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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

andarefoundinindustriessuchaslumberandautomotiveequipmentandparts.Salesofficesdo

notcarryinventoryandaremostprominentinthedrygoodsandnotionsindustries.PurchasingofficesPerformarolesimilartothatofbrokersoragentsbutarepartofthebuyer’sorganization.Manyretailersset

uppurchasingofficesinmajormarketcenters,suchasNewYorkandChicago.Figure11.2WholesalerMarketingStrategiesTrendsinWholesalingNeedforgreaterefficiencyDemandsforlowerpricesSortingoutsupplierswhoarenotaddingvaluebasedoncostandqualityBlurringdistinctionbetweenlargeretailersandwholesalersIncreaseduseoftechnologytocontaincostsandboostproductivityObjective

Outline11.5SummaryWholesaling—sellinggoodsorservicestothosebuyingforthepurposeofresaleorbusinessuseWholesalersfallintothreegroups:MerchantwholesalersBrokersandagentsManufacturers’andretailers’branchesandofficesFinalThoughtsOnlineretailingisnowaneverydayandgrowingpartoflife.Considertheramificationsonthetraditionalmom-and-popbrick-and-mortarretailstore.Howcantheyeffectivelycompete?Marketing:AnIntroductionFifteenthEditionChapter12EngagingConsumersandCommunicatingCustomerValue:AdvertisingandPublicRelationsCopyright©2023,2020,2017PearsonEducation,Inc.AllRightsReservedObjectivesOutline(1of2)12.1Definethefourpromotionmixtoolsforcommunicatingcustomervalue.12.2Discussthechangingcommunicationslandscapeandtheneedforintegratedmarketingcommunications.ObjectivesOutline(2of2)12.3Describeanddiscussthemajordecisionsinvolvedindevelopinganadvertisingprogram.12.4Explainhowcompaniesusepublicrelationstocommunicatewiththeirpublics.FirstStop:”BurgerKing:AnythingbutTraditionalIntegratedMarketingCommunicationsBurgerKing’softenwackycampaignsmightstrikesomeobserversasimpetuousorevenreckless.Buttheyunitearoundthelong-heldpositioningthatBurgerKingis“HomeoftheWhopper,”theiconic“flame-grilled,100%beef”creationthatkeepsloyalcustomerscomingback.ObjectiveOutline12.1Definethefourpromotionmixtoolsforcommunicatingcustomervalue.PromotionMixApromotionmix,ormarketingcommunicationsmix,isaspecificblendofpromotiontools:AdvertisingSalespromotionPersonalsellingPublicrelations(PR)ObjectiveOutline12.1SummaryAcompany’stotalpromotionmixconsistsoftoolsthatthecompanyusestoengagecustomers,persuasivelycommunicatecustomervalue,andbuildcustomerrelationships.ObjectiveOutline12.2Discussthechangingcommunicationslandscapeandtheneedforintegratedmarketingcommunications.NewMarketingCommunicationsModel(1of3)Factorschangingthefaceoftoday’smarketingcommunications:ChangingconsumersChangingmarketingstrategiesAdvancementsindigitaltechnologyNewMarketingCommunicationsModel(2of3)Marketersreachsmallerconsumersegmentsininteractiveandengagingways.Mixoftraditionalmassmediaandawidearrayofonline,mobile,andsocialmediaContentmarketingmanagerscreate,inspireandsharebrandmessagesandconversations.NewMarketingCommunicationsModel(3of3)Contentmarketing:Intuit’scontent-rich,skillfullyintegratedGiantStorycampaignproducedstrikingresultsacrossPOESmedia,significantlyliftingbrandawarenessandfavorability.Figure12.1IntegratedMarketingCommunicationsNatureofthePromotionTools(1of2)PromotiontoolDescriptionAdvertisingReachesmassesofbuyersatalowcostperexposureBuildsalong-termimageforaproductCantriggerquicksalesHasapublicnatureandisviewedaslegitimateVeryexpressiveImpersonalandlacksthedirectpersuasivenessofsalespeoplePersonalsellingPersonalinteractionbetweentwoormorepeopleAllowsallkindsofcustomerrelationshipstospringupBuyerfeelsagreaterneedtolistenandrespondMostexpensivepromotiontoolNatureofthePromotionTools(2of2)PromotiontoolDescriptionSalespromotionWideassortmentoftoolswithuniquequalitiesAttractsattentionandoffersincentivestopurchaseUsedtodramatizeproductoffersandboostsalesInvitesandrewardsquickresponsebuthasshort-livedeffectsPublicrelationsVerybelievabletoreadersCandramatizeacompanyorproductReachesmanyprospectsEffectiveandeconomicalwhenwellthoughtoutDirectand

digital

marketingMoretargetedandinteractiveImmediateandpersonalizedFigure12.2

PushversusPullPromotionStrategyObjectiveOutline12.2SummaryNewmarketingcommunicationsmodelMoretargeted,social,andengagingIntegratedmarketingcommunicationsIntegratesandcoordinatesthecompany’smanycommunicationschannelsDeliversaclear,consistent,andcompellingmessageabouttheorganizationanditsbrandsObjectiveOutline12.3Describeanddiscussthemajordecisionsinvolvedindevelopinganadvertisingprogram.Figure12.3

MajorAdvertisingDecisionsTable12.1PossibleAdvertisingObjectivesInformativeAdvertisingBlankCommunicatingcustomervalueSuggestingnewusesforaproductBuildingabrandandcompanyimageInformingthemarketofapricechangeTellingthemarketaboutanewproductDescribingavailableservicesandsupportExplaininghowaproductworksCorrectingfalseimpressionsPersuasiveAdvertisingBlankBuildingbrandpreferencePersuadingcustomerstopurchasenowEncouragingswitchingtoabrandCreatingongoingcustomerengagementChangingcustomerperceptionsofproductvalueBuildingbrandcommunityReminderAdvertisingBlankMaintainingcustomerrelationshipsRemindingconsumerswheretobuytheproductRemindingconsumersthattheproductmaybeneededinthenearfutureKeepingthebrandinacustomer’smindduringoff-seasonsMethodsofSettingtheAdvertisingBudgetAffordableMethodPercentage-of-SalesMethodCompetitive-ParityMethodObjective-and-TaskMethodSettingtheAdvertisingBudgetSettingthepromotionbudget:PepsiCospendsmorethan$1.7billionayearonpromotioncampaignsforitsmanybrands,suchasitscurrentPepsi“FortheLoveofIt”campaign.Butisthattoolittle,justright,ortoomuch?AdvertisingStrategyAccomplishesthecompany’sadvertisingobjectivesMajoradvertisingstrategyelements:CreatingadvertisingmessagesSelectingadvertisingmediaCreatingtheAdvertisingMessageandBrandContentBreakingthroughtheclutterMergingadvertisingandentertainmentMessageandcontentstrategyMessageexecutionConsumer-generatedcontentSelectingAdvertisingMediaAdvertisingmedia:VehiclesthroughwhichadvertisingmessagesaredeliveredtotheirintendedaudiencesStepsinadvertisingmediaselection:Determiningreach,frequency,impactandengagementChoosingamongmajormediatypesSelectingspecificmediavehiclesChoosingmediatimingTable12.2(1of2)ProfilesofMajorMediaTypesMediumAdvantagesLimitationsTelevisionGoodmass-marketingcoverage;lowcostperexposure;combinessight,sound,andmotion;appealingtothesensesHighabsolutecosts;highclutter;fleetingexposure;less

audienceselectivityDigital,mobile,andsocialmediaHighselectivity;lowcost;

immediacy;engagementcapabilitiesPotentiallylowimpact;highaudiencecontrolofcontentand

exposureNewspapersFlexibility;timeliness;goodlocalmarketcoverage;broad

acceptability;highbelievabilityShortlife;poorreproductionquality;smallpass-along

audience.DirectmailHighaudienceselectivity;flexibility;

noadcompetition

withinthesamemedium;

allowspersonalizationRelativelyhighcostperexposure;“junkmail”

image.Table12.2(2of2)ProfilesofMajorMediaTypesMediumAdvantagesLimitationsMagazinesHighgeographicanddemographicselectivity;credibility

andprestige;high-qualityreproduction;longlifeandgood

pass-alongreadershipLongadpurchaseleadtime;highcostRadioGoodlocalacceptance;highgeographicanddemographicselectivity;lowcost.Audioonly;fleetingexposure;lowattention(“thehalf-heard”

medium);fragmentedaudiencesOutdoorFlexibility;highrepeatexposure;lowcost;goodpositional

selectivityLittleaudienceselectivity;creativelimitationsEvaluatingAdvertisingEffectivenessandReturnonAdvertisingInvestmentReturnonadvertisinginvestment:

NetreturnonadvertisinginvestmentdividedbythecostsoftheadvertisinginvestmentAdvertisersshouldregularlyevaluateCommunic

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