - 23 Wholesaling Merchant Wholesalers Brokers and Agents Manufacturers� and retailers� branches and offices Full-service wholesalers Wholesale merchants Industrial distributors Limited-service wholesalers Cash-and-carry wholesalers Truck wholesalers (jobbers) Drop shippers Rack jobbers Producer�s cooperatives Mail-order wholesalers

24. 13 - 24 Wholesaling Merchant Wholesalers Brokers and Agents Manufacturers� and retailers� branches and offices Brokers and agents do not take title of the goods. Brokers Bring buyers and sellers together and assist in negotiation Agents Manufacturers� agents Selling agents Purchasing agents Commission merchants

25. Export trade brokers help manufacturers with overseas distribution and marketing

26. 13 - 26 Wholesaling Merchant Wholesalers Brokers and Agents Manufacturers� and retailers� branches and offices Sales branches and offices Branches carry inventory: lumber, auto equipment, parts Offices do not carry inventory: dry goods Purchasing officers Perform roles similar to brokers and agents; however, these individuals are employees of the organization

27. 13 - 27 Learning Goals Understand the roles of retailers and wholesalers in the marketing channel. Know the major types of retailers. Know the major types of wholesalers. Understand the marketing decisions facing retailers and wholesalers.

28. Retailer Marketing DecisionsFigure 13.1

29. A retailer like Brooks Brothers chooses to locate in very high-end shopping districts.

30. 13 - 30 Retailing The Future of Retailing New retail forms and shortening retail life cycles Wheel-of-retailing concept Growth of nonstore retailing Mail-order, television, phone, online shopping Retail convergence The merging of consumers, products, prices, and retailers

31. QVC WebsiteShop online while you watch the show

32. 13 - 32 Retailing The Future of Retailing Rise of mega retailers Growing importance of retail technology Global expansion of major retailers Retail stores as �Communities� or �Hangouts�

33. Mall of America is more than just stores. This major tourist attraction includes stores, events and a 30-ride indoor theme park.

34. Wholesaler Marketing DecisionsFigure 13.2

35. 13 - 35 Wholesaling Trends in Wholesaling Price competition is still intense Successful wholesalers must add value by increasing efficiency and effectiveness The distinction between large retailers and wholesalers continues to blur More services will be provided to retailers Many wholesalers are going global

36. 13 - 36 Learning Goals Understand the roles of retailers and wholesalers in the marketing channel. Know the major types of retailers. Know the major types of wholesalers. Understand the marketing decisions facing retailers and wholesalers.