Chapter 14 - Retailing, Direct Marketing, and Wholesaling

catalog marketing

- A type of marketing in which an organization provides a catalog from which customers make selections and place orders by mail, telephone, or the internet

discount stores

- Accept lower profit margins than conventional retailers in exchange for high sales volume - Carry a wide but carefully selected assortment of products in order to keep inventory turnover high

department stores

- Distinctly service oriented and often considered retailing leaders in a community - Found in most places with populations of more than 50,000 - Face intense competition from discount stores and online retailing

category killer

- Expand rapidly and gain sizable market shares, taking business away from smaller, high-cost retail outlets

sales branches

- Manufacturer-owned intermediaries that sell products and provide support services to the manufacturers' sales forces -Are usually located where large customers are concentrated and demand is high -Offer credit, deliver goods, give promotional assistance

sales offices

- Manufacturer-owned operations that provide services normally associated with agents -Are located away from manufacturing plants and carry no inventory -Manufacturers may set up sales branches or offices to reach their customers more effectively by performing wholesaling functions themselves. -A manufacturer also might set up such a facility when specialized wholesaling services are not available through existing intermediaries. -performing wholesaling and physical distribution activities through a manufacturer's sales branch or office can strengthen supply-chain efficiency.

Off-price retailers

- Offer limited lines of national-brand and designer merchandise (clothing, shoes, housewares) - Charge 20 to 50 percent less than department stores but offer few customer services - Often feature community dressing rooms and central checkout counters -Often do not take returns or allow exchanges - Ensure a regular flow of merchandise by establishing long-term relationships with suppliers

traditional specialty retailers

- Sometimes called limited-line retailers and may be referred to as single-line retailers if they carry unusual depth in one product category - Commonly sell shopping products (apparel, jewelry, sporting goods, fabrics, computers, pet supplies) - Usually offer better selections and more sales expertise than department stores

retail technologies

- Today's consumers expect retailers to offer convenience, information, and a seamless experience across multiple platforms (websites, apps, beacons) - Evolving consumer demographics and preferences are spurring retailers to adapt in a variety of ways that are blurring the line between the various types of retailers more than ever before

Manufacturers' agents

-Account for more than half of all agent wholesalers -Are restricted to a particular territory

Supermarkets

-Are arranged by department for maximum efficiency in stocking and handling products -Have central checkout facilities -Offer lower prices than smaller neighborhood grocery stores -Usually provide free parking -May also provide services such as check cashing, pharmacies, and curbside pickup of groceries

Superstores

-Combine features of discount stores and supermarkets -Generally carry about four times as many items as supermarkets -Offer additional services, including dry cleaning, automotive repair, check cashing, and bill paying -Use sophisticated operating techniques and often have tall shelving

community shopping center

-Draw customers looking for products not available in neighborhood shopping centers -Are planned and coordinated to attract shoppers with special events to stimulate traffic

full-service wholesalers

-Handle either consumer or business products and provide marketing services to customers -Often earn higher gross margins than other wholesalers, but their operating expenses are also higher because they perform a wider range of functions -Customers rely on them for product availability, suitable product assortments, breaking large quantities into smaller ones, financial assistance, technical service, and advice.

Hypermarkets

-Larger than superstores, offering 45,000 to 60,000 different types of low-priced products -Commonly allocate 40 to 50 percent of their space to grocery products and the remainder to general merchandise -Focus on low prices and vast selections -Have been more successful in Europe, South America, Mexico, the Middle East, and India than in the United States

Warehouse showrooms

-Offer few services and retain few personnel -Have lower costs because some marketing functions have been shifted to customers, who must transport, finance, and perhaps store products

Warehouse clubs (buying clubs)

-Offer same types of products as discount stores but in a limited range of sizes and styles -Offer a broad product mix -Offer few services to keep prices lower than those of supermarkets and discount stores -Keep advertising to a minimum -Merchandise stacked on pallets or displayed on pipe racks

Lifestyle shopping center

-Often located near affluent neighborhoods and may have fountains, benches, and other amenities that encourage "casual browsing" -Appealing architectural design is an important aspect of these "mini-cities" and is intended to encourage consumer loyalty by creating a sense of place

vending

-One of the most impersonal forms of retailing -Accounts for a very small minority of all retail sales

Selling agents

-Perform every wholesaling function except taking title to products -Are used by small producers or by manufacturers that have difficulty maintaining a marketing department because of such factors as seasonal production

commission merchants

-Sometimes called factor merchants, they have broad powers regarding prices and terms of sales -Specialize in obtaining the best price possible under market conditions

regional shopping center

-Target markets may include customers traveling from a distance to find products and prices not available in their hometowns -Tenants are likely to be national chain stores

convenience store

-Typically open 24 hours a day, 7 days a week, and stock about 500 items -More than 154,000 U.S. convenience stores servicing 160 million customers daily

Television home shopping

A form of selling in which products are presented to television viewers, who can buy them by calling a toll-free number and paying with a credit card

general-merchandise retailer

A retail establishment that offers a variety of product lines that are stocked in considerable depth

category management

A retail strategy of managing groups of similar, often substitutable products produced by different manufacturers

Convenience stores

A small self-service store that is open long hours and carries a narrow assortment of products, usually convenience items

Direct-response marketing

A type of marketing in which a retailer advertises a product and makes it available through mail, telephone, or online

Power shopping center

A type of shopping center that combines off-price stores with category killers

Lifestyle shopping center

A type of shopping center that is typically open air and features upscale specialty stores, dining, and entertainment

Neighborhood shopping center

A type of shopping center usually consisting of several small convenience and specialty stores

community shopping center

A type of shopping center with one or two department stores, some specialty stores, and convenience stores

regional shopping center

A type of shopping center with the largest department stores, widest product mixes, and deepest product lines of all shopping centers

Superregional shopping center

A type of shopping center with the widest and deepest product mixes that attracts customers from many miles away

Category killer

A very large specialty store that concentrates on a major product category and competes on the basis of low prices and product availability

efficiency and convenience for customers and lower costs for retailers

Advantages of catalog marketing include:

commission merchants

Agents that receive goods on delivery from local sellers and negotiate sales in large, central markets

Retailing

All transactions in which the buyer intends to consume the product through personal, family, or household use

franchising

An arrangement in which a supplier (franchisor) grants a dealer (franchisee) the right to sell products in exchange for some type of consideration

wholesaler

An individual or organization that sells products that are bought for resale, for making other products, or for general business operations

Retailer

An organization that purchases products for the purpose of reselling them to ultimate consumers

superregional shopping center

Attractions may include skating rinks, amusement centers, or upscale restaurants

-Negotiate purchases and expedite sales in exchange but do not take title to products -Perform a limited number of services in exchange for a commission, which generally is based on the product's selling price -Know their markets well and often form long-lasting associations with customers -Enable manufacturers to expand sales when resources are limited, benefit from the services of a trained sales force, and hold down personal selling costs

Brokers and agents both:

Power shopping center

Bypasses the traditional department store anchor and instead anchors with stores such as The Gap, T.J. Maxx, PetSmart, and Home Depot

Neighborhood shopping center

Consider their target markets to be consumers who live within two to three miles of their stores, or 10 minutes' driving time

Multichannel retailing

Employing multiple types of retailing

limited-line wholesalers

Full-service wholesalers that carry only a few product lines but many products within those lines

Specialty-line wholesalers

Full-service wholesalers that carry only a single product line or a few items within a product line

General-merchandise wholesalers

Full-service wholesalers with a wide product mix but limited depth within product lines

Superstores

Giant retail outlets that carry food and non-food products found in supermarkets, as well as most routinely purchased consumer products

retail positioning

Identifying an unserved or underserved market segment and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment

Manufacturers' agents

Independent intermediaries that represent two or more sellers and usually offer customers complete product lines

merchant wholesalers

Independently owned businesses that take title to goods, assume ownership risks, and buy and resell products to other wholesalers, business customers, or retailers

Brokers

Intermediaries that bring buyers and sellers together temporarily

Selling agents

Intermediaries that market a whole product line or a manufacturer's entire output

Agents

Intermediaries that represent either buyers or sellers on a permanent basis

Department stores

Large retail organizations characterized by a wide product mix and organized into separate departments to facilitate marketing efforts and internal management

Supermarkets

Large, self-service stores that carry a complete line of food products, along with some non-food products

Warehouse clubs (buying clubs)

Large-scale, members-only establishments that combine features of cash-and-carry wholesaling with discount retailing

Mail-order wholesalers

Limited-service wholesalers that sell products through catalogs

Drop shippers (desk jobbers)

Limited-service wholesalers that take title to goods and negotiate sales but never actually take possession of products

truck wholesalers

Limited-service wholesalers that transport products directly to customers for inspection and selection

Cash-and-carry wholesalers

Limited-service wholesalers whose customers pay cash and furnish transportation

Retail positioning

Many discount and specialty store chains have positioned themselves to appeal to time- and cash-strapped consumers with convenient locations and layouts as well as low prices

direct selling

Marketing products to ultimate consumers through face-to-face sales presentations at home or in the workplace

full-service wholesalers

Merchant wholesalers that perform the widest range of wholesaling functions

Limited-service wholesalers

Merchant wholesalers that provide some services and specialize in a few functions

jewelry, clothing, housewares, and electronics

Popular television home shopping products are?

Neighborhood shopping center

Product mixes consist of essential products and depth of the product lines is limited

Warehouse showrooms

Retail facilities in large, low-cost buildings with large on-premises inventories and minimal services

-They are vital to the U.S. economy -Add value for customers by providing services and assisting in making product selections -Can enhance customers' perceptions of the value of products by making buyers' shopping experiences easier or more convenient -Can facilitate comparison shopping, which allows customers to evaluate different options -Have sales personnel who how products can satisfy customer needs or solve problems -Can add significant value to the supply chain -Play a major role in creating time, place, and possession and, in some cases, form utility -Perform marketing functions that benefit ultimate consumers

Retailers are important for many reasons:

-Position of the firm's target market within the trading area -Kinds of products being sold -Availability of public transportation -Customer characteristics -Placement of competitors' stores

Retailers consider various factors when evaluating potential locations, including: (5)

extreme-value stores

Retailers that are a fraction of the size of conventional discount stores and typically offer very low prices on smaller size name-brand nonperishable household items

music, color, and complexity of layout and merchandise presentation

Retailers use different elements like _________ to influence customer attention, mood, and shopping behavior

Online retailing

Retailing that makes products available to buyers through internet connections

discount stores

Self-service, general-merchandise stores that offer brand-name and private-brand products at low prices

Off-price retailers

Stores that buy manufacturers' seconds, overruns, returns, and off-season merchandise for resale to consumers at deep discounts

Traditional specialty retailers

Stores that carry a narrow product mix with deep product lines

Hypermarkets

Stores that combine supermarket and discount store shopping in one location

Limited-service wholesalers

Take title to merchandise but often do not deliver merchandise, grant credit, provide marketing information, store inventory, or plan ahead for customers' future needs

-Generate sales leads -Improve customer service -Speed up payments on past-due accounts -Raise funds for nonprofit organizations -Gather marketing data

Telemarketing can help to:

labor and capital, operates the franchised business, and agrees to abide by the provisions of the franchise agreement

The franchisee supplies?

labor and capital, operates the franchised business, and agrees to abide by the provisions of the franchise agreement

The franchisor may receive a percentage of total sales in exchange for?

telemarketing

The performance of marketing-related activities by telephone

Atmospherics

The physical elements in a store's design that appeal to consumers' emotions and encourage buying

- department stores - discount stores - convenience stores - supermarkets - superstores - hypermarkets - warehouse clubs - warehouse showrooms

The primary types of general-merchandise retailers are:

vending

The use of machines to dispense products

direct marketing

The use of the telephone, internet, and nonpersonal media to introduce products to customers, who can then purchase them via mail, telephone, or online

-Whether a wholesaler is independently owned or owned by a producer -Whether it takes title to (owns) the products it handles -The range of services provided -The breadth and depth of its product lines

Wholesalers are classified according to several criteria:

- physical distribution of products from manufacturers to retailers -May establish information systems that help producers and retailers manage the supply chain from producer to customer -Use information technology and the internet to share information among intermediaries, employees, customers, suppliers, and facilitating agencies -Make databases and marketing information systems available to their supply-chain partners to facilitate order processing, shipping, and product development and to share information about changing market conditions and customer desires

Wholesalers may engage in many supply-chain management activities:

requires small amount of space, no sales personnel needed

advantages of vending:

Category management

an important part of developing a collaborative supply chain, which enhances value for customers

Location

an important strategic decision that dictates the limited geographic trading area from which a store draws its customers

- gives the marketer an opportunity to demonstrate the product in a comfortable environment - the seller can give the customer personal attention - the product can be presented to the customer at a convenient time and location

benefits of direct selling:

- franchisor can dictate many aspects of business - franchisees must pay to use the franchisor's name, products, and assistance - often must work very hard, putting in 10-12 hour days - franchise agreements are not uniform

disadvantages for the franchisee?

- gives up control - individual establishments may not be operated exactly according to the franchisor's standards

disadvantages of the franchisor?

high cost of equipment, frequent repairs and servicing

disadvantages of vending

Online retailers

frequently offer exclusive online sales, or reward customers who visit their websites or use their apps with special in-store coupons and other promotions and discounts

location

least flexible variable of the marketing mix

- great effort is required to isolate promising prospects - overall costs make it the most expensive form of retailing - some customers view direct selling negatively

limitations in direct selling

wholesaling

transactions in which products are bought for resale, for making other products, or for general business operations

Supermarkets

use category management to allocate space for their many product categories

- the appearance of the storefront - display windows - store entrances - degree of traffic congestion - particularly important to new customers

what are the exterior atmospheric elements?

- lighting - wall and floor coverings - dressing facilities - store fixtures - color can attract shoppers - scents - sounds

what are the interior atmospheric elements?

- an extension of producer's sales force - provide financial assistance - pay for transporting goods - reduces producer's warehousing expenses - source of working capital - conduits of information within the marketing channel

wholesalers' services to producers

- assist with the distribution component - help retailers select inventory - reduce a retailer's burden of looking for and coordinating supply sources - haev a wide range of products

wholesalers' services to retailers

merchant wholesalers

•Go by various names, including wholesaler, jobber, distributor, assembler, exporter, and importer •Useful for providing market coverage, making sales contacts, storing inventory, handling orders, collecting market information, and furnishing customer support

Specialty retailers

•In contrast to general-merchandise retailers with their broad product mixes, specialty retailers emphasize narrow and deep assortments. •Despite the name, they do not sell specialty items but instead offer substantial assortments in a few product lines.

vending

•Small, standardized routinely purchased products are best suited for vending. •Vending machines have taken on cult popularity among some urban-dwelling consumers