Transcript Chapter 11 slides

Retailing and
Wholesaling
Chapter 11
Rest Stop: Previewing the Concepts
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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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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
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Retailing
• All activities involved in selling goods or
services directly to final consumers for
their personal, nonbusiness use
Retailer
• A business whose sales come primarily
from retailing
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Shopper Marketing
• Using point-of-sale
promotions and
advertising to extend
brand equity to “the
last mile” and
encourage favorable
in-store purchase
decisions
Shopper marketing: Influencing
consumers’ buying decisions as
they shop now involves efforts
aimed at in-store, online, and
mobile shopping
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Types of Retailers
• The different types of retailers can be
classified based on:
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Amount of service they offer
Breadth and depth of product lines
Relative prices charged
The way they are organized
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Types of Retailers: Amount of
Service
Serve customers who are willing to
Self-service
perform their own locate-compare-select
retailers
process
Limitedservice
retailers
Provide more sales assistance as they
carry shopping goods about which
details are needed
Usually carry more specialty goods for
Full-service
which customers need or want
retailers
assistance or advice
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Types of Retailers: Product Line
Specialty
stores
A retail store that carries a narrow product line
with a deep assortment within that line
A retail store that carries a wide variety of
Department product lines, each operated as a separate
department managed by specialist buyers or
stores
merchandisers
A large, low-cost, low-margin, high-volume, selfSupermarkets service store that carries a wide variety of
grocery and household products
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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
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Types of Retailers: Product Line
Convenience
store
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
Superstore
A store much larger than a regular supermarket that
offers a large assortment of routinely purchased
food products, non-food items, and services
Category
killer
Service
retailer
A giant specialty store that carries a very deep
assortment of a particular line
A retailer whose product line is actually a service;
examples include hotels, airlines, banks, colleges,
and many others
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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”
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Types of Retailers: Relative Prices
Discount
stores:
Sell standard merchandise at lower prices and
margins, in return for higher volume
Off-price Buy merchandise at less-than-regular
retailers: wholesale prices sells at less than retail
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Types of Off-Price Retailers
Factory outlet
• An off-price retailing operation that is owned and
operated by a manufacturer and normally carries the
manufacturer’s surplus, discontinued, or irregular goods
Warehouse club
• 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
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”
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Types of Retailers: Organizational
Approach
Corporate chains
• Two or more outlets that are commonly owned
and controlled
Voluntary chains
• Wholesaler-sponsored group of independent
retailers that engage in group buying and
common merchandising
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Types of Retailers: Organizational
Approach
Franchising
• 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
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
Figure 11.1 - Retailer Marketing
Strategies
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Retailer Marketing Decisions
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Segmentation
Targeting
Store differentiation
Positioning
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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
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Retailer Marketing Decisions
• Retailer marketing mix:
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Product and service assortment
Retail prices
Promotion
Distribution (location)
• Retail strategy and retail marketing mix must
combine to create value for targeted retail
customers
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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
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Store Atmosphere
The Cabella’s “experience” has made it a tourist destination
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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
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Pricing for the Target Segment
Bergdorf Goodman caters to the upper crust with prices to match
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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
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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
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Shopping Centers Today
Today’s shopping centers are more about
creating places to be rather than just places to
buy
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Retail Trends & Developments
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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
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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
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Retail Technology
Stop & Shop uses technology to
make shopping faster and more
convenient for customers
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Green Retailing
McDonald’s new eco-friendly restaurants are designed from the bottom up with a
whole new eco-attitude
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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-andmortar stores “community friendly”?
Are there circumstances in which it would be
undesirable to encourage patrons to “hangout”? Explain.
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Wholesaling
• All activities involved in selling goods and
services to those buying for resale or business
use
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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
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Functions Wholesalers Perform
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Selling and promoting
Buying and assortment building
Bulk-breaking
Warehousing
Transportation
Financing
Risk bearing
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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
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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
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Types of Wholesalers
• Manufacturers’ sales branches
and offices:
• Involves wholesaling by sellers or buyers
themselves rather than through
independent wholesalers
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Figure 11.2 - Wholesaler Marketing
Strategies
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Wholesaler Marketing Decisions
• Wholesaler strategy:
• Segmentation, targeting, differentiation,
and positioning
• Wholesaler marketing mix:
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Product assortment and services
Price
Promotion
Distribution (location)
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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
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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
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Marketing in Action
Pharmaceutical wholesaler McKesson helps its retail pharmacist customers to be
more efficient by offering a wide range of online resources
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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
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