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Module VI

This document discusses retailing and wholesaling. It defines retailing as selling goods directly to consumers, and wholesaling as selling goods to businesses for resale. The document then classifies retailers based on level of service, product breadth/depth, relative prices, and organization. Retailers are also discussed in terms of target markets, product/service assortments, pricing, promotion, and location decisions. Wholesalers are defined and classified based on their functions and ownership structures. The marketing decisions of wholesalers regarding target markets, marketing mix, and place are then outlined.

Uploaded by

Nikhil Karwa
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© © All Rights Reserved
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Download as PPTX, PDF, TXT or read online on Scribd
17 views

Module VI

This document discusses retailing and wholesaling. It defines retailing as selling goods directly to consumers, and wholesaling as selling goods to businesses for resale. The document then classifies retailers based on level of service, product breadth/depth, relative prices, and organization. Retailers are also discussed in terms of target markets, product/service assortments, pricing, promotion, and location decisions. Wholesalers are defined and classified based on their functions and ownership structures. The marketing decisions of wholesalers regarding target markets, marketing mix, and place are then outlined.

Uploaded by

Nikhil Karwa
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Retailing &

Wholesaling

Introduction
Retailing
All

activities involved in selling goods or


services directly to final consumers for their
personal, non-business use

Introduction
Retailer
Business

retailing

whose sales come primarily from

Introduction
Store
Store

and non-store retailing

retailing => physical store

Non-store

retailing => direct mail, catalogs,


telephone, home and office parties, door-todoor, vending machines, online services

Retailer classification
Amount

of service

Self-service
For

customers who are willing to perform their


own locate-compare-select processes

Limited
Some

service

information about products available

Retailer classification
Full

service

Salespeople

assist in every phase of the

process

Specialty stores, first class department


stores

Operating

costs passed on to customers

Retailer classification
Product

line breadth and depth

Specialty

store

retail store that carries a narrow product line with a


deep assortment within that line

Department
A

store

retail organization that carries a wide variety of


product lines (clothing, home furnishing, household
goods, etc) each line is operated as a separate
department managed by specialist buyers and
merchandisers

Retailer classification
Product

line breadth and depth

Supermarket
Large,

low-cost, low-margin, high-volume, selfservice store that carries a wide variety of food,
laundry, and household products

Convenience
A

store

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

Retailer classification
Product

line breadth and depth

Superstores
A

store almost twice the size of a regular supermarket that


carries a large assortment of routinely purchased food and
nonfood items and offers services such as dry cleaning, post
offices, photo finishing, check cashing, bill paying, lunch
counters, car care, pet care

Supercenters combination of food and discount


stores

Cross-merchandising

E.g. toasters are placed above fresh bread

Retailer classification
Product

line breadth and depth

Category

killer

Giant

specialty store that carries a very deep


assortment of a particular line and is staffed
by knowledgeable employees

Hypermarkets
Huge

superstores successful in Europe,


limited success in USA

Retailer classification
Service

retailers

Hotels, motels, banks, airlines, colleges,


hospitals, movie theaters, ...

Service retailers growing faster than product


retailers [in the US]

Retailer classification
Relative
Discount

prices
stores

retail institution that sells standard


merchandise at lower prices by accepting
lower margins and selling at higher volume

Have

a tendency to trade up, which


increases costs and prices

Retailer classification
Relative
Off-price
Retailer

prices
retailers

that buys at less-than-regular


wholesale prices and sells at less than retail

Retailer classification
Independent
Off-price

off-price retailers

retailer that is either owned and run


by entrepreneurs or is a division of a larger
retail corporation

Retailer classification
Factory

outlets

Off-price

retailing operation that is owned and


operated by a manufacturer and that normally
carries the manufacturer's surplus, discontinued, or
irregular goods

Factory

outlet malls manufacturer's outlets, high


growth area

Value-retail

centers manufacturer's outlets + offprice retail stores and department store clearance
outlets

Retailer classification
Warehouse

club(wholesale clubs,
membership warehouses)

Off-price

retailer that 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

Customer

self service must carry away their


new furniture, etc

Retailer classification
Organization
Chain

stores

Two

or more outlets that are owned and controlled in


common, have central buying and merchandising, and
sell similar lines of merchandise

Corporate

chains common ownership

Voluntary

chains wholesaler sponsored group of

buyers
Retailer

cooperatives jointly owned central


wholesale operation

Retailer classification
Organization
Franchise

organizations

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

Normally

based on some unique product or service,


trade name, goodwill, or a patent that the franchiser
has developed

Retailer classification
Organization
Merchandising

conglomerates

Corporations

that combine several different retailing


forms under central ownership

Diversified

retailing, provides superior


management systems and economies, benefiting all
separate retail operations

E.g. Dayton-Hudson => Target (upscale discount


stores), Mervyn's (middle-market apparel and soft
goods)

Retailer marketing decisions


Stores

are looking more and more alike

Service

differentiation among retailers has also eroded

Retailer
Target
Retail

strategy

market
store positioning

Retailer

marketing mix

Product

and service assortment

Prices
Promotion
Place

(location)

Retailer marketing decisions


Target
Some

market and positioning

questions

Upscale,

midscale, downscale?

Customers

looking for variety, depth,


convenience, or low prices?

Too

many fail to define their target markets


and positions clearly

Retailer marketing decisions


Product

assortment and services

Product

assortment Should match target


shopper's expectations

Offer

merchandise that no-one else carries


(e.g. through exclusive distribution rights)

Retailer marketing decisions


Services

mix

One

of the key tools on non-price competition


for differentiation

Store

atmosphere

Physical
Must

layout and overall feel

have a planned atmosphere that suits


the target market and moves customers to
buy

Retailer marketing decisions


Price
Must

decide either

High
Low

markups and lower volume

markups and higher volume

Retailer marketing decisions


Promotion
Normal

promotional tools

Advertising,

personal selling, sales promotion,


public relations, direct marketing

Retailer marketing decisions


Place
A

retailer's location is its key ability to attract


customers

Costs

of building or leasing have a major


impact on profits Small retailers usually have
to settle for what they get large retailers may
employ specialists who select locations using
advanced methods

Wholesaling
Wholesaling
All

activities involved in selling goods and


services to those buying for resale or business
use

Wholesaler
A

firm engaged primarily in wholesaling


activity

Wholesaling
Functions

that wholesalers perform well

Selling

and promoting

Buying

and assortment building

Bulk-breaking
Warehousing
Transportation
Financing
Risk

bearing

Market

information

Management

services and advice

Wholesaling
Types

of wholesalers

Merchant

wholesaler

Independently

owned business that takes title


to the merchandise it handles

Full-service

wholesalers full set of services

Limited-service

wholesalers fewer services

Wholesaling
Types

of wholesalers

Broker
A

wholesaler who does not take title to goods


and whose function is to bring buyers and
sellers together and assist in negotiation

[i.e.

does not physically store product, just


match making]

Wholesaling
Types

of wholesalers

Agent
A

wholesaler who represents buyers or sellers


on a relatively permanent basis, performs only
a few functions, and does not take title to
goods

[More

permanent than a broker]

Wholesaling
Types

of wholesalers

Manufacturer's

sales branches and offices

Wholesaling

by sellers or buyers themselves


rather than through independent wholesalers

Jobber
A

merchant, middle person, or wholesaler who


purchases goods from a manufacturer in lots or
bulk and resells the goods to a consumer, or to a
retailer, who then sells them to a consumer.

Wholesaler marketing decisions


Wholesaler
Target

strategy

market

Service

positioning

Wholesaler
Product

marketing mix

and service assortment

Prices
Promotion
Place

(location)

Wholesaler marketing decisions


Target

market and positioning

Like

everyone else, cannot serve everyone


targeting can be done in many ways

Size

of customer (e.g. only large retailers)

Type
Need

of customer (e.g. only specialty stores)

for service (e.g. customers needing


credit)

Wholesaler marketing decisions


Marketing

mix decisions

Product
A

great pressure to carry a full line and to


stock enough for immediate delivery

But this practice can damage profits...

Key is to carry only profitable products, and


mix of services most valued by their target
customers

Wholesaler marketing decisions


Marketing

mix decisions

Price
Wholesalers

usually markup by a standard


percent e.g. 20% markup, 17% costs, 3%
profit

Trying

new pricing approaches cut margins in


some lines to attract customers, ask for price
breaks from manufacturers to increase sales

Wholesaler marketing decisions


Marketing

mix decisions

Promotion
Can

be critical to wholesaler success but


typically wholesalers are not promotion
minded

Many

wholesalers are behind the times in


personal selling

Wholesaler marketing decisions


Marketing

mix decisions

Place
Important

low-rent, low-tax areas

Invest

little money in buildings, equipment,


and systems

Materials

handling and order-processing


systems often outdated

Recently

investment into automated


warehouses and online ordering systems

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