Ch.15 - Retailing, Direct Marketing, and Wholesaling

The 3 types of retailers categorized by WHERE THEY SELL:

1. brick and mortar 2. online 3. brick and click

The two types of retailers when categorizing them by the BREADTH OF PRODUCTS THEY OFFER

1. general-merchandise retailers 2. specialty retailers

specialty retailers (what retailers sell) (traditional specialty retailer)

A retail establishment that emphasizes narrow and deep assortment of items - Despite the name, they do not sell specialty items but instead offer substantial assortments in a few product lines - may be referred to as single-line retailers if they carry unusual depth in one product category. - commonly sell such shopping products as apparel, jewelry, sporting goods, fabrics, computers, and pet supplies. - examples: Gap, Footlocker, Sunglass Hut - 3 types: 1. traditional specialty retailers 2. category killers 3. off-price retailers

general-merchandise retailers (what retailers sell)

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

category killer (type of specialty retailer)

A very large specialty store that concentrates on a major product category and competes on the basis of low prices and product availability - Expand rapidly and gain sizable market shares, taking business away from smaller, high-cost retail outlets - examples: Home Depot, Lowe's, Staples, Petco, PetSmart

retailing

All transactions in which the buyer intends to consume the product through personal, family, or household use - vital to US economy - > 1,000,000 establishments employing 16 mil ppl

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 - contribute 5.9% to US GDP

multichannel retailing (omni-retailing)

Employing multiple distribution channels that complement their brick-and-mortar stores with websites, catalogs, and apps where consumers can research products, read other buyers' reviews, and make actual purchases

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 - The large variety of shopping centers and the expansion of product offerings by traditional stores, along with the increased use of retail technology, have all contributed to intense retailing - 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

Manufacturers' sales branches and offices (type of wholesaler)

Sometimes called manufacturers' wholesalers, manufacturers' sales branches and offices resemble merchant wholesalers' operations. - Sales branches are manufacturer-owned intermediaries that sell products and provide support services to the manufacturers' sales forces. - Situated away from the manufacturing plant, they are usually located where large customers are concentrated and demand is high. - They offer credit, deliver goods, give promotional assistance, and furnish other services. - Sales offices are manufacturer-owned operations that provide services normally associated with agents. - Like sales branches, they are located away from manufacturing plants, but unlike sales branches, they carry no inventory. - may sell products that enhance manufacturer's own product line

atmospherics

The physical elements in a store's design that appeal to consumers' emotions and encourage buying - Helps to create an image and position a retailer - Retailers can use different elements—music, color, and complexity of layout and merchandise presentation—to influence customer attention, mood, and shopping behavior

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 the Internet - sales through this account for 8.5% of US GDP - is one type of nonstore retailing

wholesaling

Transactions in which products are bought for resale, for making other products, or for general business operations - DOES NOT INCLUDE transactions with ultimate consumers

brick and mortar retailer (where retailer's sell)

a retailer selling in physical stores

online retailer (where retailer's sell)

a retailer selling on the internet

brick and click retailer (where retailer's sell)

a retailer selling using both physical stores and the internet

how can retailers enhance customer's PERCEPTION OF VALUE of products?

by making buyers' shopping experiences easier or more convenient

how can retailers add SIGNIFICANT VALUE to the supply chain?

by representing a critical link between producers and ultimate consumers by providing the environment in which exchanges occur

retailers can facilitate ______ ________, which allows customers to evaluate different options

comparison shopping

merchant wholesalers (type of wholesaler)

independently owned businesses that take title to goods, assume risks associated with ownership, and generally buy and resell products to other wholesalers, business customers, or retailers. - producer is likely to rely on these when selling directly to customers would not be economically feasible.

what kind of markets are retailers finding significant growth potential?

international markets

location is the ______ flexible variable of the marketing mix

least

agents and brokers (type of wholesaler)

negotiate purchases and expedite sales but do not take title to products - Sometimes called functional middlemen, they perform a limited number of services in exchange for a commission, which generally is based on the product's selling price - Agents represent either buyers or sellers on a permanent basis - brokers are intermediaries that buyers or sellers employ temporarily.

off-price retailers (type of specialty retailer)

stores that buy manufacturers' seconds, overruns, returns, and off-season production runs at below-wholesale prices for resale to consumers at deep discounts. - offer limited lines of national-brand and designer merchandise, usually clothing, shoes, or housewares. - Consumers appreciate the ability to purchase name-brand goods at discounted prices, and sales offered - examples: TJ Maxx, Marshalls, Burlington Coat Factory

The services wholesalers provide to retailers

•Assist with the distribution component •Help retailers select inventory •Reduce a retailer's burden of looking for and coordinating supply sources •Have a wide range of products

how wholesalers may engage in supply chain management activities

•Bear the primary responsibility for the 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, and suppliers and facilitating agencies •Make their 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

3 general types of wholesaling establishments

•Merchant wholesalers •Agents and brokers •Manufacturers' sales branches and offices

direct marketing can occur through:

•Online retailing •Catalog marketing •Direct-response marketing •Telemarketing •Television home shopping

retailers add value for customers by:

•Providing an assortment of products and services •Breaking bulk •Holding inventory (time and place utility) •Providing supplementary services

strategic issues/concern in retailing

•Retailers must make desired products available, create stimulating shopping environments, and develop marketing strategies that increase store patronage •Retailers strategically use store location, technology, retail positioning, store image, and category management

The services wholesalers provide to producers

•Serve as an extension of the producer's sales force •Provide financial assistance •Often pay for transporting goods •Often reduce the producer's warehousing expenses and inventory investment by holding goods in inventory •Can be a source of working capital when they buy a producer's output in cash •Serve as conduits of information within the marketing channel, keeping producers up-to-date on market developments and passing along the manufacturers' promotional plans to other intermediaries

store image

•To attract customers, a retail store must project an image that appeals to its target market - atmospherics: The physical elements in a store's design that appeal to consumers' emotions and encourage buying - helps create an image and position a retailer - Retailers can use different elements: music, color, and complexity of layout and merchandise presentation—to influence customer attention, mood, and shopping behavior

wholesalers are classified according to several criteria:

•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

Factors retailers consider when evaluating potential locations:

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

hedonic shopping

•shopping for fun, like going to Bass Pro Shops just to walk around and look at stuff

utilitarian shopping

•shopping with intention or purpose, like having a weekly grocery shopping list

reasons consumers shop

•to search for specific items, alleviate boredom, or learn about something new