Retailing and Wholesaling

1. Retailing and Wholesaling

2. Retailing • Retailing:all activities involved in selling goods or services directly to final consumers for their personal, non-business use • Retailing can take place in stores and non-store environments • Retailers can be classified based on: • Amount of services • Products lines • Relative prices • Organizational approach

3. Amount of service offered: Self-service retailers Limited-service retailers Full-service retailers Relative prices charged: Discount stores Off-price retailers: Independents Factory outlets Warehouse clubs Products lines: Specialty stores Department stores Supermarkets Convenience stores Superstores Types of Retailers

4. Retail organizations: Corporate chains Voluntary chains Retailer cooperatives Franchise organizations Merchandising conglomerates Franchises: contractual association between two businesses, having three characteristics: The franchiser owns a trade or service mark, and licenses it for use for royalties Franchisees must pay to be part of the system Franchisers provide a packaged marketing and operations system Types of Retailers (continued) [omitted]

5. Target markets chosen will affect all other decisions Markets chosen and positioning need to be clear Cannot hope to be “something for everyone” Product variables: Assortment Services mix Atmospherics Price decision: Markups and volume are inversely related Retailer Marketing Decisions

6. Promotion: retailers will use all five tools to promote themselves Advertising, personal selling, sales promotion, public relations, and direct marketing Place decision: Location is critical to attract the target market Central business districts (banks, department stores, specialty stores, theatres) Shopping centers Regional (40-200 stores) Neighborhood (5-15 stores) Power centre (Huge unenclosed shopping centers)

7. Wheel of retailing concept: New types of retailers begin as low-margin, low-price, and low-status operations, but Evolve into higher-priced, higher-service operations, Eventually becoming like the conventional retailers they replaced Future of Retailing

8. Wholesaling: all activities involved in selling goods and services to those buying for resale or business use Buy mostly from producers and resell to retailers, industrial consumers and other wholesalers Perform some or all of the following functions Selling and promoting Buying and assortment building Bulk breaking Warehousing Transportation Financing Risk bearing Market information Management services and advice Wholesaling

9. Merchant wholesalers: Full-service wholesalers Wholesale merchants Industrial distributors Limited service wholesalers: Cash-and-carry wholesalers Truck jobbers Drop shippers Rack jobbers Producers’ cooperatives Mail-order wholesalers Brokers and agents: Brokers Agents: Manufacturer’s agents Selling agents Purchasing agents Commission merchants Manufacturers’ sales branches and offices Purchasing offices Types of Wholesalers (Excluded)

10. Wholesaler Marketing Decisions • Wholesalers are challenged by increased competition, demanding customers, new technologies, and more direct-buying by large customers • Must choose target markets carefully, looking for more profitable customers to build relationships with • Product lines carried are chosen for profitability • Price competition squeezes gross margins to very low • Not promotion-minded • Locations are more industrial

11. Trends in Wholesaling • Fierce resistance to price increases • Consolidation of suppliers • Survival tactics: • Focusing on adding value • Achieving cost efficiencies • Looking for opportunities to partner with suppliers and customers • Differentiate by services offered • Global orientation