Retailing and Wholesaling

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 decisions

• Discuss the major trends and developments in retailing

• Explain the major types of wholesalers and their marketing decisions

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First Stop: Walmart: The World’s Largest Retailer

• 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

technology• Getting the best prices from suppliers

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Shopper Marketing

• Using point-of-sale promotions and advertising to extend brand equity to “the last mile” and encourage favorable in-store purchase decisions

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Shopper marketing: Influencing consumers’ buying decisions as they shop now involves efforts aimed at in-store, online, and mobile shopping

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

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Types of Retailers: Amount of Service

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Types of Retailers: Product Line

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Kroger, America’s Largest Grocery-Only Retailer

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Thanks to customer-focused pricing, Kroger’s sales and market share gains have been the best in the industry despite a sagging economy

Types of Retailers: Product Line

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Convenience StoresSheetz positions itself as more than just a convenience store

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Driven by its Total Customer Focus mission and the motto, “Feel the Love,” Sheetz aims to provide “convenience without compromise”

Types of Retailers: Relative Prices

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Types of Off-Price Retailers

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

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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”

Types of Retailers: Organizational Approach

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Types of Retailers: Organizational Approach

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 Strategies

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Retailer Marketing Decisions

• Segmentation• Targeting• Store differentiation• Positioning

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Retail Targeting and Positioning

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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

Retailer Marketing Decisions

• Retailer marketing mix:• Product and service assortment• Retail prices• Promotion• Distribution (location)

• Retail strategy and retail marketing mix must combine to create value for targeted retail customers

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Retailer Marketing mis

• Retail marketing mix:• Product assortment should differentiate the

retailer while matching target shoppers’ expectations

• 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

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Store Atmosphere

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The Cabella’s “experience” has made it a tourist destination

Price Decisions

• Price policy must fit with the target market and positioning, product and service assortment, competition, and economic factors

• Price promotions and EDLP• High-low pricing

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Pricing for the Target Segment

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Bergdorf Goodman caters to the upper crust with prices to match

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

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Distributio

• 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

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Shopping Centers Today

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Today’s shopping centers are more about creating places to be rather than just places to buy

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

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Online Retailing

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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

Retail Technology

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Stop & Shop uses technology to make shopping faster and more convenient for customers

Green Retailing

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McDonald’s new eco-friendly restaurants are designed from the bottom up with a whole new eco-attitude

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-and-mortar stores “community friendly”?

Are there circumstances in which it would be undesirable to encourage patrons to “hang-out”? Explain.

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Wholesaling

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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 customers

Grainger’s value proposition is simple: to make it easier and less costly for buyers to purchase MRO items

Functions Wholesalers Perform

• Selling and promoting• Buying and assortment building• Bulk-breaking• Warehousing• Transportation• Financing• Risk bearing

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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

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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

basis• Manufacturers’ agents are the most common type of

agent wholesaler

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Types of Wholesalers

• Manufacturers’ sales branches and offices:• Involves wholesaling by sellers or buyers

themselves rather than through independent wholesalers

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Figure 11.2 - Wholesaler Marketing Strategies

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Wholesaler Marketing Decisions

• Wholesaler strategy:• Segmentation, targeting, differentiation,

and positioning

• Wholesaler marketing mix:• Product assortment and services• Price• Promotion• Distribution (location)

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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

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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

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Marketing in Action

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Pharmaceutical wholesaler McKesson helps its retail pharmacist customers to be more efficient by offering a wide range of online resources

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 decisions

• Discuss the major trends and developments in retailing

• Explain the major types of wholesalers and their marketing decisions

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