Armstrong mai12 inppt_11

Copyright © 2015 Pearson Education, Inc.

Learning Objectives

• Explain the role 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 long-time, low-price value proposition and what it means to the customers

• Lowest cost structure in the industry• Faced difficulty to maintain its growth rates

• Solution - Pushed into new, faster-growing product and service lines

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Retailing

• Activities involved in selling goods or services directly to consumers for their personal use• Retailer: Business whose sales come primarily

from retailing

• Shopper marketing: Using in-store promotions and advertising to extend brand equity to “the last mile” • Encourages favorable point-of-purchase decisions

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Types of Retailers

• Retailer classification can be based on:• Amount of service offered• Breadth and depth of the product lines• Relative prices charged• Way they are organized

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Levels of Service

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Major Store Retailer Types

Type Type descriptionSpecialty store • Carries a narrow product line with a deep assortment

Department store

• Carries several product lines • Each line is operated as a separate department

Supermarket • Large, low-cost, low-margin, high-volume, self-service operation

Convenience store

• Carries a limited line of high-turnover convenience products at slightly higher prices

Discount store • Sells goods at lower prices with lower margins and higher volumes

Off-price retailer

• Sells merchandise bought at less-than-regular wholesale prices and sold at less than retail

Superstore • Very large store for routinely purchased items11 - 7


Major Types of Retail Organizations

Type Description

Corporate chain • Two or more outlets that are commonly owned and controlled

Voluntary chain • Independent retailers engaged in group buying and merchandising

• Sponsored by wholesaler

Retailer cooperative • Group of independent retailers who jointly establish a central buying organization and conduct joint promotion efforts

Franchise organization

• Contractual association between a franchisor and franchisees

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Figure 11.1 - Retailer Marketing Strategies

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Segmentation, Targeting, Differentiation, and Positioning Decisions

• Target markets must be segmented and defined.

• Retailers then decide how to differentiate and position themselves in those markets.

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Product Assortment and Services Decision

• Retailers must determine three product variables.• Product assortment - Offer merchandise that is

carried by no other competitor• Services mix – Offer unique services• Store atmosphere – Create a unique store

experience, such as with experiential retailing

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Price Decision

• Price policy must fit the retailers’…• Target market and positioning• Product and service assortment• Competition• Economic factors

• Retailers seek either…• Everyday low pricing (EDLP), or• High-low pricing

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Promotion Decision

• Retailers use many promotional tools• Advertising• Personal selling• Sales promotion• Public relations (PR)• Direct marketing

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Place Decision

• Locations should be accessible to the target market in areas that are consistent with the retailer’s positioning.

• Shopping center: Group of retail businesses built on a site that is planned, developed, owned, and managed as a unit

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Types of Shopping Centers

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Retailing Trends and Developments

• Tighter consumer spending• Impact of the Great Recession on consumers

• Changed spending patterns

• Impact of the Great Recession on retailers• Cost-cutting, price promotions, bankruptcy• New value pitches in positioning

• New retail forms, shortening retail life cycles, and retail convergence

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• Rise of megaretailers• Offer better merchandise selections, good

service, and strong price savings to consumers • Have shifted the balance of power between

retailers and producers

• Growth of direct, online, mobile, and social media retailing• Availability of a variety of nonstore alternatives

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• Showrooming: Checking out merchandise and prices in a retail showroom but buying from an online-only rival• Sometimes occurs in the store

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• Growing importance of retail technology• Produce better forecasts• Control inventory costs• Interact electronically with suppliers• Send information between stores • Sell to customers within stores

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• Green retailing • Promoting more environmentally responsible

products• Launching programs to help customers be more

responsible• Working with channel partners to reduce their

environmental impact

• Global expansion of major retailers• Escaping saturated home markets

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Wholesaling

• Involves all the activities in selling goods and services to those buying for resale or business use• Wholesaler: A firm

engaged primarily in wholesaling activities

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Channel Functions Performed by Wholesalers

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Types of Wholesalers

Type Description

Merchant wholesalers

• Independently owned wholesale business that takes title to the merchandise it handles

• Full-service wholesalers provide a full set of services.

• Limited-service wholesalers offer fewer services to their suppliers and customers.

Broker • Does not take title to goods• Functions

• Bringing buyers and sellers together• Assisting in negotiation

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Types of Wholesalers

Type Description

Agents • Represent buyers or sellers on a relatively permanent basis

• Perform only a few functions• Do not take title to goods

Manufacturers’ and retailers’ branches and offices

• Wholesaling by sellers or buyers themselves rather than through independent wholesalers

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Types of Full-Service Wholesalers

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Types of Limited-Service WholesalersTypes Description

Cash-and-carry wholesalers

• Carry a limited line of fast-moving goods • Sell to small retailers for cash

Truck wholesalers • Perform primarily a selling and delivery function

Drop shippers • Do not carry inventory or handle the product

Rack jobbers • Price the goods• Keep goods fresh• Set up point-of-purchase displays• Keep inventory records

Producers’ cooperatives • Farmer-owned members• Assemble farm produce for sale in local markets

Mail-order or Web wholesalers

• Send catalogs to or maintain Web sites for retail, industrial, and institutional customers

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Types of Agents

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Types of Manufacturers’ and Retailers’ Branches and Offices

• Sales branches and offices • Set up by manufacturers to improve inventory

control, selling, and promotion• Sales branches carry inventory. • Sales offices do not carry inventory.

• Purchasing offices• Role similar to that of brokers or agents • Part of the buyer’s organization

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Figure 11.2 - Wholesaler Marketing Strategies

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Trends in Wholesaling

• Need for greater efficiency• Demands for lower prices• Sorting out suppliers who are not adding

value based on cost and quality• Blurring distinction between large retailers

and wholesalers• Increased use of technology to contain costs

and boost productivity

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Learning Objectives

• Explain the role 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.

11 - 31

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mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright © 2015 Pearson Education, Inc.Copyright © 2015 Pearson Education, Inc.

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Armstrong mai12 inppt_11