1. Retailing and Wholesaling
Chapter 12
Retailing and Wholesaling

2. Road Map: Previewing the Concepts
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.

3. What is Retailing? Retailing
Includes all the Activities Involved in Selling Goods or Services Directly to Final Consumers for Their Personal, Nonbusiness Use.

4. 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.

5. Classification of Retailing
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
Retail Organizations
Independent, Corporate, or Contractual
Ownership Organization

6. Classification of Retailing: Amount of Service
Self-Service
Retailers
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

7. Classification of Retailing: Product Line (Tab. 12-1)
Store Description
Specialty Stores
Department Stores
Supermarkets
Convenience Stores
Superstores
Discount Stores
Narrow Product Line, Deep Assortment i.e. The Limited or Athlete’s Foot
Wide Variety of Product Lines i.e. Clothing, Home Furnishings i.e. Saks Fifth Avenue
Wide Variety of Food, Laundry, & Household Products i.e. Kroger
Limited Line of High-Turnover Convenience Goods i.e. 7-Eleven
Large Assortment of Routinely Purchased Food, Nonfood Products i.e. Target
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

8. Discussion Question
Giant superstores called category killers are an emerging trend. Answer the following questions:
How is a category killer different from other types of retailers?
Why has this form of retailing grown so rapidly?
A category killer features a store the size of an airplane hanger. It carries a very deep assortment of a particular line with a knowledgeable staff. Category killers are prevalent in a wide range of categories, including books, baby gear, toys, electronics, home improvement products, linens and towels, party goods, sporting goods, and even pet supplies. Some would say that Babies-R-Us, Toys-R-Us, Home Depot, Lines and Things, Party Stop, and Pet Stop are all category killers even though store size may be smaller than the one described above.
Hypermarkets are variations where the size may exceed six football fields. Auchan’s would be an example.
This form of retailing has grown rapidly because of product line expanse, price, one stop shopping in a particular line, and massive promotion. Traditional retailers that do not specialize by product line, small retailers in small towns, a retailers that are in close proximity to a category killer may all be threatened.

9. Classification of Retailing: Retail Organization
Corporate
Chain
Merchandising
Conglomerates
Voluntary
Chain
Franchise
Organizations
Retailer
Cooperatives

10. Retailer Marketing Decisions (Fig. 12-1)

11. Interactive Student Assignments
Consider the following thought question, format an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from the instructor.
How do retailers establish a position in the marketplace?
Retailers are searching for new marketing strategies to attract and hold customers. In the past retailers attracted customers with unique products, more or better services than their competitors offered, or credit cards. Today, the retailers are considering other factors in formulating their strategies.
  Retailers must first define their target markets and then decide how they will position themselves in those markets. This decision is an important one since many retailers have failed to define their target markets and positions clearly.
When the decisions concerning product assortment and services arise, the retailer considers three variables:
1). The retailer’s product assortment must match target shopper’s expectations.
a). This involves decisions about the assortment’s width and depth.
b). The retailer must also search for ways to differentiate itself from similar
competitors. The aspect of quality is also a feature that must be considered.
c). The next consideration is the services that will be offered. This is one of
the key tools in nonprice competition.
d). A store’s atmosphere is sometimes as important as the goods or services
that it carries. Increasingly, owners are turning their stores into theaters
that transport the customer into unusual, exciting shopping environments.

12. Product Assortment and Services Decisions
Brand of Merchandise
Merchandising Events
Product Differentiation Strategies
Services Mix
Key Tool of Nonprice Competition
for Setting One Store Apart From
Another
Store’s Atmosphere
Physical Layout
“Feel” That Suits the Target Market
and Moves Customers to Buy

13. Retailer’s Price, Promotion, and Place 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, Power Centers, or Online Shopping
Location, Location, Location!

14. Mall of America The Mall of America “megamall” contains more than:
520 specialty stores,
49 restaurants,
7-acre indoor theme park,
Underwater World featuring hundreds of marine specimens,
And a two-story miniature golf course.

15. The Future of Retailing
New Retail Forms and Shortening Retail Life-Cycles
Growth of Nonstore Retailing
Increasing Intertype Competition
Rise of the Megaretailers
Growing Importance of Retail Technology
Global Expansion of Major Retailers
Retail Stores as “Communities” or “Hangouts”

16. What is Wholesaling? Wholesaling
Includes all the activities Involved in Selling Goods and Services to Those Buying for Resale or Business Use.

17. Why are Wholesalers Used?
Wholesalers are Often Better at Performing One or More of the Following Channel Functions:
Management
Services & Advice
Selling & Promoting
Market
Information
Buying &
Assortment Building
Wholesaler
Functions
Risk Bearing
Bulk-Breaking
Financing
Warehousing
Transportation

18. 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.
Agents & Brokers
They Don’t Take Title to
the Goods, and They
Perform Only a Few
Functions.

19. Wholesaler Marketing Decisions (Fig. 12-2)

20. Must Constantly Improve Their Services and Reduce Costs
Distinction Between Large Retailers and Wholesalers Blurs
Wholesalers Will Continue to Increase the Services Provided
Trends in Wholesaling
Wholesalers Are Beginning to Go Global

21. Rest Stop: Reviewing the Concepts
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.