1. Retailing and Wholesaling
Chapter 11

2. Rest Stop: Previewing the Concepts
Explain the roles of retailers in the distribution channel and describe the major types of retailers
Describe the major retailer marketing decisions
Discuss the major trends and developments in retailing
Explain the major types of wholesalers and their marketing decisions

3. First Stop: Walmart: The World’s Largest Retailer
Dedicated to its long-time, low-price value proposition: “Save money. Live better”
Low costs let the retailer charge lower prices but still reap higher profits
Keeps costs down through:
Superior management and sophisticated technology
Getting the best prices from suppliers

4. All activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use
Retailing
A business whose sales come primarily from retailing
Retailer

5. Shopper Marketing
Using point-of-sale promotions and advertising to extend brand equity to “the last mile” and encourage favorable in-store purchase decisions
Note to Instructor: Shopper marketing involves focusing the entire marketing process—from product and brand development to logistics, promotion, and merchandising—toward turning shoppers into buyers at the point of sale.
Shopper marketing: Influencing consumers’ buying decisions as they shop now involves efforts aimed at in-store, online, and mobile shopping

6. Types of Retailers
The different types of retailers can be classified based on:
Amount of service they offer
Breadth and depth of product lines
Relative prices charged
The way they are organized

7. Types of Retailers: Amount of Service
Serve customers who are willing to perform their own locate-compare-select process
Self-service retailers
Provide more sales assistance as they carry shopping goods about which details are needed
Limited-service retailers
Usually carry more specialty goods for which customers need or want assistance or advice
Full-service retailers

8. Types of Retailers: Product Line
A retail store that carries a narrow product line with a deep assortment within that line
Specialty stores
A retail store that carries a wide variety of product lines, each operated as a separate department managed by specialist buyers or merchandisers
Department stores
A large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of grocery and household products
Supermarkets

9. Kroger, America’s Largest Grocery-Only Retailer
Thanks to customer-focused pricing, Kroger’s sales and market share gains have been the best in the industry despite a sagging economy

10. Types of Retailers: Product Line
A small store, located near a residential area, that is open long hours seven days a week and carries a limited line of high-turnover convenience goods
Convenience store
A store much larger than a regular supermarket that offers a large assortment of routinely purchased food products, non-food items, and services
Superstore
A giant specialty store that carries a very deep assortment of a particular line
Category killer
A retailer whose product line is actually a service; examples include hotels, airlines, banks, colleges, and many others
Service retailer

11. Convenience Stores
Sheetz positions itself as more than just a convenience store
Driven by its Total Customer Focus mission and the motto, “Feel the Love,” Sheetz aims to provide “convenience without compromise”

12. Types of Retailers: Relative Prices
Sell standard merchandise at lower prices and margins, in return for higher volume
Discount stores:
Buy merchandise at less-than-regular wholesale prices sells at less than retail
Off-price retailers:

13. Types of Off-Price Retailers
An off-price retailing operation that is owned and operated by a manufacturer and normally carries the manufacturer’s surplus, discontinued, or irregular goods
Factory outlet
An off-price retailer that sells a limited selection of brand name grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees
Warehouse club

14. Marketing at Work Dollar General aims to save customers time and money
Smaller stores cost less to operate, and locating them in and less glamorous areas keeps real estate costs down
Discounter Dollar General, the nation’s largest small-box discount retailer, makes a powerful value promise for the times: “Save time. Save money. Every day”

15. Types of Retailers: Organizational Approach
Two or more outlets that are commonly owned and controlled
Corporate chains
Wholesaler-sponsored group of independent retailers that engage in group buying and common merchandising
Voluntary chains

16. Types of Retailers: Organizational Approach
A contractual association between a manufacturer, wholesaler, or service organization (a franchisor)
and independent businesspeople
(franchisees) who buy the right to own and operate one or more units in the franchise system
Franchising

17. Franchise
These days, it’s nearly impossible to stroll down a city block or drive on a suburban street without seeing an abundance of franchise businesses

18. Figure 11.1 - Retailer Marketing Strategies
Note to Instructor: As with other types of marketers, the name of the game for retailers is to find the customer-driven marketing strategy and mix that will let them create value for customers and capture value in return. Remember Target’s “Expect more. Pay less.” value proposition? And Olive Garden’s “When you’re here, you’re family.”

19. Retailer Marketing Decisions
Segmentation
Targeting
Store differentiation
Positioning
Note to Instructor: Retailers must first segment and define their target markets and then decide how they will differentiate and position themselves in these markets. Should the store focus on upscale, midscale, or downscale shoppers? Do target shoppers want variety, depth of assortment, convenience, or low prices? Until they define and profit their markets, retailers cannot make consistent decisions about product assortment, services, pricing, advertising, store décor, or any of the other decisions that must support their positions.

20. Retail Targeting and Positioning
By positioning itself strongly away from Wal-Mart and other discounters, Whole Foods has made itself one of the nation’s fastest-growing and more profitable food retailers Whole Foods Market focuses on selling high-quality natural and organic foods

21. Retailer Marketing Decisions
Retailer marketing mix:
Product and service assortment
Retail prices
Promotion
Distribution (location)
Retail strategy and retail marketing mix must combine to create value for targeted retail customers

22. Retailer Marketing mis
Retail marketing mix:
Product assortment should differentiate the retailer while matching target shoppers’ expectations
Services mix can help differentiate one retailer from another
Store atmosphere is important as a unique store experience can move customers to buy
Experiential retailing is growing in popularity

23. Store Atmosphere
The Cabella’s “experience” has made it a tourist destination

24. Price Decisions
Price policy must fit with the target market and positioning, product and service assortment, competition, and economic factors
Price promotions and EDLP
High-low pricing

25. Pricing for the Target Segment
Bergdorf Goodman caters to the upper crust with prices to match

26. Retailer Marketing Decisions
Promotion decisions:
Retailers can use any or all of the promotion tools—advertising, personal selling, sales promotion, public relations, and direct marketing—to reach consumers

27. Distributio Location is the key to success Retailers can locate in:
Central business districts
Regional shopping centers
Community shopping centers
Strip malls (neighborhood shopping center)
Power centers
Lifestyle centers

28. Shopping Centers Today
Today’s shopping centers are more about creating places to be rather than just places to buy

29. Retail Trends & Developments
New retail forms, shortening retail life cycles, and retail convergence
Rise of megaretailers
Growth of direct and online retailing
Growing importance of retail technology
Green retailing
Global expansion of major retailers

30. Online Retailing
The Internet has spawned a whole new breed of shoppers – people who just can’t buy anything unless they first look it up online and get the lowdown

31. Retail Technology
Stop & Shop uses technology to make shopping faster and more convenient for customers

32. Green Retailing
McDonald’s new eco-friendly restaurants are designed from the bottom up with a whole new eco-attitude

33. Fuel for Thought
Many retail stores are becoming “communities” or “hangouts” either in the brick-and-mortar or virtual worlds
What can retailers do to make their brick-and- mortar stores “community friendly”?
Are there circumstances in which it would be undesirable to encourage patrons to “hang- out”? Explain.

34. All activities involved in selling goods and services to those buying for resale or business use
Wholesaling
Note to Instructor: Wholesalers add value for producers by performing one or more channel functions.

35. Wholesaling
Many of the nation’s largest and most important wholesalers—like Grainger— are largely unknown to final consumers
Grainger offers more than 900,000 maintenance, repair, and operating (MRO) items to over 1.8 million customers
Grainger’s value proposition is simple: to make it easier and less costly for buyers to purchase MRO items

36. Functions Wholesalers Perform
Selling and promoting
Buying and assortment building
Bulk-breaking
Warehousing
Transportation
Financing
Risk bearing

37. Types of Wholesalers
Merchant wholesaler: An independently owned wholesale business that takes title to the merchandise it handles
Largest group of wholesalers
Account for 50% of wholesaling
Two broad categories:
Full-service wholesalers
Limited-service wholesalers

38. Types of Wholesalers: Brokers
Brokers and agents:
Do not take title to goods
Perform only a few functions
Specialize by product line or customer type
Brokers bring buyers and sellers together
Agents represent buyers on a more permanent basis
Manufacturers’ agents are the most common type of agent wholesaler

39. Types of Wholesalers Manufacturers’ sales branches and offices:
Involves wholesaling by sellers or buyers themselves rather than through independent wholesalers

40. Figure 11.2 - Wholesaler Marketing Strategies
Note to Instructor: Like retailers, wholesalers must develop customer-driven marketing strategies and mixes that create value for customers and capture value in return. For example, Grainger helps its business customers “save time and money by providing them with the right products to keep their facilities up and running.”

41. Wholesaler Marketing Decisions
Wholesaler strategy:
Segmentation, targeting, differentiation, and positioning
Wholesaler marketing mix:
Product assortment and services
Price
Promotion
Distribution (location)

42. Trends in Wholesaling Need for ever greater efficiency
Demands for lower prices
Winnowing out of suppliers who are not adding value based on cost and quality
Blurring distinction between large retailers and wholesalers

43. Trends in Wholesaling
The tight economy and the demand for increased services have put the squeeze on wholesaler profits
Wholesalers have to find efficient ways to deliver value to customers to stay in the race
Increased use of computerized, automated, and Internet-based systems will help wholesalers contain their costs

44. Marketing in Action
Pharmaceutical wholesaler McKesson helps its retail pharmacist customers to be more efficient by offering a wide range of online resources

45. Rest Stop: Reviewing the Concepts
Explain the roles of retailers in the distribution channel and describe the major types of retailers
Describe the major retailer marketing decisions
Discuss the major trends and developments in retailing
Explain the major types of wholesalers and their marketing decisions

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Copyright © 2013 Pearson Education, Inc.
Publishing as Prentice Hall