Principles of Marketing Kotler and Armstrong Insert Textbook Cover Image Chapter 13: Retailing and Wholesaling Copyright © 2016 Pearson Education, Inc. 13-1

Retailing and Wholesaling 13-2 Copyright © 2016 Pearson Education, Inc.

Retailing and Wholesaling Learning Objectives Objective 1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Objective 2: Describe the major retailer marketing decisions. Copyright © 2016 Pearson Education, Inc. 13-3

Learning Objectives Objective 3: Discuss the major trends and developments in retailing. Objective 4: Explain the major types of wholesalers and their marketing decisions. Copyright © 2016 Pearson Education, Inc. Retailing and Wholesaling 13-4

Learning Objective 1 Explain the role of retailers in the distribution channel and describe the major types of retailers. Copyright © 2016 Pearson Education, Inc. Retailing and Wholesaling 13-5

Retailing includes all the activities in selling goods or services directly to final consumers for their personal, nonbusiness use. Retailers Shopper marketing Retailing 13-6

“First Moment of Truth”—the critical three to seven seconds that a shopper considers a product on a store shelf. Retailing 13-7 Copyright © 2016 Pearson Education, Inc.

Amount of serviceProduct linesRelative pricesOrganization Retailing Types of Retailers Classification Characteristics: 13-8 Copyright © 2016 Pearson Education, Inc.

Self-serviceLimited serviceFull service Retailing Types of Retailers Amount of Service Classifications 13-9 Copyright © 2016 Pearson Education, Inc.

Product Line Classifications Specialty storesDepartment storesConvenience storesSuperstoresCategory killers Types of Retailers Copyright © 2016 Pearson Education, Inc.

Relative Price Classifications Discount stores Off-price retailers Factory outlets Warehouse clubs Types of Retailers Copyright © 2016 Pearson Education, Inc.

Relative Price Classifications Types of Retailers Copyright © 2016 Pearson Education, Inc. Discount storesOff-price retailers Independents Factory Outlets Warehouse clubs

Organizational Approach Corporate chainsVoluntary chains Retailer cooperatives Franchise organizations Types of Retailers Copyright © 2016 Pearson Education, Inc.

Organizational Approach Types of Retailers Copyright © 2016 Pearson Education, Inc.

Corporate chains are two or more outlets that are commonly owned and controlled. Size allows them to buy in large quantities at lower prices and gain promotional economies Macy’s CVS Types of Retailers Organizational Approach 13-15Copyright © 2016 Pearson Education, Inc.

Voluntary chains are wholesale-sponsored groups of independent retailers that engage in group buying and common merchandising. IGA Western Auto Types of Retailers Organizational Approach 13-16Copyright © 2016 Pearson Education, Inc.

Retailer cooperatives are a group of independent retailers that band together to set up a joint-owned, central wholesale operation and conduct joint merchandising and promotion efforts. Ace Hardware Associated Grocers Types of Retailers Organizational Approach 13-17Copyright © 2016 Pearson Education, Inc.

Franchises are contractual associations between a manufacturer, wholesaler, or service organization (a franchisor) and independent business people (franchisees) who buy the right to own and operate one or more units in the franchise system. Types of Retailers Organizational Approach 13-18

Marketing Channels Learning Objective 1 Explain the role of retailers in the distribution channel and describe the major types of retailers. Classifications by Amount of service Product lines Relative prices Organization Copyright © 2016 Pearson Education, Inc

Marketing Channels Learning Objective 2 Describe the major retailer marketing decisions. Copyright © 2016 Pearson Education, Inc

Retailer Marketing Decisions Copyright © 2016 Pearson Education, Inc.

Segmentation targeting, differentiation, and positioning involve the definition and profile of the market so the other retail marketing decisions can be made. Retailer Marketing Decisions Copyright © 2016 Pearson Education, Inc.

Major product variable decisions include: Product assortment Services mix Store atmosphere Retailer Marketing Decisions 13-23Copyright © 2016 Pearson Education, Inc.

Price policy must fit the target market and positioning, product and service assortment, competition, and economic factors. High markup on lower volume Low markup on higher volume Price Decision Retailer Marketing Decisions 13-24Copyright © 2016 Pearson Education, Inc.

Everyday low pricing (EDLP) involves charging constant, everyday low prices and offering few sales or discounts. High-low pricing involves charging higher prices on an everyday basis, coupled with frequent sales and other price promotions. Price Decision Retailer Marketing Decisions 13-25Copyright © 2016 Pearson Education, Inc.

Promotion Decision Advertising Personal selling Sales promotion Public relations Direct marketing Retailer Marketing Decisions 13-26Copyright © 2016 Pearson Education, Inc.

Central business districts are located in cities and include department and specialty stores, banks, and movie theaters. A shopping center is a group of retail businesses planned, developed, owned, and managed as a unit. Place Decision Retailer Marketing Decisions 13-27Copyright © 2016 Pearson Education, Inc.

Marketing Channels Learning Objective 2 Describe the major retailer marketing decisions. Segmentation targeting, differentiation, and positioning Product assortment and service decisions Price Decision Promotion Decision Place Decision Copyright © 2016 Pearson Education, Inc

Marketing Channels Learning Objective 3 Discuss the major trends and developments in retailing. Copyright © 2016 Pearson Education, Inc

Changed consumer spending patterns Some retailers benefit Other retailers have tough times Retailing Trends and Developments Tighter Consumer Spending 13-30Copyright © 2016 Pearson Education, Inc.

Retail convergence involves the merging of consumers, producers, prices, and retailers, creating greater competition for retailers and greater difficulty differentiating offerings. New Retail Forms, Shortening Retail Life Cycles, and Retail Convergence Retailing Trends and Developments 13-31Copyright © 2016 Pearson Education, Inc.

The rise of megaretailers involves the rise of mass merchandisers and specialty superstores, the formation of vertical marketing systems, and a rash of retail mergers and acquisitions. Superior information systems Buying power Large selection Retailing Trends and Developments 13-32Copyright © 2016 Pearson Education, Inc.

Growth of Non-store Retailing Direct Online Mobile Social Media Retailing Trends and Developments 13-33Copyright © 2016 Pearson Education, Inc.

Retailing Trends and Developments 13-34Copyright © 2016 Pearson Education, Inc.

The growing importance of retail technology provides better forecasts, inventory control, electronic ordering, transfer of information, scanning, online transaction processing, improved merchandise handling systems, and the ability to connect with customers. Retailing Trends and Developments 13-35Copyright © 2016 Pearson Education, Inc.

Environmentally sustainable practices Store design, construction, operations Product assortment Recycling made easier Package and distribution Green Retailing Retailing Trends and Developments Copyright © 2016 Pearson Education, Inc.

Retailers with unique formats and strong brands in other countries U.S. behind Asian and European companies in global expansion Challenges in meeting needs of local markets Global Expansion of Major Retailers Retailing Trends and Developments Copyright © 2016 Pearson Education, Inc.

Marketing Channels Learning Objective 3 Discuss the major trends and developments in retailing. Tighter consumer spending New retail forms, shortening life cycles, and retail convergence The rise of megaretailers Growth of non-store retailing Green retailing Growing importance of retail technology Global expansion of major retailers Copyright © 2016 Pearson Education, Inc

Marketing Channels Learning Objective 4 Explain the major types of wholesalers and their marketing decisions. Copyright © 2016 Pearson Education, Inc

Selling and promotingBuying and assortment buildingBulk breakingWarehousingTransportation Wholesaling Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use Copyright © 2016 Pearson Education, Inc.

FinancingRisk bearingMarket informationManagement services and advice Wholesaling Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use Copyright © 2016 Pearson Education, Inc.

Selling and promoting involves the wholesaler’s sales force helping the manufacturer reach many small customers at a low cost. Buying and assortment building involves the selection of items and building of assortments needed by customers, saving the customers work. Wholesaling Copyright © 2016 Pearson Education, Inc.

Bulk breaking involves the wholesaler buying in large quantities and breaking into smaller lots for customers. Warehousing involves the wholesaler holding inventory, reducing its customers’ inventory cost and risk. Wholesaling Copyright © 2016 Pearson Education, Inc.

Transportation involves the wholesaler providing quick delivery due to its proximity to the buyer. Financing involves the wholesaler providing credit and financing suppliers by ordering early and paying on time. Wholesaling Copyright © 2016 Pearson Education, Inc.

Risk bearing involves the wholesaler absorbing risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence. Market information involves the wholesaler providing information to suppliers and customers about competitors, new products, and price developments. Wholesaling Copyright © 2016 Pearson Education, Inc

Management services and advice involves wholesalers helping retailers train their sales clerks, improve store layouts, and set up accounting and inventory control systems. Wholesaling Copyright © 2016 Pearson Education, Inc.

Types of Wholesalers Merchant wholesalers Brokers and agents Manufacturers’ and retailers’ branches and offices Wholesaling Copyright © 2016 Pearson Education, Inc.

Merchant wholesalers are the largest group of wholesalers and include: Full-service wholesalers that provide a full set of services Limited service wholesalers that provide few services and specialized functions Wholesaling Types of Wholesalers Copyright © 2016 Pearson Education, Inc.

Brokers and agents do not take title, perform a few functions, and specialize by product line or customer type. Brokers bring buyers and sellers together and assist in negotiations. Agents represent buyers or sellers. Wholesaling Types of Wholesalers Copyright © 2016 Pearson Education, Inc.

Manufacturers’ and retailers’ branches and offices are a form of wholesaling by sellers or buyers themselves, rather than through independent wholesalers. Wholesaling Types of Wholesalers Copyright © 2016 Pearson Education, Inc.

Wholesaling Wholesaler Marketing Decisions Copyright © 2016 Pearson Education, Inc.

Segmentation, targeting, differentiation, positioning decisions: Size of customer Type of customer Need for service Wholesaler Marketing Decisions Wholesaling Copyright © 2016 Pearson Education, Inc.

Marketing mix decisions Product Price Promotion Place Wholesaling Wholesaler Marketing Decisions Copyright © 2016 Pearson Education, Inc.

Need for greater efficiency Value-adding customer relationships Increase in customer demand for services Increase in use of technology to boost productivity Trends in Wholesaling Wholesaling Copyright © 2016 Pearson Education, Inc.

Marketing Channels Learning Objective 4 Explain the major types of wholesalers and their marketing decisions. Copyright © 2016 Pearson Education, Inc

Principles of Marketing PowerPoint Copyright Page Copyright © 2016 Pearson Education, Inc