Retailing and Wholesaling Chapter 12 Retailing and Wholesaling

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.

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

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.

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

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

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

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.

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

Retailer Marketing Decisions (Fig. 12-1)

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.  

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

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!

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.

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”

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

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

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.

Wholesaler Marketing Decisions (Fig. 12-2)

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

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.