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11
Retailing and Wholesaling
ROAD MAP: Previewing the Concepts
• Explain the roles of retailers and wholesalers
in the distribution channel.
• Describe the major types of retailers and give
examples of each.
• Identify the major types of wholesalers and
give examples of each.
• Explain the marketing decisions facing
retailers and wholesalers.
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What is Retailing?
• Retailing includes all the activities involved
in selling products or services directly to
final consumers for their personal, nonbusiness use.
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Types of Retailers
Retailers are classified based on:
Amount of Service They Offer
Breadth & Depth of Product Lines
Relative Prices Charged
How They Are Organized
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Amount of Service
• Self-Service Retailers:
– Serve customers who are willing to perform
their own “locate-compare-select” process to
save money.
• Limited-Service Retailers:
– Provide more sales assistance because they
carry more shopping goods about which
customers need information.
• Full-Service Retailers:
– Usually carry more specialty goods for which
customers like to be “waited on.”
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Product Line Classification
Specialty Stores:
Carry narrow product lines with deep assortments
within those lines.
Department Stores:
Carry a wide variety of product lines—typically
clothing, home furnishings, and household goods.
Each line is operated as a separate department
managed by specialist buyers or merchandisers.
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Product Line Classification
Supermarket:
Large, low-cost, low-margin, high-volume,
self-service store that carries a wide variety of food,
laundry, and household products.
Convenience Stores:
Small stores located near residential areas that
are open long hours 7 days a week and carry
a limited line of high-turnover convenience goods.
11-7
Web-Based Supermarket
In the battle for “share of stomachs,” Safeway and many large
supermarkets have added Web-based sales.
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Product Line Classification
Superstores:
Much larger than regular supermarkets and
offer a large assortment of routinely purchased
food products, nonfood items, and services.
Category Killers:
Giant specialty stores that carry a very deep
assortment of a particular line and is staffed
by knowledgeable employees.
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Discussion Question
• What type of impact did the
emergence of category killers have on
department stores?
11-10
Relative Prices Classification
Discount Store:
A retail institution that sells standard merchandise
at lower prices by accepting lower margins and
selling at higher volume.
Off-Price Retailer:
Retailer that buys at less-than-regular wholesale
prices and sells at less than retail. Examples are
factory outlets, independents, and warehouse
clubs.
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Relative Prices Classification
Factory Outlet:
Off-price retailing operation that is owned and
operated by a manufacturer and that normally
carries the manufacturer’s surplus, discontinued,
or irregular goods.
Independent Off-Price Retailer:
Off-price retailer that is either owned and run by
entrepreneurs or is a division of a larger retail
operation.
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Factory Outlets
Factory outlet malls and value-retail centers have blossomed in recent
years, making them one of retailing’s hottest growth areas.
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Relative Prices Classification
Warehouse Club:
Off-price retailer that sells a limited selection of
brand-name grocery items, appliances, clothing,
and a hodgepodge of other goods at deep
discounts to members who pay annual
membership fees.
Click Here to Visit Sam's Club
11-14
Organizational Classification
Chain Stores:
Two or more outlets that are owned and controlled,
have central buying and merchandising, and sell
similar lines of merchandise.
Voluntary Chain:
A wholesaler-sponsored group of independent
retailers that engages in bulk buying and common
merchandising.
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Organizational Classification
Retailer Cooperative:
A group of independent retailers that bands
together to set up a jointly owned, central
wholesale operation and conducts joint
merchandising and promotion efforts.
Franchise:
A contractual association between a manufacturer,
wholesaler, or service organization (a franchiser)
and independent businesspeople (franchisees) who
buy the right to own and operate one or more
units in the franchise system.
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Franchising
Franchisees now
command 35% of
all retail sales in
the U.S. Subway
is one of the
fastest growing
franchises, with
nearly 20,000
shops in 74
countries.
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Organizational Classification
Merchandising Conglomerates:
A free-form corporation that combines several
diversified retailing lines and forms under central
ownership, along with some integration of their
distribution and management functions.
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Retailer Marketing Decisions
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Assortment and Services Decisions
Product Assortment:
Brand of merchandise
Merchandising events
Services Mix:
Different numbers and types of
services are key to non-price store
differentiation
Store Atmosphere:
Physical layout and “feel” of the store
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Price, Promotion, & Place Decisions
Price policy must fit its target market and positioning,
product and service assortment, and competition
Can use any or all of the promotion tools—advertising,
personal selling, sales promotion, public relations,
and direct marketing—to reach consumers
Retailers can locate in CBDs, various types of
shopping centers, strip malls, or power centers
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Mall of America
• The Mall of America
“megamall” contains:
– Over 520 specialty
stores
– 49 restaurants
– 7-acre indoor theme
park
– Underwater World
featuring hundreds of
marine specimens
– A two-story miniature
golf course.
• Click Here to Visit
the Mall of America
11-22
The Future of Retailing
1. New Retail Forms
2.
3.
4.
and Shortening
Retail Life Cycles
Growth of Nonstore
Retailing
Retail Convergence
Rise of the
Megaretailers
5. Growing Importance
6.
7.
of Retail Technology
Global Expansion of
Major Retailers
Retail Stores as
“Communities” or
“Hangouts”
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Wholesaling
• Wholesaling includes all activities involved
in selling goods and services to those
buying for resale or business use.
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Functions Provided by Wholesalers
Management
Services & Advice
Selling & Promoting
Buying &
Assortment Building
Market
Information
Bulk-Breaking
Risk Bearing
Warehousing
Financing
Transportation
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Types of Wholesalers
• Merchant Wholesalers
– 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 and Agents
– Do not take title to goods
– Perform fewer functions
– Brokers bring buyers and sellers together
– Agents represent buyers on more permanent
basis
– Manufacturers’ agents are most common type
of agent wholesaler
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Types of Wholesalers
• Manufacturers’ Sales Branches and
Offices
– Wholesaling by sellers or buyers themselves
rather than through independent wholesalers.
11-28
Wholesaling In Action
Grainger is by far the
world’s leading
wholesaler of
maintenance, repair,
and operating
supplies.
Click Here to Explore
Grainger's Website
11-29
Wholesaler Marketing Decisions
11-30
Trends in Wholesaling
Must Constantly Improve Services and Reduce Costs
Distinction Between Large Retailers & Wholesalers is Blurry
Will Continue to Increase the Services Provided to Retailers
Wholesalers Are Now Going Global
11-31
Rest Stop: Reviewing the Concepts
1. Explain the roles of retailers and wholesalers
in the distribution channel.
2. Describe the major types of retailers and
give examples of each.
3. Identify the major types of wholesalers and
give examples of each.
4. Explain the marketing decisions facing
retailers and wholesalers.
11-32