Transcript 2. Wholesaling (cont`d)

Chapter 15
Managing
Retailing,
Wholesaling,
and
Market Logistics
PowerPoint by Yu Hongyan
Business School of Jilin
University
Objectives
• Retailing
• Wholesaling
• Logistic
1. Retailing
Retailing Basics
• Types of retailers
• Marketing decisions
• Retailing trends
•
•
•
•
Retail life cycle
Wheel-of-retailing
Service levels
Retail positioning
strategies
• Nonstore retailing
• Corporate retailing
1. Retailer (cont’d)
• What means retailer?
– A retailer is any business enterprise whose sales
volume comes primarily from retailing
1. Retailer (cont’d)
Store Type
Length and Breadth of Product
Assortment
Specialty Stores
Narrow Product Line, Deep Assortment
Department Stores
Wide Variety of Product Lines i.e. Clothing,
Home Furnishings, & Household Items
Supermarkets
Wide Variety of Food, Laundry, & Household
Products
Convenience Stores
Discount Stores
Limited Line of High-Turnover Convenience
Goods
Broad Product Line, Low Margin, High
Volume
Off-Price Retailer
Inexpensive, Overruns, Irregulars, and
Leftover Goods
Superstores
Large Assortment of Routinely Purchased
Food & Nonfood Products, Plus Services
Catalog Showroom
Broad Selection, Fast Turnover, Discount
Prices
Retailing
• Retail-store types pass through the retail life
cycle.
Wheel of Retailing
• .
Low Price
Low Status
Low Margin
Mid Price
Mid Status
Mid Margin
High Price
High Status
High Margin
1. Retailer (cont’d)
• Four Levels of Retail Service
– Self-service
• Locate, compare, and select process
– Self-selection
• Find, and can ask help
– Limited-service
• Need more information and assistance
– Full-service
Discussion Scenario
“Catalogue retailers,” popular in the 1980’s, are now all
but extinct. Customers at such stores would view
display items in a showroom, submit “tickets” listing
desired items to clerks, and await delivery of their
purchases at checkout via conveyor belt.
What retail form precipitated the decline of catalogue
retailers? Can you identify an emerging retail form or
one that is in decline?
Retail Positioning Map
Breadth of
product line
Broad
Bloomingdale’s
卓展
Wal-Mart
卖场
Tiffany
Specialty Nike
Sunglass Hut
Shoe
Narrow
Value added
High
Low
1. Retailer (cont’d)
• Four broad retail positioning strategies
include:
–
–
–
–
Bloomingdale’s
Tiffany
Sunglass Hut
Wal-Mart
• Non-store retailing has been growing faster
than store retailing
1. Retailer (cont’d)
Direct Selling
Direct Marketing
Automatic Vending
Buying Services 安利
NonStore Retailing
Accounts for More
Than 12% of All
Consumer
Purchases, and is
trending up.
Type of
nonstore
retailing
1. Retailer (cont’d)
Retailing Basics
• Types of retailers
• Marketing decisions
• Retailing trends
• Target market
• Product assortment and
placement
• Services mix and store
atmosphere
• Price
• Promotion==
• Place
Promotion
•
•
•
•
•
•
•
•
Advertising
Special sales
Money saving coupons
Frequent shopper rewards
In store sampling
In store coupon
Rebate
Any more?
Retailing
General
Business
District
Location
Options for
Retailers
Community
Shopping
Center
Location within
a larger store or
operation
Regional
Shopping
Center
Strip mall
(Shopping
Strip)
Discussion Scenario
Restaurants such as McDonald’s and Subway have
attempted to expand their distribution by opening
stores within gas stations, or mass merchandisers such
as Wal-Mart. In some instances, stores offer limited
menus or drive-thru service only.
Aside from fast food restaurants, what other types of
retail businesses have followed a similar strategy?
Retailing
Retailing Basics
• Types of retailers
• Marketing decisions
• Retailing trends
•
•
•
•
•
•
•
New retail forms
Intertype competition
Growth of giant retailers
Technology
Global expansion
Selling experiences
Competition between storebased and non-store-based
retailing
2. Wholesaling
Wholesaling
•
•
•
•
Wholesaling basics
Types of wholesalers
Marketing decisions
Wholesaling trends
• Wholesaling excludes
manufacturers, farmers, and
retailers
• Wholesalers differ from
retailers in three key ways
• Wholesalers handle many
functions more efficiently
than do manufacturers
2. Wholesaling (cont’d)
• 1. The Definition of Wholesaling
– Wholesaling includes all the activities involved
in selling goods or services to those who buy
for resale or business use.
– Wholesale excludes manufactures and farmers
because they are engaged in production
2. Wholesaling (cont’d)
• Difference between R and W
– Wholesale pay less attention to promotion, atmosphere
and location because they are dealing with business
customers rather than final consumer
– Wholesale are usually larger than retail transaction, and
cover a larger trade areas than retailers
– The government deals with wholesalers and retailer
differently regards legal regulations and tax
Why Are Wholesalers Used?
Management
Services & Advice
Market
Information
Risk Bearing
Selling and
Promoting
Buying and
Assortment Building
Wholesaler
Functions
Financing
Bulk Breaking
Warehousing
Transporting
2. Wholesaling (cont’d)
• 2. The Growth of Wholesaler
– Growth of larger factories located some
distance from the principal buyers
– Production in advance of orders rather than in
response to specific orders
– Increase in the number of levels of intermediate
producer and user
2. Wholesaling (cont’d)
Selling and
Promoting
Bulk breaking
Warehousing
Buying and
Assortment Building
Market
Information
Wholesaler
Functions
Risk Bearing
Financing
Transportation
2. Wholesaling (cont’d)
Wholesaling
• Wholesaling basics
• Growth and types
of wholesalers
• Marketing decisions
• Wholesaling trends
• Wholesalers vary in type and
function
• Wholesaling has been
growing due to two key
factors:
– Many factories are located far
from buyers
– An increasing need to adapt
product quantities, features, or
packages to meet buyer needs
2. Wholesaling (cont’d)
Major Wholesaler Types
• Merchant wholesalers
• Full-service wholesalers
• Limited-service
wholesalers
• Brokers & agents
• Brokers
• Agents
• Manufacturers’ and
retailers’ branches and
offices
• Miscellaneous wholesalers
2. Wholesaling (cont’d)
Wholesaling
•
•
•
•
Wholesaling basics
Types of wholesalers
Marketing decisions
Wholesaling trends
• Target market
• Product assortment and
placement
• Price
• Promotion
• Place
2. Wholesaling (cont’d)
Wholesaling
•
•
•
•
Wholesaling basics
Types of wholesalers
Marketing decisions
Wholesaling trends
• Direct buying trends
initially threatened
wholesalers
• Wholesalers have
adapted by:
– Adding value
– Reducing costs
– Strengthening
relationships with
manufacturers
3. Market Logistics
Interrelated Aspects of Market Logistics
Value Network
Market
Logistics
Offset
Physical Distribution
Compensation
Deal
Demand
Chain Planning
Supply Chain Management
Integrated Logistics Systems
3. Market Logistics (cont’d)
McKesson
offers online
supply
management
3. Market Logistics (cont’d)
Key Elements
• Market-logistics
objectives
• Market-logistics
decisions
• Market logistics lessons
• Logistics involve trade-offs
between costs and customer
service
• Maximizing profits, not sales,
is key
• A total system basis should
be considered
• Designing a system that will
minimize the cost of
achieving objectives should
be the outcome
3. Market Logistics (cont’d)
Calculating the Cost of
Market-Logistics Systems
M = T + FW + VW + S
Where . . .
M =
T =
FW =
VW =
S =
total market-logistics cost of proposed system;
total freight cost of proposed system;
total fixed warehouse cost of proposed system;
total variable warehouse cost of proposed system
total cost of lost sales due to average delivery delay
3. Market Logistics (cont’d)
Key Elements
• Market-logistics
objectives
• Market-logistics
decisions
• Market logistics lessons
• Order processing
• Warehousing
– Storage, distribution, automated
warehouses
• Inventory
– Determine reorder point,
relevant cost comparison,
optimal order quantity
• Transportation
– Containerization
– Private vs. contract carriers
3. Market Logistics (cont’d)
Costs
Order Processing
Minimize Costs of
Attaining Logistics
Objectives
Submitted
Processed
Shipped
Logistics
Transportation
Water, Truck,
Rail,
Pipeline & Air
Functions
Warehousing
Storage
Distribution
Inventory
When to order
How much to order
Just-in-time
Transportation Modes
Rail
Nation’s largest carrier, cost-effective
for shipping bulk products, piggyback
Truck
Flexible in routing & time schedules, efficient
for short-hauls of high value goods
Water
Low cost for shipping bulky, low-value
goods, slowest form
Pipeline
Ship petroleum, natural gas, and chemicals
from sources to markets
Air
High cost, ideal when speed is needed or to
ship high-value, low-bulk items
3. Market Logistics (cont’d)
Key Elements
• Market-logistics
objectives
• Market-logistics
decisions
• Market logistics lessons
• A senior V.P. is needed as the
single contact point for all
logistical elements
• Senior V.P. must maintain
close control
• Software and systems are
essential for competitively
superior logistics
performance
Review
• Retailing
• Wholesaling
• Logistics