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Marketing:AnIntroductionFifteenthEditionChapter11RetailingandWholesalingCopyright©2023,2020,2017PearsonEducation,Inc.AllRightsReservedObjectivesOutline11.1
Explaintheroleofretailersinthedistributionchannelanddescribethemajortypesofretailers.11.2
Discusshowretailersareusingomni-channelmarketingtomeetthecross-channelshoppingbehavioroftoday’sdigitallyconnectedconsumers.11.3
Describethemajorretailermarketingdecisions.11.4Discussthemajortrendsanddevelopmentsinretailing.11.5Explainthemajortypesofwholesalersandtheirmarketingdecisions.FirstStop:Walmart:ABattlebetweenTitansintheNewWorldofRetailWalmarthasinvestedheavilytobuilditsomni-channelcapabilitiestobetterservetoday’smobile-first,omni-channelconsumers.ObjectiveOutline11.1Explaintheroleofretailersinthedistributionchannelanddescribethemajortypesofretailers.Retailing:ConnectingBrandswithConsumersActivitiesinvolvedinsellinggoodsorservicesdirectlytoconsumersfortheirpersonaluseRetailer:BusinesswhosesalescomeprimarilyfromretailingTheShiftingRetailingModelShoppermarketing:FocusingtheentiremarketingprocesstowardturningshoppersintobuyersastheyapproachthepointofsaleOmni-channelretailing:Creatingaseam-lesscross-channelbuyingexperiencethatintegratesin-store,online,andmobileshoppingTypesofRetailersRetailerclassificationcanbebasedonAmountofserviceofferedBreadthanddepthoftheproductlinesRelativepriceschargedWaytheyareorganizedAmountofServiceSelf-serviceretailersServecustomerswhoarewillingtoperformtheirownlocate-compare-selectprocessLimited-serviceretailersCarrymoreshoppinggoodsaboutwhichcustomersneedinformationProvidemoresalesassistanceFull-serviceretailersCarrymorespecialtygoodsAssistcustomersineveryphaseoftheshoppingprocessMajorStoreRetailerTypes(1of2)TypeDescriptionExamplesSpecialtystoreAstorethatcarriesanarrowproductlinewithadeepassortment,suchasapparelstores,sporting-goodsstores,furniturestores,florists,andbookstores.RE
I,SunglassHut,Sephora,Williams-SonomaDepartmentstoreAstorethatcarriesseveralproductlines—typicallyclothing,homefurnishings,andhouseholdgoods—witheachlineoperatedasaseparate
departmentmanagedbyspecialistbuyersor
merchandisers..Macy’s,Sears,NeimanMarcusSupermarketArelativelylarge,low-cost,low-margin,high-volume,self-serviceoperation
designedtoservetheconsumer’stotalneedsforgroceryandhousehold
products.Kroger,Publix,Safeway,SuperValu.ConveniencestoreArelativelysmallstorelocatednearresidentialareas,open24/7,andcarrying
alimitedlineofhigh-turnoverconvenienceproductsatslightlyhigherprices.7-Eleven,CircleK,Speedway,
SheetzSuperstoreAverylargestorethatmeetsconsumers’totalneedsforroutinelypurchased
foodandnonfooditems.Thisincludessupercenters,combinedsupermarket
anddiscountstores,andcategorykillers,whichcarryadeepassortmentina
particularcategory.WalmartSupercenter,SuperTarget,
Meijer(discountstores);BestBuy,Petco,
Staples,BedBath&Beyond(category
killers)DiscountstoreAstorethatcarriesstandardmerchandisesoldatlowerpriceswithlower
marginsandhighervolumes.Walmart,Target,Kohl’sOff-priceretailerAstorethatsellsmerchandiseboughtatless-than-regularwholesale
pricesandsoldatlessthanretail.Theseincludefactoryoutletsownedand
operatedbymanufacturers;independentoff-priceretailersownedandrunby
entrepreneursorbydivisionsoflargerretailcorporations;andwarehouse
(orwholesale)clubssellingalimitedselectionofgoodsatdeepdiscountsto
consumerswhopaymembershipfees.Mikasa(factoryoutlet);TJMaxx
(independentoff-priceretailer);Costco,
Sam’sClub,BJ’s(warehouseclubs).MajorStoreRetailerTypes(2of2)DiscounterDollarGeneral,thenation’slargestsmall-boxdiscountretailer,makesapowerfulvaluepromiseforthetimes:“Savetime.Savemoney.Everyday.”MajorTypesofRetailOrganizationsTypeDescriptionExamplesCorporatechainTwoormoreoutletsthatarecommonlyownedandcontrolled.Corporatechainsappearinalltypesofretailingbuttheyarestrongestindepartmentstores,discountstores,foodstores,drugstores,andrestaurants.Macy’s(departmentstores),Target(discountstores),Kroger(grocery
stores),
CVS(drugstores)VoluntarychainWholesaler-sponsoredgroupofindependentretailersengagedingroup
buyingand
merchandising.IndependentGrocersAlliance(IGA),
WesternAuto(autosupply),TrueValue
(hardware)RetailercooperativeGroupofindependentretailerswhojointlyestablishacentralbuying
organizationandconductjoint
promotionefforts.AssociatedGrocers(groceries),
AceHardware
(hardware)FranchiseorganizationContractualassociationbetweenafranchisor(amanufacturer,wholesaler,
orserviceorganization)andfranchisees(independentbusinesspeople
whobuytherighttoownandoperateoneormoreunitsinthefranchise
system).McDonald’s,Subway,PizzaHut,JiffyLube,
MeinekeMufflers,7-ElevenObjective
Outline11.1SummaryRetailing—sellinggoodsorservicesdirectlytofinalconsumersShoppermarketing—turningshoppersintobuyersOmni-channelretailing—integratesin-store,online,andmobileshoppingRetailersclassifiedbyamountofservice,productlinesold,andrelativepricesCorporateandcontractualretailorganizationsObjective
Outline11.2Discusshowretailersareusingomni-channelretailingtomeetthecross-channelshoppingbehavioroftoday’sdigitallyconnectedconsumers.Omni-ChannelRetailing:BlendingIn-Store,Online,Mobile,andSocialMediaChannels(1of2)Inthisageofwebsites,smartphones,mobileapps,socialmedia,andotherthingsdigital,shoppingtypicallyinvolvesadazzlingarrayofchannelsandplatforms.Omni-channelconsumersreadilyresearchproductsandpricesonline,shoppingdigitallyfromhome,fromwork,instores,oranywhereinbetween.Theboundariesbetweenin-storeandonlineretailingarerapidlyblurring.Omni-ChannelRetailing:BlendingIn-Store,Online,Mobile,andSocialMediaChannels(2of2)Omni-channelmarketing:Used-cargiantCarMaxmakestheentireused-carbuyingexperiencesimpleandseamlessacrossitsdigitalandstoreshoppingchannels.ObjectiveOutline11.3Describethemajorretailermarketingdecisions.Figure11.1
RetailerMarketingStrategiesSegmentation,Targeting,Differentiation,andPositioningDecisions(1of2)Targetmarketsmustbesegmentedanddefined.Retailersthendecidehowtodifferentiateandpositionthemselvesinthosemarkets.Segmentation,Targeting,Differentiation,andPositioningDecisions(2of2)Retailtargetingandpositioning:LushFreshHandmadeCosmeticssucceedsbycarefullypositioningitselfawayfromitslargercompetitors.Itmakespremiumbeautyproductsbyhandfromthefreshestpossiblenaturalingredients.ProductAssortmentandServicesDecisionRetailersmustdeterminethreeproductvariables.ProductassortmentServicesmixStoreatmospherePriceDecisionPricepolicymustfittheretailers’TargetmarketandpositioningProductandserviceassortmentCompetitionEconomicfactorsRetailerspracticeeitherEverydaylowpricing(EDLP)High-lowpricingPromotionDecisionRetailersusevariouscombinationsofthefivepromotiontools:AdvertisingPersonalsellingSalespromotionPublicrelations(PR)DirectandsocialmediamarketingPlaceDecisionLocationsshouldbeaccessibletothetargetmarketinareasthatareconsistentwiththeretailer’spositioning.Shoppingcenter:Groupofretailbusinessesbuiltonasitethatisplanned,developed,owned,andmanagedasaunitTypesofShoppingCentersRegionalshoppingcenterCommunityshoppingcenterNeighborhoodshoppingcenterPowercenterLifestylecenterObjective
Outline11.3SummaryMajorretailermarketingdecisionsSegmentationandtargetingStoredifferentiationandpositioningRetailmarketingmixdecisionsProductandservicesassortmentPrice,promotion,andplaceObjective
Outline11.4Discussthemajortrendsanddevelopmentsinretailing.RetailingTrendsandDevelopments(1of4)DisruptionanduncertaintycausedbyCOVID-19TighterconsumerspendingImpactoftheGreatRecessiononconsumersChangedspendingpatternsImpactoftheGreatRecessiononretailersCost-cutting,pricepromotions,bankruptcyNewvaluepitchesinpositioningNewretailforms,shorteningretaillifecycles,andretailconvergenceRetailingTrendsandDevelopments(2of4)RiseofmegaretailersOfferbettermerchandiseselections,goodservice,andstrongpricesavingstoconsumersHaveshiftedthebalanceofpowerbetweenretailersandproducersGrowthofdirect,online,mobile,andsocialmediaretailingAvailabilityofavarietyofnonstorealternativesRetailingTrendsandDevelopments(3of4)GrowingimportanceofretailtechnologyProducebetterforecastsControlinventorycostsInteractdigitallywithsuppliersSendinformationbetweenstoresSelltocustomerswithinstoresRetailingTrendsandDevelopments(4of4)SustainableretailingPromotingmoreenvironmentallyresponsibleproductsLaunchingprogramstohelpcustomersbemoreresponsibleWorkingwithchannelpartnerstoreducetheirenvironmentalimpactGlobalexpansionofmajorretailersEscapingsaturatedhomemarketsObjective
Outline11.4SummaryMajortrendsanddevelopmentsinretailingNeweconomicrealities—thrift-mindedconsumersNewretailformsandretailconvergenceRiseofmegaretailersGrowthofdirect,online,mobile,andsocialmediaretailingandretailtechnologyGreenretailingandglobalexpansionofmajorretailersObjective
Outline11.5Explainthemajortypesofwholesalersandtheirmarketingdecisions.Wholesaling(1of2)InvolvesalltheactivitiesinsellinggoodsandservicestothosebuyingforresaleorbusinessuseWholesaler:Afirmengagedprimarily
inwholesalingactivitiesWholesaling(2of2)Manyofthenation’slargestandmostimportantwholesalers—likeGrainger—arelargelyunknowntofinalconsumers.
Buttheyareverywellknownandmuchvaluedbythebusinesscustomerstheyserve.ChannelFunctionsPerformedbyWholesalersSellingandpromotingBuyingandassortmentbuildingBulkbreakingWarehousingTransportationFinancingRiskbearingMarketinformationManagementservicesandadviceTable11.2(1of3)MajorTypesofWholesalerTypeDescriptionMerchantwholesalersIndependentlyownedbusinessesthattaketitletoallmerchandisehandled.Therearefull-serviceWholesalersandlimited-servicewholesalers.Full-servicewholesalersProvideafulllineofservices:carryingstock,maintainingasalesforce,offeringcredit,makingdeliveries,
andprovidingmanagementassistance.Full-servicewholesalersincludewholesalemerchantsand
Industrial
distributors.WholesalemerchantsSellprimarilytoretailersandprovideafullrangeofservices.Generalmerchandisewholesalerscarry
severalmerchandiselines,whereasgenerallinewholesalerscarryoneortwolinesingreatdepth.Specialty
wholesalersspecializeincarryingonlypartofaline.IndustrialdistributorsSelltomanufacturersratherthantoretailers.Provideseveralservices,suchascarryingstock,offering
credit,andprovidingdelivery.Maycarryabroadrangeofmerchandise,ageneralline,oraspecialtyline.Limited-servicewholesalersOfferfewerservicesthanfull-servicewholesalers.Limited-servicewholesalersareofseveraltypes:Cash-and-carrywholesalersCarryalimitedlineoffast-movinggoodsandselltosmallretailersforcash.Normallydonotdeliver..Truckwholesalers(ortruckjobbers)Performprimarilyasellinganddeliveryfunction.Carryalimitedlineofsemiperishablemerchandise(such
asmilk,bread,snackfoods),whichissoldforcashasdeliveriesaremadetosupermarkets,smallgroceries,
hospitals,restaurants,factorycafeterias,andhotels.DropshippersDonotcarryinventoryorhandletheproduct.Onreceivinganorder,dropshippersselectamanufacturer,
whothenshipsthemerchandisedirectlytothecustomer.Dropshippersoperateinbulkindustries,suchas
coal,lumber,andheavyequipment.RackjobbersServegroceryanddrugretailers,mostlyinnonfooditems.Rackjobberssenddeliverytruckstostores,where
thedeliverypeoplesetuptoys,paperbacks,hardwareitems,healthandbeautyaids,orotheritems.Rack
Jobbers
pricethegoods,keepthemfresh,setuppoint-of-purchasedisplays,andkeepinventoryrecords.Producers’cooperativesFarmer-ownedmembersthatassemblefarmproduceforsaleinlocalmarkets.Producers’cooperatives
Often
attempttoimproveproductqualityandpromoteaco-opbrandname,suchasSun-Maidraisins,
Sunkist
oranges,orDiamondnuts.Mail-orderorwebwholesalersSendcatalogstoormaintainwebsitesforretail,industrial,andinstitutionalcustomersfeaturingjewelry,cosmetics,
specialtyfoods,andothersmallitems.Itsprimarycustomersarebusinessesinsmalloutlyingareas.Table11.2(2of3)MajorTypesofWholesalerBrokersandagentsDonottaketitletogoods.Themainfunctionistofacilitatebuyingand
selling,
forwhichtheyearna
commission
onthesellingprice.Generallyspecializebyproductlineorcustomertype.BrokersBringbuyersandsellerstogetherandassistinnegotiation.Brokersarepaidbythepartywhohiredthe
brokeranddonotcarryinventory,getinvolvedinfinancing,orassumerisk.Examplesincludefoodbrokers,
realestatebrokers,insurancebrokers,andsecurity
brokers.AgentsRepresenteitherbuyersorsellersonamorepermanentbasisthanbrokersdo.Therearefourtypes:Manufacturers’agentsRepresenttwoormoremanufacturersofcomplementarylines.Oftenusedinsuchlinesasapparel,
furniture,andelectricalgoods.Amanufacturer’sagentishiredbysmallmanufacturerswhocannotafford
theirownfieldsalesforcesandbylarge
manufacturerswhouseagentstoopennewterritoriesorcover
territoriesthatcannotsupportfull-timesalespeople.SellingagentsHavecontractualauthoritytosellamanufacturer’sentireoutput.Thesellingagentservesasasales
department
andhassignificantinfluenceoverprices,terms,andconditionsofsale.Foundinproductareas
suchastextiles,industrialmachineryandequipment,coalandcoke,chemicals,andmetals.Table11.2(3of3)MajorTypesofWholesalerTypeDescriptionPurchasingagentsGenerallyhavealong-termrelationshipwithbuyersandmakepurchasesforthem,oftenreceiving,
inspecting,
warehousing,andshippingthemerchandisetobuyers.Purchasingagentshelpclientsobtain
thebestgoodsandpricesavailable.CommissionmerchantsTakephysicalpossessionofproductsandnegotiatesales.Usedmostoftenin
agriculturalmarketingby
farmerswhodonotwanttoselltheirownoutput.Takeatruckloadofcommoditiestoacentralmarket,sellit
forthebestprice,deductacommissionandexpenses,andremitthebalancetotheproducers.Manufacturers’andretailers’
branchesandofficesWholesalingoperationsconductedbysellersorbuyersthemselvesratherthanoperatingthrough
independent
wholesalers.Separatebranchesandofficescanbededicatedtoeithersalesorpurchasing.SalesbranchesandofficesSetupbymanufacturerstoimproveinventorycontrol,selling,andpromotion.Salesbranchescarry
inventory
andarefoundinindustriessuchaslum
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