prentice hall, copyright 2009 retailing and wholesaling chapter 11 next exit
TRANSCRIPT
2
11-2Prentice Hall, Copyright 2009
Rest Stop:Rest Stop: Previewing the ConceptsPreviewing the Concepts
1. Explain the roles of retailers and wholesalers in the distribution channel.
2. Describe the major types of retailers and give examples of each.
3. Describe the major types of wholesalers and give examples of each.
4. Explain the marketing decisions facing retailers and wholesalers.
11-3Prentice Hall, Copyright 2009
Costco Background
Costco warehouse club outsells Wal-Mart’s Sam’s Club by 50% despite having 50 fewer stores.
Sales have surged 55%, profits 57%, over the last 4 years.
Similar to Sam’s Club, Costco offers limited selection of national and private-label brands at low prices to members.
Costs are kept low; Costco refuses to mark up any item more than 14%. Operating margins average only 2.8%.
Costco –Costco – Beating Wal-Mart at its Own GameBeating Wal-Mart at its Own GameCase StudyCase Study
Why Costco is SucceedingCostco is a “theatre of retail that
creates buying urgency and excitement for customers.”
Costco carries a changing assortment of high quality goods and luxury items such as Prada bags and Callaway golf clubs.
Stores are located in more affluent areas than are Sam’s Clubs, and draw higher income customers.
The Kirkland signature store brand provides a quality offering for a wide range of goods.
411-4Prentice Hall, Copyright 2009
RetailingRetailing
Retailing includes all the activities involved in selling goods or services directly to
final consumers for their personal, non-business use.
11-5Prentice Hall, Copyright 2009
RetailingRetailing
Most retailing is done by retailers, businesses, whose revenues come primarily from retailing.
Retailers generate in excess of $4.3 trillion in sales annually.
Nonstore retailing has recently grown by leaps and bounds.
11-6Prentice Hall, Copyright 2009
Types of RetailersTypes of Retailers
The different types of retailers can be classified based on:– The amount of service they offer.
– The breadth and depth of product lines.
– The relative prices charged.
– How they are organized.
11-7Prentice Hall, Copyright 2009
Types of RetailersTypes of Retailers
Classification by the amount of service:– Self-service retailers serve customers who
are willing to perform their own “locate-compare-select” process to save money.
– Limited-service retailers provide more sales assistance because they carry more shopping goods about which customers need information.
– Full-service retailers usually carry more specialty goods for which customers need or want assistance or advice.
11-8Prentice Hall, Copyright 2009
Types of RetailersTypes of Retailers
Specialty stores
Department stores
Supermarkets
Convenience stores
Superstores Service retailers
Retail classifications by product line:
11-9Prentice Hall, Copyright 2009
Upscale Supermarkets
Many supermarkets are moving upscale. Safeway is converting to “lifestyle” stores, supported by a big-budget “ingredients for life” marketing campaign.
Marketing in Action
11-10Prentice Hall, Copyright 2009
Types of RetailersTypes of Retailers
Relative prices classification:– Discount stores
– Off-price retailers:• Independent off-price retailers
•Factory outlets:– Factory outlet malls– Value-retail centers
•Warehouse clubs
11-11Prentice Hall, Copyright 2009
Wal-Mart Rules the Discounters
Wal-Mart’s low-price value proposition has helped make them the world’s largest retailer. Sales of toys
and pet supplies top those of category killers.
Marketing in Action
11-12Prentice Hall, Copyright 2009
Types of RetailersTypes of Retailers
Organizational classification:– Corporate chain stores
– Voluntary chain
– Retailer cooperative
– Franchise
– Merchandising conglomerates
Prentice Hall, Copyright 2009 11-13
Figure 11.1Figure 11.1Retailer Marketing StrategyRetailer Marketing Strategy
11-14Prentice Hall, Copyright 2009
Retailer Marketing DecisionsRetailer Marketing Decisions
Retailer Strategy:– Segmentation and targeting
– Store differentiation and positioning
– Retail marketing mix•Retailers cannot make meaningful
decisions related to the retail marketing mix until they first define and profile their target market.
11-15Prentice Hall, Copyright 2009
Positioning Whole Foods Market
Whole Foods Market targets a select group of upscale customers and offers them “organic, natural, and
gourmet foods, all swaddled in Earth Day politics.”
Marketing in Action
11-16Prentice Hall, Copyright 2009
Retailer Marketing DecisionsRetailer Marketing Decisions
Retailer marketing mix:– Product and service assortment– Retail prices– Promotion– Distribution (location)
The retail strategy and retail marketing mix must combine to create value for targeted retail customers.
11-17Prentice Hall, Copyright 2009
Retail marketing mix:– Product assortment should differentiate
the retailer while matching target shoppers’ expectations.
– Services mix can help differentiate one retailer from another (e.g., Home Depot’s “How-to” classes for do-it-yourselfers).
Retailer Marketing DecisionsRetailer Marketing Decisions
11-18Prentice Hall, Copyright 2009
Retail marketing mix:– Store atmosphere is important as:
•The physical layout can help or hinder shopping
•Experiential retailing helps sell goods
•Unusual, exciting shopping environments are becoming more common
Retailer Marketing DecisionsRetailer Marketing Decisions
11-19Prentice Hall, Copyright 2009
Positioning Whole Foods Market
Successful retailers orchestrate every aspect of the store atmosphere and experience.
Sony Style carefully controls the music, lighting, colors, and even the smells (vanilla and mandarin orange).
Marketing in Action
11-20Prentice Hall, Copyright 2009
Retailer Marketing DecisionsRetailer Marketing Decisions
Price decisions:– The price policy
must fit with the target market and positioning, the product and service assortment, and the competition.
11-21Prentice Hall, Copyright 2009
Retailer Marketing DecisionsRetailer 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.
11-22Prentice Hall, Copyright 2009
Retailer Marketing DecisionsRetailer Marketing Decisions
Distribution decisions:– Location is the key to success.
– Retailers can locate in: •Central business districts
•Various types of shopping centers
•Strip malls
•Power centers
•Lifestyle centers
11-23Prentice Hall, Copyright 2009
The Future of RetailingThe Future of Retailing
1. New retail forms and shortening retail life cycles
2. Nonstore retailing growth
3. Retail convergence
4. Rise of the megaretailers
5. Growing importance of retail technology
6. Global expansion of major retailers
7. Retail stores as “communities” or “hangouts”
11-24Prentice Hall, Copyright 2009
Lifestyle Centers
The current trend in retailing is toward either large “power centers” (huge unenclosed shopping malls) or “lifestyle centers” (smaller malls with upscale stores and nonretail activities such as dining and a movie
theatre in affluent areas), or a hybrid of both.
Marketing in Action
11-25Prentice Hall, Copyright 2009
Fuel for ThoughtFuel 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.
2611-26Prentice Hall, Copyright 2009
WholesalingWholesaling
Includes all activities involved in selling goods and services to those buying for resale or
business use.
11-27Prentice Hall, Copyright 2009
WholesalingWholesaling
Wholesalers add value for producers by performing one or more channel functions.
11-28Prentice Hall, Copyright 2009
WholesalingWholesaling
Financing Risk bearing Market
information Management
services and advice
Selling and promoting
Buying and assortment building
Bulk-breaking Warehousing Transportation
Functions performed by wholesalers:
11-29Prentice Hall, Copyright 2009
Types of WholesalersTypes of Wholesalers
Merchant wholesalers:– Largest group of wholesalers
– Account for 50% of wholesaling
– Two broad categories:•Full-service wholesalers
•Limited-service wholesalers
11-30Prentice Hall, Copyright 2009
Types of WholesalersTypes of Wholesalers
Full-service wholesalers:– Wholesale merchants– Industrial distributors
Limited-service wholesalers:– Cash-and-carry wholesalers– Truck wholesalers– Drop shippers– Producer’s cooperatives– Mail-order wholesalers
11-31Prentice Hall, Copyright 2009
Types of WholesalersTypes of Wholesalers
Brokers and agents:– Do not take title
to goods– Perform only a
few functions– Specialize by
product line or customer type
11-32Prentice Hall, Copyright 2009
Types of WholesalersTypes of Wholesalers
Brokers bring buyers and sellers together.
Agents represent buyers on a more permanent basis.– Manufacturers’ agents– Selling agents– Purchasing agents– Commission merchants.
11-33Prentice Hall, Copyright 2009
Types of WholesalersTypes of Wholesalers
Manufacturers’ sales branches and offices:– Involves wholesaling by sellers or
buyers themselves rather than through
independent wholesalers.
Prentice Hall, Copyright 2009 11-34
Figure 11.2Figure 11.2Wholesaler Marketing StrategyWholesaler Marketing Strategy
11-35Prentice Hall, Copyright 2009
Trends in WholesalingTrends in Wholesaling
Fierce resistance to price increases. Winnowing out of suppliers who are
not adding value based on cost and quality.
Distinction between large retailers and wholesalers continues to blur.
Wholesalers will continue to increase the services provided to retailers.
Wholesalers are now going global.
36
11-36Prentice Hall, Copyright 2009
Rest Stop:Rest Stop: Reviewing the ConceptsReviewing the Concepts
1. Explain the roles of retailers and wholesalers in the distribution channel.
2. Describe the major types of retailers and give examples of each.
3. Describe the major types of wholesalers and give examples of each.
4. Explain the marketing decisions facing retailers and wholesalers.
37
11-37Prentice Hall, Copyright 2009
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 © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall