Principle of Marketing ; Boone. Retailing and wholesaling powerpoint slide notes.

1. Chapter 14
Direct Marketing and
Marketing Resellers:
Retailers and Wholesalers
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2. Objectives
1.
2.
3.
4.
5.
6.
7.
8.
Explain the wheel of retailing.
Discuss how retailers select target markets.
Show how the elements of the marketing mix apply to
retailing strategy.
Explain the concepts of retail convergence and scrambled
merchandising.
Identify the functions performed by wholesaling
intermediaries.
Identify the major types of independent wholesaling
intermediaries and the situations appropriate for each.
Compare the basic types of direct marketing and non-store
retailing.
Explain how much the Internet has altered the wholesaling,
retailing, and direct marketing environments.
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3. What is
What is
Retailing?involved in selling goods or
Retailing?
 All the activities
services directly to final consumers for their
personal, non-business use.
 Retailers
- businesses whose sales come
primarily from retailing.
 Retailers
can be classified as:
– Store retailers such as Giant, Bata, Isetan.
– Nonstore retailers such as the mail, telephone,
and Internet. (Kayla Baverly Hill, Smart Shop,
vending machine)
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4. What is Retailer?
What is Retailer?
 Represent
the distribution channel to
most consumers
 Determine
–
–
–
–
–
–
locations,
store hours,
quality and quantity of salespeople,
store layouts,
merchandise selections and
return policies.
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5. Wheel of Retailing
Explains the patterns of change in
retailing.
 A new type of retailer gains a
competitive foothold by offering
customers lower prices.
 Maintains profits by reducing or
eliminating services.
 Once established the innovator adds
more services and prices gradually rise.

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6. Wheel of
Retailing
Low-end strategy
• Low prices
• Limited facilities and
services
• Price-sensitive
Medium strategy
• Moderate prices
consumers
• Improved facilities
• Broader base of valueand service-conscious
High-end strategy
consumers
• High prices
• Excellent facilities and
services
• Upscale consumers
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7. Retailing Strategy
1. Selecting a target market
2. Develop a retailing mix to satisfy the
chosen market
Retail Image
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8. Retailing Strategy
Controllable variables
 Selecting
a target market
 Developing a retailing mix
– Retailing mix specifies:
 Merchandise
strategy
 Customer service
standards
 Pricing guidelines
 Target market
analysis
 Promotion goals
 Location/distribution
decisions
 Store atmosphere
Uncontrollable
variables
Retailing
Strategy
•
•
•
•
Consumers
Competition
Technology
Economic
conditions
• Seasonality
• Legal restrictions
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9. 1. Selecting Target Market
 Depend
-
on:
Size and Profit Potential
Level of competition
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10. 2. a. Merchandise strategy
 Category
-
 Battle
-
Management
seek to improve the retailer’s
product category performance
through more coordinated buying,
merchandising, and pricing
for Shelf Space
slotting allowances
seek pricing and concessions from
manufacturers
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11. 2. b. Customer Service Strategy
(Gift wrapping, consultation, delivery, installation,
complimentary drinks, child care services etc)
Depend on:
 Store
size, type and location;
 Merchandise assortment;
 Services offered by competitors;
 Customer expectations, and
 Financial resources
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12. 2.c. Pricing Strategy
Markup and Markdown
 The
amount that a retailer adds to a
product’s cost to set the final selling price.
 The amount of the markup typically
results from:
1. The services performed by the retailer.
2. The inventory turnover rate.
 Typically
state markups as percentages.
 Marketers determine markups based
partly on their judgments.
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13. 2. d. Location/Distribution Strategy
It depends on:
Type of
merchandise
Financial
resources
Target
market
Site
availability
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14. 2.e. Promotional Strategy
Communicate about the store
 Location,
 Merchandise
selection,
 Hours of operation, and
 Process
 Others
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15. 2.f. Store Atmospherics Strategy
Combination of physical characteristics
and amenities that attract customers and
satisfy their shopping needs
Store Exterior
Interior décor
-
-
Architectural design
Window display
signs
entryways
Store layout
Merchandise presentation
Lighting,
Colour,
Sounds,
Scent, and
Cleanliness
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16. Defining Categories of Retailers
Forms of ownership.
Shopping effort (reason consumer
shops).
3. Services provided to customers.
4. Product lines.
5. Locations of retail transactions.
1.
2.
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17. 1. Retailers by Form of
Ownership
 Chain Stores
– Chain stores are groups of retail outlets that
operate under central ownership and
management and handle the same product
lines. Ex: GIANT hypermarket, Court
Mammoth
– Major advantage: economies of scale.
– May advertise in a variety of media.
 Independent Retailers
– Account for about 43 percent of all retail sales.
– Traditional advantage of independent stores is
friendly, personalized service.
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18. 2. Shopping by Store Type
(shopping efforts)
 Convenience
retailers focus their marketing
appeals on accessible locations, long store
hours, rapid checkout service, and adequate
parking facilities. Ex. Seven-Eleven.
 Shopping stores include furniture stores,
appliance retailers, clothing outlets, and
sporting goods stores.
– Consumers usually compare prices.
 Specialty
retailers combine carefully
defined product lines, services, and
reputations. Ex Habib Jewels, Toys r us,
Central Shoes, DaVinci etc
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19. 3. Classification by Services
Consists of three retailer types:
1. Self-service. Ex. 7-Eleven
2. Limited Service Retailer. Ex Superstore
3. Full-service retailers. Ex. Boutique,
specialty store
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20. Classification by Product Lines
1.
1.
1.
Specialty store typically handles only part of a single
product.
•
Stocks in considerable depth or variety.
•
Typically carry convenience and shopping goods.
Limited-line retailers
•
Customers find a large assortment of products
within one product line or a few related lines.
•
Typically develops in areas with a large enough
population to sufficiently support it.
•
Ex: Category Killers
General Merchandise retailer
•
Carry a wide variety of product lines that are all
stocked in some depth.
•
Ex: Variety store, department stores, Mass
merchandise store (off price retailer, hypermarket
and supercenters, and catalog retailer)
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21. Classification By Product Line
Classification By Product Line
Store Type
Specialty Stores
Specialty Stores
Department Stores
Department Stores
Supermarkets
Supermarkets
Convenience Stores
Convenience Stores
Superstores
Superstores
Category Killers
Category Killers
Hypermarkets
Hypermarkets
Length and Breadth of Product
Assortment
Narrow Product Line, Deep Assortment i.e.
Narrow Product Line, Deep Assortment i.e.
The Limited or Athlete’s Foot
The Limited or Athlete’s Foot
Wide Variety of Product Lines i.e. Clothing,
Wide Variety of Product Lines i.e. Clothing,
Home Furnishings, & Household Items
Home Furnishings, & Household Items
Wide Variety of Food, Laundry, & Household
Wide Variety of Food, Laundry, & Household
Products
Products
Limited Line of High-Turnover Convenience
Limited Line of High-Turnover Convenience
Goods
Goods
Large Assortment of Routinely Purchased
Large Assortment of Routinely Purchased
Food & Nonfood Products, Plus Services
Food & Nonfood Products, Plus Services
Giant Specialty Store that Carries aaVery Deep
Giant Specialty Store that Carries Very Deep
Assortment of aaParticular Line
Assortment of Particular Line
Huge Superstores
Huge Superstores
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22. What is Wholesaling?
What is Wholesaling?
All
the activities involved in
selling goods and services to
those buying for resale or
business use.
Wholesaler
- those firms
engaged primarily in wholesaling
activity.
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23. Functions of Wholesaling
Intermediaries
 Creating
Utility:
– Time, Place, Ownership, Possession
 Providing
Services:
– Buying, selling, storing, transporting,
market info, financing and risk taking. Full
function merchant wholesalers
 Lowering
Cost by limiting contacts
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24. Why are Wholesalers Used?
Why are Wholesalers Used?
Wholesalers are Often Better at Performing One
or More of the Following Channel Functions:
Providing
Providing
Services & Advice
Services & Advice
Market
Market
Information
Information
Risk Bearing
Risk Bearing
Wholesaler
Functions
Financing
Financing
Selling and
Selling and
Promoting
Promoting
Buying and
Buying and
Assortment Building
Assortment Building
Bulk Breaking
Bulk Breaking
Warehousing
Warehousing
Transportation
Transportation
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25. Type of Wholesaling
Intermediaries
 Ownership
Structure
– Manufacturer-owned facilities




Sales branch – carry inventory and process order
Sales office – does not carry inventory
Trade fair
Merchandise mart – provides space for permanent
showroom and exhibits
– Independent wholesaling Intermediaries


Merchant wholesaler
Agents and brokers
– Retailer-owned cooperatives
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26. Independent Wholesaling
 Two
types of wholesalers:
– Full function merchant wholesalers
– Limited function merchant wholesalers
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27. Direct Marketing & Other Non
Store Retailing
 Direct
Mail
 Direct Selling
 Direct response Retailing
 Telemarketing
 Internet Retailing
 Automatic Merchandising (vending
machine)
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