1. Retailers, Wholesalers and Their Strategy Planning
Chapter Thirteen
Retailers, Wholesalers and Their Strategy Planning
Chapter 13-18
For use only with Perreault/Cannon/McCarthy or Perreault/McCarthy texts. © 2011 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin 1

2. Marketing Strategy Planning Process
This slide refers to material on pp. 333.
In this presentation we will continue our discussion of one of the four Ps – Place.
When managers think about Place, they are concerned with making goods and services available in the right quantities, right locations, when customers want them. 4

3. Retailers and Wholesalers Plan Their Own Strategies
This slide refers to material on pp
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Must Select Target Markets and Marketing Mixes Carefully
Summary Overview
Wholesalers and retailers are vital links in a channel system. As consumers, we are much more familiar with retailing than wholesaling, because we all shop at retail stores at one time or another. Wholesaling takes place out of the view of most consumers.  Both wholesalers and retailers must select their target markets and marketing mixes carefully.
Key Issues
Marketers should understand how retailing and wholesaling are evolving.
The pace of this evolution has accelerated.
Technology is changing the ways in which intermediaries interact with customers.
New types of intermediaries have developed.
Understanding the evolution of retailers and wholesalers will provide clues about what to expect in the future.
Discussion Question: Many retailers have developed websites, but simply having a website is no guarantee of success, and the numerous failures of online retailers demonstrate that fact. What lessons can “e-tailers” learn from traditional retailers when it comes to serving customers?
Retailing: all of the activities involved in the sale of products to final consumers.
Retailing is crucial to consumers in every macro-marketing system.
Consumers spend more than $4.5 trillion a year buying goods and services from U.S. retailers.
In service retailing, the retailer is also the producer.
Marketers Must Understand Retailer/ Wholesaler Evolution
Retailing Deals with Final Customers 6

4. Retailing on the Internet
This slide refers to material on pp
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Moving Information
New Meaning of Convenience
Internet Retailing
Summary Overview
Retailing on the Internet continues to grow quickly - at more than 20 percent a year.
Key Issues
Moving Information versus moving goods.
Internet dramatically lowers the cost of communication and makes it faster.
Convenience takes on new meanings.
A consumer can have an unlimited assortment on the Internet; however, the consumer is limited by other elements of the product.
Shipping delays and shipping costs.
Consumer can’t touch product.
More and less information at the same time.
Detailed information is easily available on the Internet, but a consumer can’t inspect a product on the Internet.
The costs are sometimes misleading.
Need to develop low-cost ways to hand deliveries of everyday purchases
Consideration of costs for product returns
Internet fraud
Misleading costs?
Amount of Information 17

5. What Is a Wholesaler? Changing With the Times
This slide refers to material on pp
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Changing With the Times
Producing Value and Profits, Not Chasing Orders
Progressive Wholesalers Adapt
Summary Overview
Wholesaling is concerned with the activities of persons or establishments (wholesalers) that sell to retailers, other merchants, business users, or institutional users, but do not sell in large amounts to final consumers.
Key Issues
Wholesaling is changing with the times, and innovative forms of competition will lead to new business models.
However, many wholesalers are enjoying significant growth, by focusing on producing value and profits and not chasing orders.
Progressive wholesalers have used technology to offer better service, streamlined their operations, switched to selective distribution policies, and modernized their facilities.
Not all wholesalers are progressive, and perhaps we will say good-bye to some.
Discussion Question: Some wholesalers feel they are begin squeezed out of business because powerful producers and/or wholesalers are bypassing them.
Is this an ethical issue? Is it fair, or is it just part of doing business?
Survivors will need effective strategies, based on the marketing concept.
Goodbye to Some?
Ethical Issues?
New Strategies Needed To Survive 26

6. Several Promotion Methods Are Available
This slide refers to material on pp
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Personal Selling
Mass Selling
Summary Overview
Promotion is communicating information between a seller and a potential buyer or others in the channel to influence attitudes and behavior. A key part of modern marketing is the use of several promotion tools that work together to achieve a company’s overall promotion goals.
Key Issues
Personal selling: direct spoken communication between sellers and potential customers.
Salespeople get quick feedback and can adapt the 4Ps on the spot.
A sales force can be very expensive to build and maintain.
Mass selling: communicating with large numbers of potential customers at the same time, useful when the target market is large and geographically dispersed.
Advertising is any paid form of nonpersonal presentation of ideas, goods, or services by an identified sponsor. Media include television, radio, magazines, billboards, direct mail, and the Internet.
Publicity is any unpaid form of nonpersonal presentation of ideas, goods, or services. Publicity professionals try to get stories about their company’s products placed in mass media vehicles without having to pay media costs.
Discussion Question: Why do you think that consumers might believe publicity more readily than they would believe an ad?
Sales Promotion: as discussed on the next slide.
Less is spent on advertising than personal selling or sales promotion
Different methods of promotion
Advertising
Publicity
Sales Promotion 6

7. Sales Promotion Tries to Spark Immediate Interest (Exhibit 14-2)
This slide refers to material on pp. 362.
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Aimed at consumers or users
Contests
Coupons
Aisle displays
Samples
Trade shows
Point-of-purchase materials
Banners & streamers
Frequent buyer programs
Sponsored events
Aimed at wholesalers or retailers
Price deals
Promotion allowances
Sales constests
Calendars & gifts
Trade shows
Meetings
Catalogs
Merchandising aids
Videos
Summary Overview
Sales promotion refers to promotion activities--other than advertising, publicity, and personal selling--that stimulate interest, trial, or purchase by final customers or others in the channel. Sales promotion may be aimed at consumers, at intermediaries, or even at a firm’s own employees.
Key Issues
Examples of sales promotion aimed at final consumers include: contests; coupons; aisle displays; samples; trade show displays; point-of-purchase materials; banners and streamers; frequent-buyer programs; and sponsored special events.
Examples of sales promotion aimed at wholesalers or retailers include: price deals; promotion allowances; sales contests; calendars; gifts; trade show displays; meeting sponsorships; catalogs; videos; and other merchandising aids.
Examples of sales promotion aimed at the company’s own sales force include: contests; bonuses; meeting sponsorships; customized portfolios; displays; sales aids; and training materials.
Sales promotion can be implemented quickly and get results sooner.
Most sales promotion efforts are designed to produce immediate results.
More money is spent on sales promotion and personal selling than on mass media advertising.
Discussion Question: For what promotion type would it be easiest to assess results—that is, whether or not it really worked—advertising or sales promotion? Why?
Aimed at company’s own sales force
Contests & Bonuses
Meetings
Portfolios & Displays
Sales aids
Training materials 7

8. Sales Promotion This slide refers to material on pp. 362.
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Summary Overview
Point-of-purchase promotional materials are a popular form of sales promotion. Because space is at a premium in most grocery stores, this promotional material is strategically located on the floor.
Key Issues
In this ad, Floor Graphics, a provider of point-of-sale ads for the floors of retail stores, is providing information about its services.
Floor Graphics targets businesses that sell consumer products.
Floor Ads are often placed on the floor in retail stores directly in front of the shelf with the merchandise being promoted.
Clearly, this form of promotion can get attention and stimulate interest at the time of the purchase decision.
Discussion Question: How do you think floor point-of-sale ads compare to other promotional options? What are the advantages? What are the disadvantages? 8

9. Someone Must Plan, Integrate, and Manage the Promotion Blend
This slide refers to material on pp
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Sales Managers
Advertising Managers
Integrated Marketing Communications
Summary Overview
Each promotion method has strengths, weaknesses, and distinct activities, so each requires a different type of expertise. Specialists develop and implement detailed plans for the various parts of the overall promotion blend.
Key Issues
Sales managers: are concerned with managing personal selling.
This may involve building and maintaining channels of distribution.
In smaller companies, the sales manager may double as the marketing manager.
Advertising managers: manage the company’s mass selling effort, using in-house advertising departments or external agencies.
The advertising manager may also handle publicity or use an internal or external specialist in public relations—communication with noncustomers, such as labor, public interest groups, stockholders, and the government.
Sales promotion managers: manage the sales promotion effort.
Marketing manager: must determine the blend of promotional activities and coordinate them. The individual promotion specialists can then focus on the details of implementation.
Discussion Question: How is promotion management complicated in a “long” channel of distribution—one involving several levels of intermediaries?
Effective blending of promotion efforts is achieved through integrated marketing communications, so that the firm can send a consistent and complete message.
Marketing Managers
Sales Promotion Managers 9

10. Which Method to Use Depends on Promotion Objectives
This slide refers to material on pp. 365.
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Informing
Summary Overview
A marketing manager usually has to set priorities for the promotion objectives. This section will describe some specific objectives and how different promotion methods can help achieve them.
Key Issues
Informing, persuading, and reminding are basic promotion objectives. More specific promotion objectives should describe who the target is and why.
Informing is educating. Promotion helps customers learn about products. Informing is especially important for products that are really new.
Persuading usually becomes necessary in order to convince the market to buy the firm’s products instead of some other firm’s products.
Discussion Question: Can you give examples of informing and persuading for personal selling, advertising, sales promotion, and publicity?
A reminding objective might be suitable (sometimes) if target customers already have positive attitudes about a firm’s marketing mix.
Persuading
Reminding 10

11. Integrated Direct-Response Promotion Is Very Targeted
This slide refers to material on pp
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
More Than Direct Mail
Summary Overview
Direct marketing is direct communication between a seller and an individual customer using a promotion method other than face-to-face personal selling. Most direct marketing efforts are designed to generate a direct response from consumers. This direct response promotion has grown in popularity because it makes targeting specific consumers easier.
Key Issues
Direct-response promotion is more than direct-mail advertising.
It includes telephone, print, , Internet, broadcast, and other media.
Consumers respond by making a purchase, asking for more information, calling a toll-free number, or clicking on a website.
Marketers must coordinate direct-response efforts with other promotion.
Direct response promotion targets a customer directly using a database that can contain information about past purchase behavior and other segmenting characteristics.
Direct-response methods raise ethical concerns, including:
“junk mail,” “spam,” or unwanted telemarketing calls;
security of personal information in a database;
“cookies”--that are transmitted to customers’ computers by Internet marketers.
Most marketers involved in direct-response promotion take steps to address these concerns.
Discussion Question: Which of these ethical issues—if any—concern you? Why?
Target Directly With a Database
Ethical Concerns 18

12. What Kinds of Personal Selling Are Needed?
This slide refers to material on pp. 389.
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Order-Getting
Order-Taking
Basic
Sales Tasks
Summary Overview
Marketing managers recognize that effective personal selling involves successful completion of a number of activities, and establishing a balance between the right number and the right kind of salespeople. Therefore, it is important for marketers to understand the basic sales tasks that are to be performed.
Key Issues
Personal selling is divided into three tasks. These basic sales tasks are:
order-getting;
order-taking; and
supporting.
Order getters and order takers obtain orders on behalf of a company.
Supporting salespeople are not directly interested in orders; their function is to help the order-oriented salespeople.
In some cases, a single salesperson will do all three tasks.
In other cases, particularly in large companies that depend heavily on personal selling, the tasks are divided among a number of sales professionals.
Discussion Question: What are the pros and cons of having a salesperson perform all three basic tasks, compared to dividing the tasks up among several salespeople?
Supporting 7

13. Order Getters Develop New Business Relationships
This slide relates to material on pp
Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Order Getters (establishing business relationships with new customers) and Order-Getting (seeking possible buyers with organized sales presentation to sell a good, service, or idea)
Producers’ Order Getters Find New Opportunities, Prospects, Accounts, Channels of distribution
Summary Overview
Order getters: are concerned with establishing business relationships with new customers and developing new business. Order-getting: seeking possible buyers with a well-organized sales presentation designed to sell a good, service, or idea.
Key Issues
Order getters must be experts about every aspect of their products.
 Producers’ order getters find new market opportunities—new prospects, new accounts, and new channels of distribution.
Good order getters are problem solvers.
Many producers give their order getters special training so they will understand their customers’ needs and the products that need to be sold.
Discussion Question: In selling services, the customer cannot inspect the service before purchase. How can an order-getting sales rep get the consumer to buy a service sight unseen?
Wholesalers’ order getters work closely with producers and retailers.
In a sense, they almost hand the product to the customer.
Salespeople for agent wholesalers are often order getters.
 Retail order getters influence consumer behavior and help to move products from the market introduction stage to the market growth stage of the product life cycle, especially for heterogeneous shopping products and unsought products.
Wholesalers’ Order Getters (Salespeople for agent wholesalers are often order getters)
Retail Order Getters Influence Buyer Behavior by moving through the product life cycle

14. Order Takers Nurture Relationships to Keep the Business Coming
This slide refers to material on pp
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Order Takers and Order-Taking
Producers’ Order Takers Train, Explain, & Collaborate
Summary Overview
Order takers: sell to regular customers, completing sales transactions and maintaining relationships. Order-taking: the routine completion of sales made regularly to target customers.
Key Issues
Order takers need to be highly trained, competent individuals. Order-taking activities can make the difference between keeping and losing a customer.
Producers’ order takers train, explain, and collaborate. They work on improving the whole relationship with the customer.
Even if computers handle routine reorders, someone has to perform basic tasks such as making adjustments, handling complaints, and keeping customers informed of new developments.
Wholesalers’ order takers are involved not in getting orders but in keeping them.
Wholesale order takers may have to deal with thousands of items.
As a result, they often keep in contact with customers on a regular basis and fulfill any needs that arise, as opposed to selling any particular item.
Retail order takers are often poor salesclerks who are not paid or trained well.
Knowledgeable, courteous, helpful salesclerks can play an important role in a retailer’s marketing mix.
Discussion Question: Why do you think that retailers do not place more emphasis on training and compensating retail order takers?
Wholesalers’ Order Takers Don’t Get Orders But Keep Them
Retail Order Takers Are Often Poor Sales Clerks 9

15. Supporting Sales Force Informs and Promotes in the Channel
This slide relates to material on pp
Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Technical Specialists (experts who know product applications; science or engineering backgrounds)
Missionary Salespeople (increase sales by creating goodwill; providing training , & performing other activities)
Supporting Sales Tasks
Summary Overview
Supporting salespeople help the order-oriented salespeople but they don’t try to get orders themselves. Their activities, such as providing specialized services and information, are aimed at enhancing the relationship with the customer and getting sales in the long run.
Key Issues
 Missionary salespeople: supporting salespeople who work for producers by calling on their intermediaries and customers.
Missionary salespeople can increase sales by creating goodwill, providing training, and performing other activities.
This position is often used as a training ground for new salespeople.
 Technical specialists: provide technical know-how in support of order-oriented salespeople.
Technical specialists are experts who know product applications, and they often have science or engineering backgrounds.
They are more concerned with providing technical details about products than in persuading customers to place orders.
Discussion Question: How important are good communication skills for technical specialists? Explain.
 Customer service reps: work with customers to resolve problems that arise after a purchase.
Every marketing-oriented company needs good people to handle customer service.
Customer Service Reps (resolve problems)

16. The Right Structure Helps Assign Responsibility
This slide refers to material on pp
 Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Different Markets, Different Tasks
Team Selling
Major Accounts Sales Force
Summary Overview
The sales manager must organize the sales force so that all necessary tasks are performed well. If different people handle different sales tasks, firms often rely on team selling—when different people work together on a specific account.
Key Issues
Different target markets need different selling tasks. –Managers often have different sales forces for different target markets who have different support or information needs.
For example, big accounts often get special treatment from a major accounts sales force.
Discussion Question: What are the advantages of having a separate sales force for big accounts? Are there any disadvantages?
Some salespeople specialize in telephone selling.
Telemarketing is quick and inexpensive and can provide a way to serve customers who would otherwise be too expensive to support.
Sales tasks are done in sales territories.
Sales territory: a geographic area that is the responsibility of one salesperson or several working together.
Managers must weigh distance, number of customers, the complexity of account service, and the potential profitability of setting up sales territories.
The size of the sales force depends on workload per salesperson.
Assessing the workload evaluates the time required for sales tasks as well as the number of customers and other important market factors.
Sales Force Size and Workload
Telemarketing
Sales Territories 13

17. Information Technology Provides Tools to Do the Job
This slide relates to material on pp
Indicates place where slide “builds” to include the corresponding point (upon mouse click).
New Software (e.g., spreadsheet analysis; electronic presentations)
Great Changes in Handling Tasks
New Hardware (e.g., personal digital assistants with wireless internet access; cellular phones)
Summary Overview
 There have been great changes in how sales tasks are handled. Many of today’s sales reps rely on an array of software and hardware that wasn’t available a decade ago.
Key Issues
 There is new software for spreadsheet analysis, electronic presentations, time management, sales forecasting, customer contact, and shelf-space management.
 Hardware devices include personal digital assistants with wireless Internet access, cellular phones, fax machines, laptop computers, pagers, and personalized videoconferencing systems.
 In many situations the new software and hardware provide a competitive advantage. They are dramatically changing the ability of sales reps to meet the needs of their customers while achieving the objectives of their jobs.
 However, the availability of these technologies does not change the basic nature of the sales tasks that need to be accomplished. What they do change is the way--and how well--the job is done.
 Of course, if a firm expects salespeople to be able to use these technologies, that requirement needs to be included in selecting and training people for the job.
Discussion Question: What obstacles exist that may hinder the adoption and use of new sales technologies within a particular organization? In other words, if these tools are so great, why doesn’t everyone use them?
Good Selection and Training Needed
Technology Can Be a Competitive Advantage
What is Done vs.
How It’s Done

18. Competitive Advertising Emphasizes Selective Demand
This slide relates to material on p. 430.
Competitive Advertising Emphasizes Selective Demand
Summary Overview
Competitive advertising tries to develop selective demand for a specific product or brand. Competitive ads become more important as competition increases and as a product moves into maturity.
Key Issues
Direct type: competitive advertising that aims for immediate buying action.
Indirect type: points out product advantages to consider in future buying decisions.
In the U.S., marketing managers at Nestlé are constantly trying to stimulate selective demand in a very competitive market.
In developing nations where candy is less popular, Nestlé faces the challenge of stimulating primary demand.
Discussion Question: Is this ad a direct competitive ad or an indirect competitive ad? Why?

19. A Competitive Ad That’s Comparative
This slide relates to material on p. 430.
Summary Overview
Comparative advertising goes head-to-head with competitive products by making specific brand comparisons. Even though comparative ads are common in the U.S., they are still banned in some other countries.
Key Issues
In the ad above, Clorox Disinfecting Wipes states that a competing wipe made by Windex doesn’t disinfect as well as its product.
Some consumers might view all wipe products as having the same cleaning capabilities.
Discussion Question: What ads for other products draw direct comparisons with other competing products?
A key thing to remember in planning comparative ads is that the claims made about products should be supported by research.
There may also be drawbacks to comparative ads if they are confusing to consumers, or if they focus on small, insignificant differences between products.

20. Reminder Advertising Reinforces a Favorable Relationship
This slide relates to material on p. 430.
Reminder Advertising Reinforces a Favorable Relationship
Summary Overview
Reminder advertising tries to keep the product’s name before the public. It is useful for supporting successful products well into the market maturity and sales decline stages of the product life cycle.
Key Issues
Buster Brown, displayed in the ad, is a well-known brand with a 100-year history.
The ad above was run at back-to-school, shoe-buying time to remind parents of their positive feelings about Buster Brown shoes.
The ads featured a toll-free number to call or website address so consumers could learn the location of the closest retailer.

21. Legality of Pricing Policies
This slide relates to material on pp
Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Unfair Trade Practice Acts (puts a lower limit on prices)
Dumping (pricing a product sold in a foreign market below the cost of producing it in its domestic market)
Key Issues
Summary Overview
Some pricing decisions are limited by government legislation.
Key Issues
Minimum prices are sometimes controlled.
 Unfair trade practice acts: put a lower limit on prices, especially at the wholesale and retail levels.
These acts protect the viability of certain types of intermediaries, and indirectly benefit the consumer by providing more choices.
 Dumping is pricing a product sold in a foreign market below the cost of producing it in its domestic market.
Antidumping laws protect domestic producers from foreign competition.
Even very high prices may be OK—firms can charge high prices as long as they do not conspire with competitors to fix prices or discriminate against some of their customers.
 You can’t lie about prices. Phony list prices: prices shown to consumers to suggest that the price has been discounted from list.
In the U.S., the Federal Trade Commission (FTC) tries to stop this practice, using the Wheeler-Lea Amendment, which bans “unfair or deceptive acts in commerce.”
Discussion Question: Why do phony list prices still exist, if they are illegal?
Price fixing: competitors getting together to raise, lower, or stabilize prices. It is considered conspiracy under the FTC Act and the Sherman Act. Price fixing is illegal—you could go to jail!
Producers may set minimum retail prices. Manufacturers usually suggest a retail list price and leave it up to the retailers to decide what to charge in local markets.
Price Fixing (competitors getting together to raise, lower, or stabilize prices)
Phony List Prices (suggest that the price has been discounted from list)

22. The Marketing Manager Must Consider Various Kinds of Costs
This slide relates to material on p. 492.
Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Total Variable Cost
Total Fixed Cost
Total Cost
Summary Overview
In light of the problem with average-cost pricing, it is important to understand six types of costs, because they each change in a different way as output changes.
Key Issues
There are three kinds of total cost:
 Total fixed cost is the sum of those costs that are fixed in total, regardless of how much of something is produced. Things like rent, managers’ salaries, and insurance remain constant whether production goes up or down.
 Total variable cost is the sum of expenses that change with the level of output. Variable costs include things like hourly wages, the cost of materials, packaging, shipping, and sales commissions.
 Total cost is the sum of total fixed and total variable costs.
There are three kinds of average cost:
 Average cost per unit is obtained by dividing total cost by the related quantity.
 Average fixed cost per unit is obtained by dividing total fixed cost by the related quantity.
 Average variable cost per unit is obtained by dividing total variable cost by the related quantity.
Discussion Question: If total fixed costs are $50,000 and total variable costs are $60,000, and 500 units are produced, what are: a.) total cost; b.) average cost; c.) average fixed cost; and d.) average variable cost?
Average Variable Cost
Average Cost
Average Fixed Cost

23. Bid Pricing and Negotiated Pricing Depend Heavily on Costs
This slide relates to material on pp
Indicates place where slide “builds” to include the corresponding point (upon mouse click).
New Prices for Every Job
Ethical Issues
Summary Overview
 Bid pricing means offering a specific new price for every job rather than setting a price for all customers. This can be as simple as setting the lowest acceptable selling price, as is the case in a reverse auction online, or it may be much more complicated, as when a contractor bids on many different projects.
Key Issues
Cost estimation is the biggest challenge in bid pricing. In spite of this challenge, sellers must be equipped to respond quickly to invitations to bid. Usually, these bids are based on the buyer’s specifications for the product or the service.
 There are ethical issues in cost-plus bid pricing, such as over-inflation of cost figures by sellers.
 Given that there will likely be other competitors for any given bid, sellers need to give considerable thought to the overhead and profit figures they add to the costs of the project, because they may have a significant impact on how bids compare to each other. So, demand must be considered as well as cost in submitting bids.
Sometimes, bids are negotiated. Sellers whose initial bids are attractive may move to additional rounds of negotiation to arrive at a final price. Other times, the lowest bid is accepted.
Discussion Question: What is the danger in relying only on the amount of the bid to determine the eventual winner of the contract?
 The negotiated price is the price resulting from bargaining between the buyer and seller, and focuses on what a specific customer will pay. All the marketing mix variables may be negotiated—not just the price.
Consider Demand
Negotiated Prices