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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


Definitions
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


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

      (continued)


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


Franchising
Franchising

  • 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.