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Chapter 15

Chapter 15. Wholesale, Retail, and Food Service Marketing. Definitions. Chain: 11 or more stores under one ownership Independent: one or as many as 10 stores under one ownership Affiliate: independent retailer associated with a wholesaler Voluntary affiliate Cooperative affiliate.

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Chapter 15

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  1. Chapter 15 Wholesale, Retail, and Food Service Marketing

  2. Definitions • Chain: 11 or more stores under one ownership • Independent: one or as many as 10 stores under one ownership • Affiliate: independent retailer associated with a wholesaler • Voluntary affiliate • Cooperative affiliate

  3. Geography of Distributionfor W-Rs • Generally organized around larger metropolitan areas • 53 distribution areas cover the U.S. • Typical area served by 10 or fewer chains and affiliate groups • Economies of scale and vertical integration help competitive advantage

  4. Private Label (Store)Brands • Private label products give retailer higher margins and consumers lower prices • Private brands still less popular • Possible consumer fears about quality • Consumer loyalty to national brand • Higher price on national brand may connote higher quality • Retailers believe private brands can develop consumer loyalty to store

  5. Retail Market Structure • Retail structure concentrated at local level • Consumers tend to shop for food within three miles of home • In most MAs, a few chains have over half of market • Entry by new stores not easy

  6. Competing for Customers • New formats • Growth of convenience stores • Growth of superstores • Growth of combination stores • Location, merchandising, atmosphere • Non-price competition • New services, better service (continued)

  7. Competing for Customers(continued) • Promotion • Advertising helps create store’s image • In-store promotions often paid for by company providing product; slotting fees charged • Promotional devices less popular today • Pricing • Variable price merchandising (VPM) • Price specializing • Everyday low pricing (ELP)

  8. What’s In Stores

  9. Food Service Industry • Public eating places • Restaurants, fast-food, bars, amusement venues, clubs • Institutional food sector • Referred to as HRI (hotels, restaurants, institutions) • Schools, colleges, military service, hospitals, prisons, etc. • Food service industry has steadily eroded market share of food retailers

  10. Franchising • Franchise (owner of trade name and concept) licenses franchisees to operate under name and format • Franchisees typically pay royalty fees • Multi-unit franchisees growing more popular

  11. Food Serviceand Procurement • Institutional middlemen • Principal supplier of food service industry • Processors use brokers to sell to middlemen • Meat purveyors buy carcassas and fabricate cuts, ground beef • Procurement by large buyers • Larger buyers and fast-food chains have organized procurement systems • Have expertise and buying power to set tight specs and use competitive bids

  12. Class Exercise • Visit the restaurant assigned to you and then prepare a report that includes the following information: • Marketing style • Atmosphere • Clientele • Food types served • Pricing • Ask manager how restaurant is supplied, how procurement decisions are made.

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