1. Chapter 1 Retailing and Wholesaling11
Retailing and Wholesaling

2. ROAD MAP: Previewing the Concepts
Chapter 1
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. Chapter 1
What is Retailing?
Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, non-business use.

4. Types of Retailers Retailers are classified based on:
Chapter 1
Types of Retailers
Retailers are classified based on:
Amount of Service They Offer
Breadth & Depth of Product Lines
Relative Prices Charged
How They Are Organized

5. Amount of Service Self-Service Retailers: Limited-Service Retailers:
Chapter 1
Amount of Service
Self-Service Retailers:
Serve customers who are willing to perform their own “locate-compare-select” process to save money.
Limited-Service Retailers:
Provide more sales assistance because they carry more shopping goods about which customers need information.
Full-Service Retailers:
Usually carry more specialty goods for which customers like to be “waited on.”

6. Product Line Classification
Chapter 1
Product Line Classification
Specialty Stores:
Carry narrow product lines with deep assortments
within those lines.
Department Stores:
Carry a wide variety of product lines—typically
clothing, home furnishings, and household goods.
Each line is operated as a separate department
managed by specialist buyers or merchandisers.

7. Product Line Classification
Chapter 1
Product Line Classification
Supermarket:
Large, low-cost, low-margin, high-volume,
self-service store that carries a wide variety of food,
laundry, and household products.
Convenience Stores:
Small stores located near residential areas that
are open long hours 7 days a week and carry
a limited line of high-turnover convenience goods.

8. Web-Based Supermarket
Chapter 1
Web-Based Supermarket
In the battle for “share of stomachs,” Safeway and many large supermarkets have added Web-based sales.

9. Product Line Classification
Chapter 1
Product Line Classification
Superstores:
Much larger than regular supermarkets and
offer a large assortment of routinely purchased
food products, nonfood items, and services.
Category Killers:
Giant specialty stores that carry a very deep
assortment of a particular line and is staffed
by knowledgeable employees.

10. Relative Prices Classification
Chapter 1
Relative Prices Classification
Discount Store:
A retail institution that sells standard merchandise
at lower prices by accepting lower margins and
selling at higher volume.
Off-Price Retailer:
Retailer that buys at less-than-regular wholesale
prices and sells at less than retail. Examples are
factory outlets, independents, and warehouse
clubs.

11. Relative Prices Classification
Chapter 1
Relative Prices Classification
Factory Outlet:
Off-price retailing operation that is owned and
operated by a manufacturer and that normally
carries the manufacturer’s surplus, discontinued,
or irregular goods.
Independent Off-Price Retailer:
Off-price retailer that is either owned and run by
entrepreneurs or is a division of a larger retail
operation.

12. Chapter 1
Factory Outlets
Factory outlet malls and value-retail centers have blossomed in recent years, making them one of retailing’s hottest growth areas.

13. Relative Prices Classification
Chapter 1
Relative Prices Classification
Warehouse Club:
Off-price retailer that sells a limited selection of
brand-name grocery items, appliances, clothing,
and a hodgepodge of other goods at deep
discounts to members who pay annual
membership fees.
Click Here to Visit Sam's Club

14. Organizational Classification
Chapter 1
Organizational Classification
Chain Stores:
Two or more outlets that are owned and controlled,
have central buying and merchandising, and sell
similar lines of merchandise.
Voluntary Chain:
A wholesaler-sponsored group of independent
retailers that engages in bulk buying and common
merchandising.

15. Organizational Classification
Chapter 1
Organizational Classification
Retailer Cooperative:
A group of independent retailers that bands
together to set up a jointly owned, central
wholesale operation and conducts joint
merchandising and promotion efforts.
Franchise:
A contractual association between a manufacturer,
wholesaler, or service organization (a franchiser)
and independent businesspeople (franchisees) who
buy the right to own and operate one or more
units in the franchise system.

16. Chapter 1
Franchising
Franchisees now command 35% of all retail sales in the U.S. Subway is one of the fastest growing franchises, with nearly 20,000 shops in 74 countries.

17. Organizational Classification
Chapter 1
Organizational Classification
Merchandising Conglomerates:
A free-form corporation that combines several
diversified retailing lines and forms under central
ownership, along with some integration of their
distribution and management functions.

18. Retailer Marketing Decisions
Chapter 1
Retailer Marketing Decisions

19. Assortment and Services Decisions
Chapter 1
Assortment and Services Decisions
Product Assortment:
Brand of merchandise
Merchandising events
Services Mix:
Different numbers and types of
services are key to non-price store
differentiation
Store Atmosphere:
Physical layout and “feel” of the store

20. Price, Promotion, & Place Decisions
Chapter 1
Price, Promotion, & Place Decisions
Price policy must fit its target market and positioning,
product and service assortment, and competition
Can use any or all of the promotion tools—advertising,
personal selling, sales promotion, public relations,
and direct marketing—to reach consumers
Retailers can locate in CBDs, various types of
shopping centers, strip malls, or power centers
Location, Location, Location!

21. Mall of America Click Here to Visit the Mall of America
Chapter 1
Mall of America
The Mall of America “megamall” contains:
Over 520 specialty stores
49 restaurants
7-acre indoor theme park
Underwater World featuring hundreds of marine specimens
A two-story miniature golf course.
Click Here to Visit the Mall of America

22. The Future of Retailing
Chapter 1
The Future of Retailing
New Retail Forms and Shortening Retail Life Cycles
Growth of Nonstore Retailing
Retail Convergence
Rise of the Megaretailers
Growing Importance of Retail Technology
Global Expansion of Major Retailers
Retail Stores as “Communities” or “Hangouts”

23. Chapter 1
Wholesaling
Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.

24. Functions Provided by Wholesalers
Chapter 1
Functions Provided by Wholesalers
Selling & Promoting
Management
Services & Advice
Buying &
Assortment Building
Market
Information
Bulk-Breaking
Risk Bearing
Warehousing
Financing
Transportation

25. Types of Wholesalers Merchant Wholesalers Largest group of wholesalers
Chapter 1
Types of Wholesalers
Merchant Wholesalers
Largest group of wholesalers
Account for 50% of wholesaling
Two broad categories:
Full-service wholesalers
Limited-service wholesalers

26. Types of Wholesalers Brokers and Agents Do not take title to goods
Chapter 1
Types of Wholesalers
Brokers and Agents
Do not take title to goods
Perform fewer functions
Brokers bring buyers and sellers together
Agents represent buyers on more permanent basis
Manufacturers’ agents are most common type of agent wholesaler

27. Types of Wholesalers Manufacturers’ Sales Branches and Offices
Chapter 1
Types of Wholesalers
Manufacturers’ Sales Branches and Offices
Wholesaling by sellers or buyers themselves rather than through independent wholesalers.

28. Chapter 1
Wholesaling In Action
Grainger is by far the world’s leading wholesaler of maintenance, repair, and operating supplies.
Click Here to Explore Grainger's Website

29. Wholesaler Marketing Decisions
Chapter 1
Wholesaler Marketing Decisions

30. Must Constantly Improve Services and Reduce Costs
Distinction Between Large Retailers & Wholesalers is Blurry
Chapter 1
Trends in Wholesaling
Will Continue to Increase the Services Provided to Retailers
Wholesalers Are Now Going Global

31. Rest Stop: Reviewing the Concepts
Chapter 1
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.

32. Q: A retailing operation that depends upon handy location and long hours to attract customers to its limited line of frequently purchased products is a:
1. specialty store. 
2. department store. 
3. superstore. 
4. convenience store.
AK, 7e – Chapter 11

33. Q: Kar Krazy, an auto parts category killer, has just opened in your home town. Which of the following types of stores would most likely survive Kar Krazy’s assault on the market?
1. An auto parts department store that offers a little of everything 
2. A small store that caters to owners of high-performance sports cars 
3. A small store that sells parts for less than Kar Krazy 
4. A small self-service parts shop
AK, 7e – Chapter 11

34. Q: You prefer to shop for underwear, socks, and other goods at a store in which the staff simply keeps the shelves stocked and assumes you’re there to locate, compare, and select your items on your own. This is what sort of retailer?
1. Limited-service retailer 
2. Specialty store 
3. Full-service retailer 
4. Self-service retailer
AK, 7e – Chapter 11

35. Q: A _______ is a group of retail businesses planned, developed, owned, and managed as a unit.
1. power center 
2. shopping center 
3. central business district 
4. strip mall
AK, 7e – Chapter 11

36. Q: You want to open a coffee bar that stands a chance of competing with Starbucks, and you must consider product assortment and services. These entail making all the following decisions except:
1. what will be the general atmosphere of your establishment. 
2. where and how much you will advertise. 
3. what customer service training you will provide for employees. 
4. the types and amounts of coffee you will serve.
AK, 7e – Chapter 11

37. Q: Bloomingdale’s is known for running spectacular shows featuring goods from a certain country, such as India or China. These shows are examples of:
1. service mix. 
2. store atmosphere. 
3. product assortment. 
4. country range.
AK, 7e – Chapter 11

38. Q: Do you think it's wrong for megaretailers to force small local businesses out of the market?
1. Yes
2. No
AK, 7e – Chapter 11

39. Q: The ________ concept suggests that many new forms of retailing begin as low-margin, low-price, low-status operations, which take the place of other such retailers who have, over time, added services and moved upscale.
1. retail life cycle 
2. wheel-of-retailing 
3. scrambled merchandising 
4. merchant wholesaling
AK, 7e – Chapter 11

40. Q: Which of the following is not a current retailing trend?
1. The demise of the department store 
2. Online retailing 
3. Global retailing 
4. The rise of megaretailers
AK, 7e – Chapter 11

41. Q: Which of the following middlemen takes title to the goods they are selling?
1. Agents 
2. Brokers 
3. Merchant wholesalers 
4. Cash-and-carry wholesalers
AK, 7e – Chapter 11

42. Q: Which of the following services do wholesalers provide to retailers?
1. Retail pricing 
2. Accounting services 
3. Online transactions 
4. All of the above
AK, 7e – Chapter 11

43. Q: Which of the following is not a likely trend in the wholesaling industry?
1. Geographic expansion of operations 
2. Vertical integration 
3. Increase in services provided 
4. Increase in the number of wholesalers
AK, 7e – Chapter 11