Retailing and Wholesaling

Chapter 11

Rest Stop: Previewing 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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First Stop: Walmart: The Worlds 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:
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, Americas Largest Grocery-Only Retailer

Thanks to customer-focused pricing, Krogers 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 Superstore Category killer Service retailer
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

A store much larger than a regular supermarket that offers a large assortment of routinely purchased food products, non-food items, and services
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 manufacturers 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 nations 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, its 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

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 nations 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:
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 Cabellas 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 toolsadvertising, personal selling, sales promotion, public relations, and direct marketingto 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

Todays shopping centers are more about creating places to be rather than just places to buy

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Retail Trends & Developments

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 cant 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

McDonalds 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 nations largest and most important wholesalerslike 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

Graingers value proposition is simple: to make it easier and less costly for buyers to purchase MRO items

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Functions Wholesalers Perform

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:

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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