1. Retailing and Wholesaling
CHAPTER 11
Retailing and Wholesaling

2. Roadmap: 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.
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3. WHOLE FOODS MARKET – Finding Its Niche
Has 170 stores worldwide with $4 billion in sales vs stores and sales of $285 billion for Wal-Mart.
Offers organic, natural, and gourmet foods.
Positions itself AWAY from Wal-Mart: “Whole Foods, Whole People, Whole Planet.”
Marketing Efforts
Web site reinforces the company’s positioning.
Caters to health conscious, affluent, liberal, educated consumer base.
Both in-store and online shopping is a customer experience.
Cares about employees, customers, & community.
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4. What Is Retailing?
Retailing includes all the activities involved in selling products or services directly to final consumers for their personal or business use.
Most retailing is done by retailers, but nonstore retailing has recently grown substantially.
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5. Classification of Types of Retailers
Retailers are classified based on:
Level of service they offer.
Breadth and depth of product lines.
Relative prices charged.
How they are organized.
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6. Level of Service Classification
Self-Service Retailers:
Serve customers who are willing to perform their own “locate-compare-select” process to save money.
Limited-Service Retailers:
Provide more sales assistance because they carry more shopping goods about which customers need information.
Full-Service Retailers:
Usually carry more specialty goods for which customers like to be “waited on.”
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7. Product Line Classification
Specialty stores
Department stores
Supermarkets
Convenience stores
Superstores
Category killers
Supercenters
Hypermarkets
Video Snippet
What type of retailers carry the Reebok shoe brand? Learn more by watching this video snippet.
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8. Product Line Classification
Specialty stores
Carry narrow product lines with deep assortments within those lines.
Department stores
Carry a wide variety of product lines – typically clothing, home furnishings, and household goods. Each product line is operated by a separate department managed by specialist buyers or merchandisers.
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9. Specialty Stores Marketing in Action
The Gap’s product lines are limited to clothing and accessories for men, women, kids, and babies. In addition to regular sizes, petite and tall sizes are available in a variety of clothing items.
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10. Product Line Classification
Supermarkets
Large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of food, laundry, and household products.
Convenience stores
Small stores located near residential areas that are open long hours 7 days a week and carry a limited line of high-turnover convenience goods.
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11. Superstores
Larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services.
Category Killers
Giant specialty stores that carry a very deep assortment of a particular line and are staffed by knowledgeable employees.
Supercenters
Large combination discount and grocery stores.
Hypermarkets
Gigantic supercenters the size of 6 football fields.
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12. Would you consider Lowe’s to be a category killer? Why or why not?
Let’s Talk!
Would you consider Lowe’s to be a category killer? Why or why not?
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13. Relative Prices Classification
Discount stores
Off-price retailers
Independent off-price retailers
Factory outlets
Factory outlet malls
Value-retail centers
Warehouse club
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14. Discount Stores
A retail institution that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume.
Wal-Mart is such a successful discounter that they now sell more toys than category killer Toys ‘R Us.
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15. Relative Prices Classification
Off-price Retailers
Independent Off-price Retailers:
Either owned and run by entrepreneurs or as a division of a larger retail operation.
Factory Outlets:
Owned and operated by a manufacturer. Normally carries the manufacturer’s surplus, discontinued, or irregular goods.
Warehouse Club:
Sells a limited selection of brand-name grocery items, appliances, clothing, and a hodgepodge of other goods at deep discounts to members who pay annual membership fees.
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16. Factory Outlet Malls Marketing in Action
Factory outlet malls and value-retail centers have blossomed in recent years, making them one of the hottest growth areas in retailing.
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17. Organizational Classification
Corporate chain stores
Voluntary chain
Retailer cooperative
Franchise
Merchandising conglomerates
True Value is an example of a voluntary chain.
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18. Organizational Classification
Chain Stores
Two or more outlets that are owned and controlled, have central buying and merchandising, and sell similar lines of merchandise.
Voluntary Chains
A wholesaler-sponsored group of independent retailers that engages in bulk buying and common merchandising.
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19. Organizational Classification
Retailer Cooperatives
A group of independent retailers that bands together to set up a jointly owned, central wholesale operation and conducts joint merchandising and promotion efforts.
Franchises
Contractual association between a manufacturer, wholesaler, or service organization (a franchiser) and independent businesspeople (franchisees) who buy the right to own and operate one or more units in the franchise system.
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20. Retailing Franchise Opportunities
Marketing in Action
Retailing Franchise Opportunities
Not all franchise opportunities are in fast food. In fact, franchises now account for 40 percent of all retail sales in the United States.
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21. Organizational Classification
Merchandising Conglomerates
Corporation that combines several diversified retailing lines and forms under central ownership, as well as some integration of their distribution and management functions.
Limited Brands operates six retail brands. Visit the Web site for details.
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22. Figure 11-1 Retailer Marketing Decisions
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23. Amazon Targets Its Market
Marketing in Action
Amazon Targets Its Market
Online retailer Amazon uses a sophisticated database to track customer purchases and individually target buyers by suggesting other items that fit past purchase profiles.
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24. Assortment and Service Decisions
Product assortment
Should differentiate the retailer while matching target shoppers’ expectations.
Services mix
Another opportunity for differentiation.
Store atmosphere
Physical layout can help/hinder shopping.
Experiential retailing helps sell goods.
Unusual, exciting shopping environments are becoming more common.
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25. Experiential Retailing
Marketing in Action
Experiential Retailing
Mall of America pioneered the experiential retailing concept and remains the #1 retail tourist attraction in the nation.
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26. Price and Promotion Decisions
Pricing:
Must fit its target market and positioning, product and service assortment, and competition.
Promotion:
Can use any or all of the promotion tools—advertising, personal selling, sales promotion, public relations, and direct marketing—to reach consumers.
Place:
Retailers can locate in central business districts, various types of shopping centers, strip malls, or power centers.
Location is the key to success.
Copyright 2007, Prentice-Hall Inc.

27. Types of Shopping Centers
Regional shopping center or mall
Community shopping center
Neighborhood shopping center (strip mall)
Power center
Megamalls
Lifestyle centers
Which form of shopping center appears to be represented by the photo?
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28. What’s Next for Mall of America?
Marketing in Action
What’s Next for Mall of America?
Megamall superstar, the Mall of America, has begun a billion dollar Phase II expansion that will include a world class casino, concert and performing arts hall, multi-cultural exhibits, indoor golf course, NHL-sized ice rink, themed hotel rooms, and of course, high-end retail stores.
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29. The Future of Retailing
New Retail Forms and Shortening Retail Life Cycles
Growth of Nonstore Retailing
Retail Convergence
Rise of the Megaretailers
Growing Importance of Retail Technology
Global Expansion of Major Retailers
Retail Stores as “Communities” or “Hangouts”
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30. Let’s Talk!
Which retailing trend may contribute the most to the demise of traditional malls? Why?
What other factors have contributed to the declining popularity of this retail form? Explain.
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31. Wholesaling Wholesaling:
includes all activities involved in selling goods and services to those buying for resale or business use.
Wholesalers add value for producers by performing one or more channel functions.
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32. Functions Provided by Wholesalers
Selling and promoting
Buying and assortment building
Bulk-breaking
Warehousing
Transportation
Financing
Risk bearing
Market information
Management services and advice
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33. Types of Wholesalers Merchant Wholesalers Largest group of wholesalers
Account for 50 percent of wholesaling
Two broad categories:
Full-service wholesalers
Limited-service wholesalers
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34. Types of Wholesalers Brokers and Agents Do not take title to goods.
Perform fewer functions.
Brokers bring buyers and sellers together.
Agents represent buyers on more permanent basis.
Manufacturers’ agents are most common type of agent wholesaler.
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35. Types of Wholesalers
Manufacturers’ and Retailers’ Sales Branches and Offices
Wholesaling by sellers or buyers themselves rather than through independent wholesalers.
Sales branches carry inventory.
Sales offices do not.
Many retailers set up purchasing centers in major market areas.
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36. Marketing in Action
Wholesalers
Grainger, the leading wholesaler of maintenance, repair, and operating (MRO) supplies, succeeds by making life easier for the entire marketing channel.
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37. Figure 11-2 Wholesaler Marketing Decisions
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38. Trends in Wholesaling Fierce resistance to price increases.
Winnowing out of suppliers who are not adding value based on cost and quality.
Distinction between large retailers and wholesalers is blurry.
Will continue to increase the services provided to retailers.
Wholesalers are now going global.
Copyright 2007, Prentice-Hall Inc.

39. Rest Area: 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.
Copyright 2007, Prentice-Hall Inc.