Chapter 13 Retailers, Wholesalers and Their Strategy Planning

1. Chapter 13 Retailers, Wholesalers and Their Strategy Planning

2. At the end of this presentation, you should be able to: • Understand how retailers plan their marketing strategies. • Know about the many kinds of retailers that work with producers and wholesalers as members of channel systems. • Understand the differences among the conventional and nonconventional retailers—including Internet merchants and others who accept the mass-merchandising concept. • Understand scrambled merchandising and the “wheel of retailing.” • See why size or belonging to a chain can be important to a retailer.

3. At the end of this presentation, you should be able to: • Know what progressive wholesalers are doing to modernize their operations and marketing strategies. • Know the various kinds of merchant and agent wholesalers and the strategies they use. • Understand why retailing and wholesaling have developed in different ways in different countries. • See why the Internet is impacting both retailing and wholesaling. • Understand important new terms.

4. Marketing Strategy Planning Process

5. CH 12: Distribution Customer Service & Logistics CH 11: Place and Development of Channel Systems CH 13: Retailers, Wholesalers & Their Strategy Planning Marketing Strategy Planning for Retailers and Wholesalers (Exhibit 13-1) Strategy planning for wholesalers Future of retailing and wholesaling Strategy planning for retailers Nature of retailing

6. Retailers and Wholesalers Plan Their Own Strategies Must Select Target Markets and Marketing Mixes Carefully Marketers Must Understand Retailer/ Wholesaler Evolution Retailing Deals with Final Customers

7. Planning a Retailer’s Strategy Convenience Product Selection Key Features Affecting Consumers’ Retail Choice Fairness in Dealings Helpful Information Prices Social Image Shopping Atmosphere

8. Shopping Atmosphere © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

9. Expanded assortment & service Specialty shops & dept. stores Expanded assortment &/or reduced margins & service Supermarkets, disc. houses, mass merch., super-, club- stores Safeway, IKEA, Home Depot, Costco Conventional Offerings Single- & limited- line stores Added conv., higher margins, reduced assortment C-stores, vending, door- to-door, phone, mail, some e-tail 7-11, Pepsi vending, Avon, Lands’ End, QVC eBay, Amazon, Zappos, Netflix, Dell Expanded assortment, reduced margins, more information Internet Conventional Retailers – Try to Avoid Price Competition (Exhibit 13-3) Ritz Camera, Coach, Gap, Macy’s

10. Expanded assortment & service Specialty shops & dept. stores Ritz Camera, Coach, Gap, Macy’s Conventional Offerings Single- & limited- line stores Conventional Retailers – Try to Avoid Price Competition (Exhibit 13-3)

11. Expanded assortment & service Specialty shops & dept. stores Expanded assortment &/or reduced margins & service Supermarkets, disc. houses, mass merch., super-, club- stores, + Safeway, IKEA, Home Depot, Costco Conventional Offerings Single- & limited- line stores Conventional Retailers – Try to Avoid Price Competition (Exhibit 13-3) Ritz Camera, Coach, Gap, Macy’s

12. Parties R Us is a large store containing nothing but party supplies. The store carries everything from costumes to party favors, decorations to invitations, and paper plates to birthday candles. The selection is huge and prices are low. There is even a party consultant on hand to help plan parties. Parties R Us is a: department store. catalog retailer. category killer. convenience store. Checking Your Knowledge

13. Expanded assortment & service Specialty shops & dept. stores Expanded assortment &/or reduced margins & service Supermarkets, disc. houses, mass merch., super-, club- stores, + Safeway, IKEA, Home Depot, Costco Conventional Offerings Single- & limited- line stores Added conv., higher margins, reduced assortment C-stores, vending, door- to-door, phone, mail, some e-tail 7-11, Pepsi vending, Avon, Lands’ End, QVC Conventional Retailers – Try to Avoid Price Competition (Exhibit 13-3) RitzCamera, Coach, Gap, Macy’s

14. Vending Machines are Convenient

15. Shop at Home in a Variety of Ways

16. Expanded assortment & service Specialty shops & dept. stores Expanded assortment &/or reduced margins & service Supermarkets, disc. houses, mass merch., super-, club- stores, + Safeway, IKEA, Home Depot, Costco Conventional Offerings Single- & limited- line stores Added conv., higher margins, reduced assortment C-stores, vending, door- to-door, phone, mail, some e-tail 7-11, Pepsi vending, Avon, Lands’ End, QVC eBay, Amazon, Zappos, Netflix, Dell Expanded assortment, reduced margins, more information Internet Conventional Retailers – Try to Avoid Price Competition (Exhibit 13-3) Ritz Camera, Coach, Gap, Macy’s

17. Retailing on the Internet Moving Information New Meaning of Convenience InternetRetailing Misleading costs? Amount of Information

18. Four Online Retailer Approaches Integrate online Complement their stores/catalogs Supplement their stores Four Online Retailer Approaches Very focused on specific needs of target More efficient than competitors

19. Interactive Exercise: Types of Retail Outlets © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

20. Competitive Effects Influence Other Retailers © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

21. Why Retailers Evolve and Change The “Wheel of Retailing” Keeps on Rolling! AND Scrambled Merchandising= Higher Profits Product Life Cycle Applies to Retailing Ethical Issues May Arise

22. Walgreen’s, CVS, and other “drugstores” have become scaled-down versions of mass-merchandisers by adding small appliances, housewares, food, and other items to their traditional lines. This type of “scrambled merchandising” is meant to deal with the increasing desire that consumers have for: personal service. convenience. low prices. prestigious brand names. quality. Checking Your Knowledge

23. An Example of a Large Retail Chain

24. Big Chains Are Building Market Clout © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

25. Differences in Retailing in Different Nations New Ideas Spread Mass-Marketing Requires Mass Markets Online Retailing Varies Must Adapt Marketing Strategies

26. What Is a Wholesaler? Changing With the Times Producing Value and Profits, Not Chasing Orders Progressive Wholesalers Adapt Goodbye to Some? Ethical Issues? New Strategies Needed To Survive

27. Wholesalers Add Value in Different Ways (Exhibit 13-5)

28. Agent wholesalers • Auction companies • Brokers • Manufacturers’ agents • Selling agents No Yes(Merchant wholesalers) How many functions does the wholesaler perform? Some functions All functions • Service merchant wholesaler • General merchandise wholesalers (or mill supply houses) • Single-line or general-line wholesalers • Specialty wholesalers • Limited-function merchant wholesaler • Cash-and-carry wholesaler • Drop-shippers • Truck wholesalers • Rack jobbers • Catalog wholesalers Types of Wholesalers (Exhibit 13-6) Does wholesaler own the products?

29. Service Limited - Function Types of Merchant Wholesalers Types of Merchant Wholesalers • Cash-and- Carry • Drop-Shippers • Truck • Rack Jobbers • Catalog • General merchandise • Single-line (or general-line) • Specialty

30. Agents Are Strong on Selling Manufacturer’s Agents Brokers Types of Agent Wholesalers Auction Companies Selling Agents

31. Atlantic Music distributes various types of musical instruments, sheet music, and accessories that are sold through independent music stores. It carries many different brands, such as Remo and Ludwig drums, and brass instruments from Yamaha, Hohner, and other manufacturers. Atlantic takes title to the musical instruments and supplies it resells, and provides a wide variety of services to its customers. Atlantic Music is a(n): merchant wholesaler. limited service merchant wholesaler. auction company. manufacturer’s broker. intermediary. Checking Your Knowledge

32. What Will Happen to Retailers and Wholesalers in the Future? Improved Logistics Efficiency Development of Specialized Intermediaries Marketers and Consumers Can Expect Increasing Competition New Web-Based Retailers

33. Study Question 1 "Soak" is a retailer with two locations in a major metropolitan area, both of which are in large, popular shopping centers. It carries a unique assortment of high-quality shower and bath products, such as soaps, bubble bath, and bath oils. One of its most popular products is a "bath bomb"—a round ball that fizzes and releases aromatic bath oils when placed in a bathtub filled with warm water. The small staff at the store is very knowledgeable about the store's products and provides a high level of customer service. "Soak" would be classified as a:  A. Convenience store.B. Department store.C. Discount house.D. Specialty shop.E. General store.

34. Study Question 2 The ____________ says that retailers should offer low prices to get faster turnover and greater sales volumes by appealing to larger markets.  A. Wheel of retailing theoryB. Production conceptC. Mass-merchandising conceptD. Sales conceptE. Primary industry theory

35. Study Question 3 A new grocery store features a bank, a pharmacy, a flower shop, a full-service bakery, a café, photo processing, and equipment rentals, in addition to its normal grocery product lines. The store is engaging in:  A. The wheel of retailing.B. Retailing strategy.C. Scrambled merchandising.D. The retail life cycle.E. Merchandising strategy.

36. Study Question 4 Wholesalers:  A. Have had to deal with a competitive threat posed by large retailers that have taken over wholesale functions.B. Do not use e-commerce to serve customers.C. Face competitive pressure from shipping companies such as FedEx and UPS that make it easier for producers to ship directly to customers.D. All of the above.E. A and C only.

37. Study Question 5 Capitol Periodical Distributors is a wholesaler providing assistance to retailers that want to carry books and magazines. A retailer provides Capitol with a certain amount of floor space, and Capitol uses the space to install display racks.Capitol fills the racks with magazines and books that would be suitable for the retailer's target market. Every week a representative from Capitol comes in to remove any outdated publications and refill the racks. This practice helps the retailer serve its customers better than if the retailer tried to manage the books and magazines itself. Capitol Periodical Distributors is a: A. Specialty wholesaler.B. Drop-shipper.C. Catalog wholesaler.D. Rack jobber.E. Cash-and-carry wholesaler.