1. Chapter 15 Managing Retailing, Wholesaling, and Market Logistics
PowerPoint by Yu Hongyan Business School of Jilin University

2. Objectives
Retailing
Wholesaling
Logistic

3. 1. Retailing Retailing Basics Retail life cycle Wheel-of-retailing
Types of retailers
Marketing decisions
Retailing trends
Retail life cycle
Wheel-of-retailing
Service levels
Retail positioning strategies
Nonstore retailing
Corporate retailing

4. 1. Retailer (cont’d) What means retailer?
A retailer is any business enterprise whose sales volume comes primarily from retailing

5. 1. Retailer (cont’d)
Store Type Length and Breadth of Product Assortment
Specialty Stores
Narrow Product Line, Deep Assortment
Department Stores
Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items
Supermarkets
Wide Variety of Food, Laundry, & Household Products
Convenience Stores
Limited Line of High-Turnover Convenience Goods
Discount Stores
Broad Product Line, Low Margin, High Volume
Off-Price Retailer
Inexpensive, Overruns, Irregulars, and Leftover Goods
Superstores
Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services
Catalog Showroom
Broad Selection, Fast Turnover, Discount Prices

6. Retailing
Retail-store types pass through the retail life cycle.

7. Wheel of Retailing New Entrants . Mid Price Mid Status Mid Margin
Low Price
Low Status
Low Margin
High Price
High Status
High Margin
New Entrants

8. 1. Retailer (cont’d) Four Levels of Retail Service Self-service
Locate, compare, and select process
Self-selection
Find, and can ask help
Limited-service
Need more information and assistance
Full-service

9. Discussion Scenario
“Catalogue retailers,” popular in the 1980’s, are now all but extinct. Customers at such stores would view display items in a showroom, submit “tickets” listing desired items to clerks, and await delivery of their purchases at checkout via conveyor belt.
What retail form precipitated the decline of catalogue retailers? Can you identify an emerging retail form or one that is in decline?

10. Retail Positioning Map
Broad
Narrow
Breadth of
product line
Bloomingdale’s 卓展
Wal-Mart 卖场
Tiffany
Specialty Nike
Sunglass Hut
Shoe
Value added
Low
High

11. 1. Retailer (cont’d) Four broad retail positioning strategies include:
Bloomingdale’s
Tiffany
Sunglass Hut
Wal-Mart
Non-store retailing has been growing faster than store retailing

12. 1. Retailer (cont’d) Direct Selling Direct Marketing Automatic Vending
NonStore Retailing Accounts for More Than 12% of All Consumer Purchases, and is trending up.
Automatic Vending
Buying Services 安利
Type of nonstore retailing

13. 1. Retailer (cont’d) Retailing Basics Target market
Types of retailers
Marketing decisions
Retailing trends
Target market
Product assortment and placement
Services mix and store atmosphere
Price
Promotion==
Place

14. Promotion Advertising Special sales Money saving coupons
Frequent shopper rewards
In store sampling
In store coupon
Rebate
Any more?

19. Retailing Location Options for Retailers General Business District
Regional Shopping Center
Community Shopping Center
Strip mall (Shopping Strip)
Location within a larger store or operation

20. Discussion Scenario
Restaurants such as McDonald’s and Subway have attempted to expand their distribution by opening stores within gas stations, or mass merchandisers such as Wal-Mart. In some instances, stores offer limited menus or drive-thru service only.
Aside from fast food restaurants, what other types of retail businesses have followed a similar strategy?

21. Retailing Retailing Basics Types of retailers Marketing decisions
Retailing trends
New retail forms
Intertype competition
Growth of giant retailers
Technology
Global expansion
Selling experiences
Competition between store-based and non-store-based retailing

22. 2. Wholesaling Wholesaling Wholesaling basics Types of wholesalers
Marketing decisions
Wholesaling trends
Wholesaling excludes manufacturers, farmers, and retailers
Wholesalers differ from retailers in three key ways
Wholesalers handle many functions more efficiently than do manufacturers

23. 2. Wholesaling (cont’d) 1. The Definition of Wholesaling
Wholesaling includes all the activities involved in selling goods or services to those who buy for resale or business use.
Wholesale excludes manufactures and farmers because they are engaged in production

24. 2. Wholesaling (cont’d) Difference between R and W
Wholesale pay less attention to promotion, atmosphere and location because they are dealing with business customers rather than final consumer
Wholesale are usually larger than retail transaction, and cover a larger trade areas than retailers
The government deals with wholesalers and retailer differently regards legal regulations and tax

25. Why Are Wholesalers Used?
Management
Services & Advice
Selling and
Promoting
Wholesaler
Functions
Market
Information
Buying and
Assortment Building
Risk Bearing
Bulk Breaking
Financing
Warehousing
Transporting

26. 2. Wholesaling (cont’d) 2. The Growth of Wholesaler
Growth of larger factories located some distance from the principal buyers
Production in advance of orders rather than in response to specific orders
Increase in the number of levels of intermediate producer and user

27. 2. Wholesaling (cont’d) Wholesaler Functions Selling and Promoting
Market
Information
Bulk breaking
Risk Bearing
Wholesaler Functions
Warehousing
Financing
Buying and Assortment Building
Transportation

28. 2. Wholesaling (cont’d) Wholesaling Wholesaling basics
Growth and types of wholesalers
Marketing decisions
Wholesaling trends
Wholesalers vary in type and function
Wholesaling has been growing due to two key factors:
Many factories are located far from buyers
An increasing need to adapt product quantities, features, or packages to meet buyer needs

29. Major Wholesaler Types
2. Wholesaling (cont’d)
Major Wholesaler Types
Merchant wholesalers
Full-service wholesalers
Limited-service wholesalers
Brokers & agents
Brokers
Agents
Manufacturers’ and retailers’ branches and offices
Miscellaneous wholesalers

30. 2. Wholesaling (cont’d) Wholesaling Wholesaling basics
Types of wholesalers
Marketing decisions
Wholesaling trends
Target market
Product assortment and placement
Price
Promotion
Place

31. 2. Wholesaling (cont’d) Wholesaling
Wholesaling basics
Types of wholesalers
Marketing decisions
Wholesaling trends
Direct buying trends initially threatened wholesalers
Wholesalers have adapted by:
Adding value
Reducing costs
Strengthening relationships with manufacturers

32. 3. Market Logistics Interrelated Aspects of Market Logistics Offset
Value Network
Market Logistics
Offset
Physical Distribution
Compensation Deal
Demand Chain Planning
Supply Chain Management
Integrated Logistics Systems

33. 3. Market Logistics (cont’d)
McKesson offers online supply management

34. 3. Market Logistics (cont’d)
Key Elements
Market-logistics objectives
Market-logistics decisions
Market logistics lessons
Logistics involve trade-offs between costs and customer service
Maximizing profits, not sales, is key
A total system basis should be considered
Designing a system that will minimize the cost of achieving objectives should be the outcome

35. 3. Market Logistics (cont’d)
Calculating the Cost of Market-Logistics Systems
M = T + FW + VW + S
Where . . .
M = total market-logistics cost of proposed system;
T = total freight cost of proposed system;
FW = total fixed warehouse cost of proposed system;
VW = total variable warehouse cost of proposed system
S = total cost of lost sales due to average delivery delay

36. 3. Market Logistics (cont’d)
Key Elements
Market-logistics objectives
Market-logistics decisions
Market logistics lessons
Order processing
Warehousing
Storage, distribution, automated warehouses
Inventory
Determine reorder point, relevant cost comparison, optimal order quantity
Transportation
Containerization
Private vs. contract carriers

37. 3. Market Logistics (cont’d)
Order Processing
Submitted
Processed
Shipped
Costs
Minimize Costs of
Attaining Logistics
Objectives
Logistics
Functions
Transportation Water, Truck, Rail, Pipeline & Air
Warehousing
Storage
Distribution
Inventory
When to order
How much to order
Just-in-time

38. Transportation Modes Rail Truck Water Pipeline Air
Nation’s largest carrier, cost-effective
for shipping bulk products, piggyback
Truck
Flexible in routing & time schedules, efficient
for short-hauls of high value goods
Water
Low cost for shipping bulky, low-value
goods, slowest form
Pipeline
Ship petroleum, natural gas, and chemicals
from sources to markets
Air
High cost, ideal when speed is needed or to
ship high-value, low-bulk items

39. 3. Market Logistics (cont’d)
Key Elements
Market-logistics objectives
Market-logistics decisions
Market logistics lessons
A senior V.P. is needed as the single contact point for all logistical elements
Senior V.P. must maintain close control
Software and systems are essential for competitively superior logistics performance

40. Review
Retailing
Wholesaling
Logistics