Transcript Retailers

Chapter Thirteen
Retailing and Wholesaling
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 13- slide 1
Retailing and Wholesaling
Topic Outline
•
•
•
•
Retailing
Retailer Marketing Decisions
The Future of Retailing
Wholesaling
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Chapter 13- slide 2
Retailing
Retailing includes all the
activities in selling
products or services
directly to final
consumers for their
personal, non-business
use
Retailers are businesses
whose sales come
primarily from retailing
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Chapter 13- slide 3
Retailing
• Retailers can be classified as:
– Store retailers such as Home Depot, Sears,
Walmart
– NonStore retailers such as the mail, telephone,
and Internet.
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Chapter 13- slide 4
Major Store Retailer Types
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Chapter 13- slide 5
Classification of Retail Stores
Amount of Service
Self-Service, Limited-Service and
Full-Service Retailers
Product Line
Length and Breadth of the Product
Assortment
Relative Prices
Pricing Structure that is Used
by the Retailer
Retail Organizations
Independent, Corporate, or Contractual
Ownership Organization
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Chapter 13- slide 6
Retailing
Types of Retailers
Amount of service
• Self-service
• Limited service
• Full service
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Chapter 13- slide 7
Retailing
Types of Retailers
• Self service retailers: serve customers who
are willing to perform their own process to
save time or money such as supermarkets
• Limited service retailers: such as Sears
provide more sales assistance because they
carry more shopping goods about which
customers need information. Their
increased operating costs result in higher
prices
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Chapter 13- slide 8
Retailing
Types of Retailers
• Full service retailers : salespeople assist
customers in every phase of the shopping
process. Full service stores usually carry
more specialty goods for which customers
need or want assistance or advice.
• Result in higher operating costs , which is
passed along to customers as higher prices.
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Chapter 13- slide 9
Classification By Product Line
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
Limited Line of High-Turnover Convenience
Goods, a small store located near the area
Superstores
Large Assortment of Routinely Purchased
Food & Nonfood Products, Plus Services
Category Killers
Giant Specialty Store that Carries a Very Deep
Assortment of a Particular Line
Hypermarkets
Huge Superstores
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Chapter 13- slide 10
Another model
Product Line
Specialty stores
• Narrow product line with deep assortment
Department stores
• Wide variety of product lines
Convenience stores
• Limited line of high-turnover goods
Superstores
• Non-food goods
Category killers
• Deep in category with sales staff
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Chapter 13- slide 11
Department Store Model:
The Showcase Store
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Chapter 13- slide 12
Retailing
Types of Retailers
Relative Prices
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Discount
stores
Off-price
retailers
Factory
outlets
Warehouse
clubs
Chapter 13- slide 13
Relative prices
• Discount store: a retail operation that sells standard
merchandise at lower prices by accepting low
margins and selling at higher volume.
• Off price retailer: a retailer that buys at less than
regular wholesale prices and sells at less than retail
• The three main types of the off price retailers are
independents, factory outlets and warehouse
divisions of larger retail corporations
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Chapter 13- slide 14
Relative prices
a) Independent off price retailer: an off price retailer
that is either independently owned and run or is a
division of a larger retail corporation.
b) Factory outlet: which is owned and operated by a
manufacturer and that normally carries the
manufacturer’s surplus, discontinued or irregular
goods.
c) Warehouse club: which sells a limited selection of
brand name grocery items, clothing or other goods
at deep discounts to members who pay annual
membership
feesInc.
Copyright
© 2010 Pearson Education,
Chapter 13- slide 15
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Retailing
Types of Retailers
Organizational Approach
Corporate
chains
Voluntary
chains
Franchise
organizations
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Retailer
cooperatives
Merchandising
conglomerates
Chapter 13- slide 16
Corporate Retail Organizations
Features of corporate retailing:
• Greater purchasing power
• Achieve economies of scale
• Wider brand recognition
• Better trained employees
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Chapter 13- slide 17
Retailing
Types of Retailers
Organizational Approach
Corporate chains are two or more outlets
that are commonly owned and controlled
• Size allows them to buy in large quantities
at lower prices and gain promotional
economies
• selling similar lines of merchandise,
highly skilled employees.
• Sears
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Chapter 13- slide 18
Retailing
Types of Retailers
Organizational Approach
Voluntary chains are wholesale-sponsored
groups of independent retailers that
engage in group buying and common
merchandising
• IGA
• Western Auto
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Chapter 13- slide 19
Retailing
Types of Retailers
Organizational Approach
Retailer cooperatives is a group of
independent retailers that band together
to set up a joint-owned, central wholesale
operation and conduct joint
merchandising and promotion effort
• Ace Hardware
• Associated Grocers
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Chapter 13- slide 20
Retailing
Types of Retailers
Organizational Approach
•
Franchise organizations are
based on some unique
product or service; on a
method of doing business; or
on the trade name, good will,
or patent that the franchisor
has developed
• Contractual association
between franchiser
(manufacturers, wholesalers,
service organizations) and
franchisee who are authorized
to use the brand name.
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McDonalds ….
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Chapter 13- slide 21
Retailing
Types of Retailers
Organizational Approach
• Merchandising conglomerates are
corporations that combine several retailing
forms under central ownership
• Limited Brands
• Several diversified retailing lines with
integration in management and
distribution.
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Chapter 13- slide 22
Characteristics of Direct Marketing
Privacy
Response
Measurement
Testing
Targeted
Individuals
Key
Characteristics
of
Direct
Marketing
Higher
Response
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Customized
Offer
Immediate
Orders
Continuous
Relationship
Chapter 13- slide 23
Types of NonStore Retailing
Nonstore Retailing Accounts for More Than 14% of All Consumer Purchases,
and May Account for 33% of All Sales by 2010
Direct Marketing
Direct Selling
Automatic Vending
Catalogs & Direct Mail
TV Shopping Shows
Online Shopping
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Home
& Office Parties
Chapter 13- slide 24
Retailing
Retailer Marketing Decisions
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Chapter 13- slide 25
Retailing
Retailer Marketing Decisions
Segmentation targeting,
differentiation, and
positioning involves the
definition and profile of the
market so the other retail
marketing decisions can be
made
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Chapter 13- slide 26
Retailing
Retailer Marketing Decisions
Product Assortment and Service
Product assortment and service decisions include:
• Product assortment
• Services mix
• Store atmosphere
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Chapter 13- slide 27
Click
to add
title Assortment and
Retailer’s
Product
Services Decisions
Product Assortment Decisions
• Width and Depth of Assortment
• Quality of Products
• Product Differentiation Strategies
Services Mix
Key Tool of Non price Competition
for Setting One Store Apart From
Another.
Store’s Atmosphere
• Physical Layout
• “Feel” That Suits the Target Market
and Moves Customers to Buy
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Chapter 13- slide 28
Retailer Services Mix
Prepurchase services
Postpurchase services
Ancillary services
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Chapter 13- slide 29
Click
to add
title
Retailer’s
Price,
Promotion, and
Place Decisions
Price Decisions
Target Market
Product & Services Assortment
Competition
Promotion Decisions
Using Advertising, Personal Selling,
Sales Promotion and Public
Relations to Reach Customers.
Place Decisions
Shopping Centers, Central Business
Districts, Power Centers, or Outlet
Malls. Location!
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Chapter 13- slide 30
Retailing
Retailer Marketing Decisions
Price Decision
Price policy must fit the target market and
positioning, product and service assortment, and
competition
•
High markup on
lower volume
(most specialty
stores)
• Low markup on
higher
volume(mass
merchandiser and
Copyrightdiscount
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Chapter 13- slide 31
Retailing
Retailer Marketing Decisions
Price Decision
High-low pricing involves charging higher
prices on an everyday basis, coupled with
frequent sales and other price promotions
Everyday low price (EDLP) involves charging
constant, everyday low prices with few
sales or discounts
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Chapter 13- slide 32
Retailing
Retailer Marketing Decisions
Promotion Decision
Advertising
Personal
selling
Public
relations
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Sales
promotion
Direct
marketing
Chapter 13- slide 33
Place Decision
• General business districts
• Regional shopping centers
• Community shopping centers
• Strip malls
• Location within a larger store
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Chapter 13- slide 34
Retailing
Place Decision
Central business districts are located in cities and
include department and specialty stores, banks, and
movie theaters
Shopping center is a group of retail businesses planned,
developed, owned, and managed as a unit
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Chapter 13- slide 35
Indicators of Sales Effectiveness
Number of people passing by
% who enter store
% of those who buy
Average amount
spent per sale
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Chapter 13- slide 36
Wall Mart’s Factors of Success:
• Listen to the customers.
• Treat employees as partners.
• Big sign reading (Satisfaction guaranteed), (we sell for less).
• Customers often welcome by greeter
• Low price and speed stock replenishment.
• Expanded their stories outside of US
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Chapter 13- slide 37
The Future of Retailing
New Retail Forms and Shortening
Retail Lifecycles
Growth of Nonstore Retailing
Increasing Intertype Competition
Rise of Megaretailers
Growing Importance of
Retail Technology
Global Expansion of Major Retailers
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Chapter 13- slide 38
Trends in Retailing
• New retail forms has been emerged.
• New retailers are facing shorter life span, they are
rapidly copied and lose novelty. It is familiar in our areas.
• Growth of non store retailing.
• Competition is increasing between different types of
stores, like Discount stores, Catalog showrooms,
Department stores. All are competing the same
customers.
• All retailers now moving to one of 2 poles, either mass
merchandiser, or as specialty retailer. Super power
retailers emerging.
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Chapter 13- slide 39
Trends in Retailing cont.
• Department stores - one stop shopping convenience.
Gradually they gave up to Malls where customers can
find every thing.
• Technology became critical, Retailers using computers to
manage better Inventory, Ordering, etc..
• Retailers with unique formats and strong positioning are
moving to other countries, Like
•
McDonalds 18% of US retailers moved out, 40% of
Europeans, and 31% of Far East.
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Chapter 13- slide 40
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Wheel-of-retailing concept states that many new
types of retailing forms begin as low-margin,
low-price, low-status operations, and challenge
established retailers. As they succeed they
upgrade their facilities and offer more services,
increasing their costs and forcing them to
increase prices, eventually becoming the
retailers they replaced.
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Chapter 13- slide 41
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Growth of non-store retailing includes:
• Mail order
• Television
• Phone
• Online
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Chapter 13- slide 42
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Retail convergence involves the merging of
consumers, producers, prices, and
retailers, creating greater competition for
retailers and greater difficulty
differentiating offerings
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Chapter 13- slide 43
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
The rise of megaretailers involves the rise of
mass merchandisers and specialty
superstores, the formation of vertical
marketing systems, and a rash of retail
mergers and acquisitions
• Superior information systems
• Buying power
• Large selection
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Chapter 13- slide 44
Retailing
The Future of Retailing
New Retailing Forms and Shortening Life Cycles
Growing importance of retail technology provides
better forecasts, inventory control, electronic
ordering, transfer of information, scanning,
online transaction processing, improved
merchandise handling systems, and the ability
to connect with customers
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Chapter 13- slide 45
Wholesaling
Wholesaling includes all activities involved in selling goods and
services to those buying for resale or business use
Selling and promoting
Buying assortment building
Bulk breaking
Warehousing
Transportation
Financing
Risk bearing
Market information
Management services and advice
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Chapter 13- slide 46
Wholesaling
Wholesaling
Selling and promoting involves the
wholesaler’s sales force helping the
manufacturer reach many smaller
customers at lower cost
Buying assortment building involves the
selection of items and building of
assortments needed by their customers,
saving the customers work
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Chapter 13- slide 47
Wholesaling
Wholesaling
Bulk breaking involves the wholesaler buying
in larger quantity and breaking into
smaller lots for its customers
Warehousing involves the wholesaler holding
inventory, reducing its customers’
inventory cost and risk
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Chapter 13- slide 48
Wholesaling
Wholesaling
Transportation involves the wholesaler
providing quick delivery due to its
proximity to the buyer
Financing involves the wholesaler providing
credit and financing suppliers by ordering
earlier and paying on time
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Chapter 13- slide 49
Wholesaling
Wholesaling
Risk bearing involves the wholesaler
absorbing risk by taking title and bearing
the cost of theft, damage, spoilage, and
obsolescence
Market information involves the wholesaler
providing information to suppliers and
customers about competitors, new
products, and price developments
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Chapter 13- slide 50
Wholesaling
Wholesaling
Management services and
advice involves wholesalers
helping retailers train their
sales clerks, improve store
layouts, and set up
accounting and inventory
control systems
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Chapter 13- slide 51
Types of Wholesalers
Merchant
Wholesaler
Brokers/ Agents
Independently Owned
Business that Takes
Title to the
Merchandise
it Handles.
They Don’t Take Title to
the Goods, and They
Perform Only a Few
Functions.
Manufacturers’
Sales Branches
and Offices
Wholesaling by Sellers
or Buyers Themselves
Rather Than Through
Independent
Wholesalers.
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Chapter 13- slide 52
Wholesaling
Types of Wholesalers
Merchant wholesalers is the largest group of
wholesalers and include:
• Full-service wholesalers who provide a full
set of services
• Limited service wholesalers who provide
few services and specialized functions
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Chapter 13- slide 53
Wholesaling
Types of Wholesalers
Brokers and agents do not take title, perform
a few functions, and specialize by product
line or customer type
• Brokers bring buyers and sellers together
and assist in negotiations
• Agents represent buyers or sellers
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Chapter 13- slide 54
Wholesaling
Types of Wholesalers
Manufacturers’ sales branches and offices is
a form of wholesaling by sellers or buyers
themselves rather than through
independent wholesalers
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Chapter 13- slide 55
Wholesaling
Wholesaler Marketing Decisions
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Chapter 13- slide 56
Trends in Wholesaling
Wholesaling Developments to Consider
Must Learn to Compete Effectively Over
Wider and More Diverse Areas
Increasing Consolidations Will Reduce
Number of Wholesalers
Surviving Wholesalers Will Grow Larger
Through Acquisitions and Mergers
Vertical Integration Will Remain Strong
Global Expansion
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Chapter 13- slide 57
Wholesaling
Wholesaler Marketing Decisions
Target market and positioning decisions
• Size of customer
• Type of customer
• Need for service
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Chapter 13- slide 58
Wholesaling
Wholesaler Marketing Decisions
Marketing mix
decisions
• Product
• Price
• Promotion
• Place
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Chapter 13- slide 59
Wholesaling
Trends in Wholesaling
Challenges
• Resistance to price increases
• Lack of suppliers
• Changing customer needs
• Adding value by increasing efficiency and
effectiveness
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Chapter 13- slide 60
Market logistics
– It involves, Planning, Implementing, and
controlling the physical flow of materials and
final goods till from points of origin to points of
use.
* Market logistics starts from the point of sales
forecasting which planning for other activities
depend on such as scheduling distribution,
production and inventory levels.
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Chapter 13- slide 61
Market-logistics objectives
–Getting the right goods
to the right places at
the right time for the
least cost.
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Chapter 13- slide 62
Organizational Lessons about
Marketing Logistics:
• Market logistics decisions must be based
on profit maximizing rather than cost
consideration
• Electronic links among all parties should be
established
• Logistics goals should match or exceed
competitors’ service standards.
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Chapter 13- slide 63