Transcript Retailers - Assignment Point

11
Principles of Marketing
Marketing Channels & Supply Chain
Management
Retailing & Wholesaling
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
Retailing
Non-store retailing includes selling to final consumers
through:
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Direct mail
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Catalogs
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Telephone
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Internet
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TV shopping
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Home and office parties
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Door-to-door sales
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Vending machines
Types of Retailers: Amount of Service
Self-service retailers serve customers who are willing to
perform their own locate-compare-select process to
save money. Wal-Mart, Supermarkets.
Limited service retailers provide more sales assistance
because they carry more shopping goods about which
customers need more information. Sears, JC Penney.
Full-service retailers assist customers in every phase of
the shopping process, resulting in higher costs that are
passed on to the customer as higher prices.
Department stores, Specialty stores
table 13.1, page 367
Retailing
Types of Retailers
Relative Prices
Discount stores sell standard merchandise at lower
prices by accepting lower margins and selling higher
volume. (Wal-mart)
Off-price retailers buy at less than regular wholesale
prices and charge customers less than retail. These
retailers can be found in all areas, from food,
clothing, electronics etc.
Retailing
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
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Pizzahut
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KFC
Retailing
Retailer Marketing Decisions
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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Regional shopping centers
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Community shopping centers
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Neighborhood shopping centers
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Lifestyle centers
Retailing
The Future of Retailing
Wheel-of-retailing concept states that many new
types of retailing forms begin as low-margin, lowprice, 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.
Wholesaling
Wholesaling
Wholesalers add value by performing channel functions:
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Selling and promoting
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Buying assortment building
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Bulk breaking
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Warehousing
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Transportation
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Financing
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Risk bearing
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Market information
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Management services and advice
Wholesaling
Wholesaling
Selling and promoting involves the wholesaler’s sales
force helping the manufacturer reach many smaller
customers at lower cost
Buying and assortment building involves the
selection of items and building of assortments
needed by their customers, saving the customers
work
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
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
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
Wholesaling
Wholesaling
Management services & advice involves
wholesalers helping retailers train their sales
clerks, improve store layouts, and set up
accounting and inventory control systems
Supply Chains and
the Value Delivery Network
Supply chain management is the process of
managing upstream & downstream value-added
flows of materials, final goods, & related
information among suppliers, the company,
resellers, & final consumers
Upstream partners include raw material suppliers,
components, parts, information, finances, and
expertise to create a product or service
Downstream partners include the marketing
channels or distribution channels that look toward
the customer
Supply Chains and
the Value Delivery Network
Supply Chain Views
Supply chain “make and sell” view includes the firm’s
raw materials, productive inputs, and factory
capacity
Demand chain “sense and respond” view suggests
that planning starts with the needs of the target
customer and the firm responds to these needs by
organizing a chain of resources and activities with
the goal of creating customer value
The Nature and Importance of
Marketing Channels
Supply Chain Views
Matching refers to shaping and fitting the
offer to the buyer’s needs, including
activities such as manufacturing, grading,
assembling, and packaging
Negotiation refers to reaching an agreement
on price and other terms of the offer so that
ownership or possession can be transferred
The Nature and Importance of
Marketing Channels
Number of Channel Members
Channel level refers to each layer of marketing
intermediaries that performs some work in bringing
the product and its ownership closer to the final
buyer
Direct marketing channel has no intermediary
levels; the company sells directly to consumers
Indirect marketing channels contain one or more
intermediaries
Channel Behavior and Organization
Channel Behavior
Channel conflict refers to disagreement over
goals, roles, and rewards by channel
members
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Horizontal conflict is conflict among
members at the same channel level
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Vertical conflict is conflict between different
levels of the same channel
Channel Behavior and Organization
Conventional distribution systems consist of one or more
independent producers, wholesalers, & retailers. Each seeks to
maximize its own profits & there is little control over the other
members & no formal means for assigning roles & resolving conflict.
Vertical Marketing System: A distribution channel structure in which
producers, wholesalers & retailers act as a unified system. One
channel member owns the others, has contracts with them, or has
so much power that they all cooperate. The VMS can be dominated
by the producer, wholesaler or retailer.
Disintermediation occurs when product or service producers cut out
intermediaries and go directly to final buyers, or when radically new
types of channel intermediaries displace traditional ones
Channel Design Decisions
Types of intermediaries refers to channel
members available to carry out channel
work. Examples include:
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Company sales force
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Manufacturer’s agency (agents)
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Industrial distributors
Channel Design Decisions
 Number of marketing intermediaries
Strategies:
• Intensive distribution: is a strategy used by
producers of convenience products and common raw
materials in which they stock their products in as
many outlets as possible
• Exclusive distribution: giving a limited number of
dealers the exclusive right to distribute the
company’s products in their territories.
• Selective distribution: the use of more than one,
but fewer than all, of the intermediaries who are
willing to carry the company’s products.
Marketing Logistics and
Supply Chain Management
Warehousing is the storage function that overcomes
differences in need quantities & timing, ensuring
that the products are available when customers are
ready to buy them
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Storage warehouses are designed to store goods
for moderate or long periods, not move them
Distribution centers are designed to move
goods, rather than just store them
Marketing Logistics and
Supply Chain Management
Inventory management balances carrying too little
and too much inventory
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Just-in-time logistics systems allow producers and
retailers to carry small amounts of inventories of
parts or merchandise
RFID (radio frequency identification devices) are
small transmitter chips embedded in or placed on
products or packages to provide greater inventory
control
Marketing Logistics and
Supply Chain Management
Third-party logistics is the outsourcing of logistics
functions to third-party logistics providers (3PLs)
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Provide logistics functions more efficiently
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Provide logistics functions at lower cost
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Allow the company to focus on its core business
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Are more knowledgeable of complex logistics