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Retailing and
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
Discuss the major trends and developments
in retailing
Explain the major types of wholesalers and
their marketing decisions
11 - 2
First Stop: Walmart: The World’s Largest
• 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
• Getting the best prices from suppliers
11 - 3
• All activities involved in selling goods or
services directly to final consumers for
their personal, nonbusiness use
• A business whose sales come primarily
from retailing
11 - 4
Shopper Marketing
• Using point-of-sale
promotions and
advertising to extend
brand equity to “the
last mile” and
encourage favorable
in-store purchase
Shopper marketing: Influencing
consumers’ buying decisions as
they shop now involves efforts
aimed at in-store, online, and
mobile shopping
11 - 5
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
11 - 6
Types of Retailers: Amount of
Serve customers who are willing to
perform their own locate-compare-select
Provide more sales assistance as they
carry shopping goods about which
details are needed
Usually carry more specialty goods for
which customers need or want
assistance or advice
11 - 7
Types of Retailers: Product Line
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
A large, low-cost, low-margin, high-volume, selfSupermarkets service store that carries a wide variety of
grocery and household products
11 - 8
Kroger, America’s Largest
Grocery-Only Retailer
Thanks to customer-focused pricing,
Kroger’s sales and market share gains
have been the best in the industry
despite a sagging economy
11 - 9
Types of Retailers: Product Line
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
11 - 10
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
11 - 11
Types of Retailers: Relative Prices
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
11 - 12
Types of Off-Price Retailers
Factory outlet
• An off-price retailing operation that is owned and
operated by a manufacturer and normally carries the
manufacturer’s 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 nation’s
largest small-box discount retailer, makes
a powerful value promise for the times:
“Save time. Save money. Every day”
11 - 14
Types of Retailers: Organizational
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
11 - 15
Types of Retailers: Organizational
• 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
These days, it’s 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
11 - 18
Retailer Marketing Decisions
Store differentiation
11 - 19
Retail Targeting and Positioning
By positioning itself strongly away
from Wal-Mart and other discounters,
Whole Foods has made itself one of
the nation’s fastest-growing and more
profitable food retailers Whole Foods
Market focuses on selling high-quality
natural and organic foods
11 - 20
Retailer Marketing Decisions
• Retailer marketing mix:
Product and service assortment
Retail prices
Distribution (location)
• Retail strategy and retail marketing mix must
combine to create value for targeted retail
11 - 21
Retailer Marketing mis
• Retail marketing mix:
• Product assortment should differentiate the
retailer while matching target shoppers’
• 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
11 - 22
Store Atmosphere
The Cabella’s “experience” has made it a tourist destination
11 - 23
Price Decisions
• Price policy must fit with the target market
and positioning, product and service
assortment, competition, and economic
• Price promotions and EDLP
• High-low pricing
11 - 24
Pricing for the Target Segment
Bergdorf Goodman caters to the upper crust with prices to match
11 - 25
Retailer Marketing Decisions
• Promotion decisions:
• Retailers can use any or all of the promotion
tools—advertising, personal selling, sales
promotion, public relations, and direct
marketing—to reach consumers
11 - 26
• 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
11 - 27
Shopping Centers Today
Today’s shopping centers are more about
creating places to be rather than just places to
11 - 28
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
11 - 29
Online Retailing
The Internet has spawned a whole new breed of shoppers – people who just
can’t buy anything unless they first look it up online and get the lowdown
11 - 30
Retail Technology
Stop & Shop uses technology to
make shopping faster and more
convenient for customers
11 - 31
Green Retailing
McDonald’s new eco-friendly restaurants are designed from the bottom up with a
whole new eco-attitude
11 - 32
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.
11 - 33
• All activities involved in selling goods and
services to those buying for resale or business
11 - 34
Many of the nation’s largest and most
important wholesalers—like Grainger—
are largely unknown to final consumers
Grainger offers more
than 900,000
maintenance, repair,
and operating
(MRO) items to over
1.8 million
Grainger’s value
proposition is simple: to
make it easier and less
costly for buyers to
purchase MRO items
11 - 35
Functions Wholesalers Perform
Selling and promoting
Buying and assortment building
Risk bearing
11 - 36
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
11 - 37
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
• Manufacturers’ agents are the most common type of
agent wholesaler
11 - 38
Types of Wholesalers
• Manufacturers’ sales branches
and offices:
• Involves wholesaling by sellers or buyers
themselves rather than through
independent wholesalers
11 - 39
Figure 11.2 - Wholesaler Marketing
11 - 40
Wholesaler Marketing Decisions
• Wholesaler strategy:
• Segmentation, targeting, differentiation,
and positioning
• Wholesaler marketing mix:
Product assortment and services
Distribution (location)
11 - 41
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
11 - 42
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
11 - 43
Marketing in Action
Pharmaceutical wholesaler McKesson helps its retail pharmacist customers to be
more efficient by offering a wide range of online resources
11 - 44
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
• Discuss the major trends and developments
in retailing
• Explain the major types of wholesalers and
their marketing decisions
11 - 45
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2013 Pearson Education, Inc.
Publishing as Prentice Hall
11 - 46