Chapter 11 Marketing

What is retailer classification based on?

(1) amount of service offered (2) breadth and depth of the product lines (3) relative prices charged (4) way they are organized

Power centers

A newer form of shopping center. Are huge unenclosed shopping centers consisting of a long strip of retail stores.

Supermarket

A relatively large, low-cost, low-margin, high-volume, self-service operation designed to serve the consumer's total needs for grocery and household products

Convenience store

A relatively small store located near residential areas, open 24/7, and carrying a limited time of high-turnover convenience products at slightly higher prices.

Department store

A store that carries several product lines- typically clothing, home furnishings, and household goods - with each line operated as a separate department managed by specialist buyers or merchandisers

Discount store

A store that carries standard merchandise sold at lower prices with lower margins and higher volumes.

Off-price retailer

A store that sells merchandise bought at less-than-regular wholesale prices and sold at less than retail. These include factory outlets owned and operated by manufacturers; independent off-price retailers owned and run by entrepreneurs or by divisions of larger retail corporations; and warehouse (or wholesale) clubs selling a limited selection of goods at deep discounts to consumers who pay membership fees

Superstore

A very large store that meets consumers' total needs for routinely purchased food and nonfood items. This includes supercenters, combined supermarket and discount stores, and category killers, which carry a deep assortment in a particular category

Manufacturers' and retailers' branches and offices (MSBO)

Another major type of wholesaling. Done by sellers or buyers themselves rather than through independent wholesalers

What are the similarities and differences between wholesalers and brokers?

Brokers differ from merchant wholesalers in two ways. They do not take title to goods, and second, they perform only a few functions. Like merchant wholesalers, they generally specialize by product line or customer type.

High-low pricing

Charging higher prices on an everyday basis, coupled with frequent sales and other price promotions, to increase store traffic, create a low-price image, or attract customers who will buy other goods at full prices.

Some retailers benefit from a down economy. Give example:

Consumers cut back and looked for ways to spend less, big discounters such as Costco scooped up new business from bargain-hungry shoppers.

Neighborhood shopping centers or strip malls

Contain between 5 and 15 stores. These centers, which are close and convenient for consumers, usually contain a supermarket, perhaps a discount store, and several service stores - dry cleaner, drugstore, hardware store, local restaurant, or other stores.

Franchise organization

Contractual association between a franchisor (a manufacturer, wholesaler, or service organization) and franchisees (independent businesspeople who buy the right to own and operate one or more units in the franchise system).

What does location mean for wholesalers?

Distribution or location is important. Wholesalers must choose their locations, facilities, and Web locations carefully.

Services mix

Example, some retailers invite customers to ask questions or consult service representatives in person or via phone or keyboard

Shopper Marketing

Focusing the entire marketing process - from product and brand development to logistics, promotion, and merchandising - toward turning shoppers into buyers as they approach the point of sale.

Following many years of good economic times for retailers, the ________ __________ of 2008-2009 turned many retailers' fortunes from boom to bust

Great Recession

How are retailers adopting environmentally sustainable practices?

Greening up their stores and operations, promoting more environmentally responsible products, launching programs to help customers be more responsible, and working with channel partners to reduce their environmental impact.

Retailer cooperative

Group of independent retailers who jointly establish and own a central buying organization and conduct joint promotion efforts.

Retail convergence

Merging of consumers, products, prices, and retailers. Such convergence means greater competition for retailers and greater difficultly in differentiating the product assortments of different types of retailers.

Digital marketing

Most retailers also interact digitally with customers using Web sites and digital catalogs, online ads and video, social media, mobile ads, and apps, blogs, and emails

Corporate chain

Multiple outlets (typically 10 or more) that are commonly owned and controlled. Corporate chains appear in all types of retailing but they are strongest in department stores, discount stores, food stores, drugstores, and restaurants.

Retailer's price policy

Must fit its target market and positioning, product and service assortment, the competition, and economic factors

Are most wholesalers promotion minded?

No, most wholesalers are not promotion minded.

Difference between omni-channel and multi-channel marketing?

Omni-channel consumers readily research products and prices online, shopping digitally from home, from work, in stores, or anywhere in between

What does price mean for wholesalers?

Price is an important wholesaler decision. Wholesalers usually mark up the cost of goods by a standard percentage.

International retailing

Retailers can face dramatically different retail environments when crossing countries, continents, and cultures. Hence,when going global, retailers must understand and meet the needs of local markets. Presents challenges as well as opportunities.

Store's atmosphere

Retailers want to create a unique store experience, one that suits the target market and moves customers to buy

Lifestyle centers

Smaller, open-air malls with upscale stores, convenient locations, and nonreal activities, such as a playground, skating rink, hotel, dining establishments, and a movie theater.

Multi-channel marketing

The ability to interact with potential customers on various platforms

Wholesaler marketing decisions can involve what with a target group?

They can choose a target group by size of customer (for example, large retailers only), type of customer (convenience stores only), the need for service (customers who need credit), or other factors

buying and assortment building

They can select items and build assortments needed by their customers, thereby saving much work

Most consumers still make most of their purchase the old-fashioned way:

They go to a store, find what they want, plunk down their cash or credit cards, and bring home the goods.

Voluntary chain

Wholesaler-sponsored group of independent retailers engaged in group buying and merchandising

What has resulted from the mega-retailers shifting the balance of power between retailers and producers?

With their size and buying power, these giant retailers can offer better merchandise selections, good service, and strong price savings to consumers. As a result, they grow even larger by squeezing out their smaller, weaker competitors.

Shopping center

a group of retail businesses built on a site that is planned developed, owned, and managed as a unit

Specialty store

a store that carries a narrow product line with a deep assortment, such as apparel stores, sporting-goods stores, furniture stores, florists, and bookstores

It's very important that retailers select locations that are _________ to the target market in areas that are consistent with the retailer's positioning.

accessible

Public relations (PR)

activities, such as new-store openings, special events, newsletters and blogs, store magazines, and public service activities, are also available to retailers

Retailers use various combinations of the five promotion tools

advertising, personal selling, sales promotion, public relations, and direct and social media marketing

Manufacturers' agents

are the most common type of agent wholesaler. They are also called manufacturers' representatives

Broker

brings buyers and sellers together and assists in negotiations for which they earn a commission on the selling price.

Wholesalers

buy mostly from producers and sell mostly to retailers, industrial consumers, and other wholesalers

everyday low pricing (EDLP)

charging constant, everyday low prices with few sales or discounts.

What types of technologies do retailers use to improve their business?

checkout scanning, RFID inventory tracking, merchandise handling, information sharing, customer interactions

Most stores today __________ _____________ to increase their customers pulling power and give consumers the convenience of one-stop shopping

cluster together

Community shopping center

contains between 15 and 50 retail stores. It contains a branch of a department store or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank.

Today's retail forms appear to be ___________, i.e. increasingly, different types of retailers now sell the same product at the same prices to the same consumers

converging

The rise of huge mass merchandisers and specialty superstores, the formation of vertical marketing systems, and rash of retail mergers and acquisitions have created a ______ of ________ ___________.

core of superpower megaretailers

The increased use of computerized, automated, and Internet-based systems will help wholesalers contain the:

cost of ordering, shipping, and inventory holding, thus boosting their productivity

Omni-channel retailing

creates a seam-less cross-channel buying experience that integrates in-store, online, and mobile shopping, e.g. Amazon is trying that

Recent economic conditions have led to ________ for even lower prices and the ______ out of suppliers who are not adding value based on ____ and ______

demands; sorting; cost and quality

The wholesaler industry remains vulnerable to one of its most enduring trends - the need for ______-_______ ________

ever-greater efficiency

There are two broad types of wholesalers:

full-service and limited-service

Most retailers seek either ______ markups on lower volume or low markups on higher volume

high

Wholesaling

includes all the activities involved in selling goods and services to those buying for resale or business use

Retailing

includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use

Retailer online sites, mobile apps, and online social media:

influence a large amount of in-store buying

Personal selling

involves store salespeople greeting customers, meeting their needs, and building relationships

Self-service

is the basis of all discount operations and is typically used by retailers selling convenience goods and nationally branded, fast-moving shopping goods

New retail forms continue to emerge to meet new situations and consumer needs, but the _____ ______ of new retail forms is getting shorter.

life cycle

Which type of service results in increased operating costs and thus higher prices?

limited-service

Advertising

may be supported by newspaper inserts and catalogs

Sales promotions

may include in-store demonstrations, displays, sales, and loyalty programs

There are several types of wholesalers, defined mainly by the types of functions they perform:

merchant wholesalers, agent & brokers, and MSBOs

Retailers

most retailing is done by them. They are businesses whose sales come primarily from retailing

limited-service wholesalers

offer fewer services to their suppliers and customers

Regional shopping center

or regional shopping mall. is the largest and most dramatic shopping center. It has from 50 to more than 100 stores, including two or more full-line department stores.

How does advanced information technology and software systems help progressive retailers?

produce better forecasts, control inventory costs, interact electronically with suppliers, send information between stores, and even sell to customers within stores

Like retailers, wholesalers must decide on:

product and service assortments, price, promotion, and place

Retailers must decide on three major product variables:

product assortment, service mix, store atmosphere

Wholesalers add customer value through the ______ and ______ they offer

products; services

full-service wholesalers

provide a full set of services

Limited-service retailers

provide more sales assistance because they carry more shopping goods about which customers need information

Omnichannel

refers to the multichannel marketing approach that provides the customers with an integrated shopping experience over all the platforms

Agents

represent buyers or sellers on a more permanent basis.

____________ ____________ have become critically important as competitive tools

retail technologies

In return, some large wholesalers are setting up their own _______ _________

retailing operations

Retailers must first _______ and ________ their target markets and then decide how they will __________ and position themselves in these markets.

segment; define; differentiate

Wholesalers' marketing decisions include choices of:

segmentation and targeting, differentiation and positioning, and the marketing mix, which is product and service assortments, price, promotion, and distribution

To meet varying service needs, retailers may offer one of three service levels:

self-service limited-service full-service

Wholesalers add value by performing one or more channel functions:

selling and promoting, buying and assortment building, bulk breaking, warehousing, transportation, financing, risk bearing, market information, management services and advice

Self-service retailers

serve customers who are willing to perform their own locate-compare-select process to save time or money

product assortment

should differentiate it while matching target shoppers' expectations. One strategy is to offer merchandise that no other competitor carries, such as store brands or national brands for which the retailer holds exclusive rights

With _______ __________ and ___________, a retailer can compete effectively against even the largest and strongest competitors.

solid targeting and positioning

Full-service retailers

such as high-end specialty stores and first-class department stores, assist customers in every phase of the shopping process

They [wholesalers] also need to work closely with the manufacturers and retailers to make their operation more efficient and tuned to what the ________ __________ is demanding of them.

supply chain

Many large retailers are also joining forces with suppliers and distributors to create more: (environmentally friendly)

sustainable products, packaging, and distribution systems

Merchant wholesalers

the largest single group of wholesalers, accounting for roughly 50 percent of all wholesaling

Warehousing

they can also hold inventories, thereby reducing the inventory costs and risks of suppliers and customers

financing

they finance their customers by giving credit, and they finance their suppliers by ordering early and paying bills on time

market information

they give information to suppliers and customers about competitors, new products, and price developments

For most retailers, _______ __________ ________ has meant tough times

tighter consumer spending

Full-service stores

usually carry more specialty goods for which customers need or want assistance or advice

Many retailers now operate formats such as wholesale clubs and supercenters that perform many ______ _________

wholesale functions

risk bearing

wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence

management services and advice

wholesalers also help retailers train their salesclerks, improve store layouts and displays, and set up accounting and inventory control systems.

transportation

wholesalers can provide quicker delivery to buyers because they are closer to buyers than are producers

bulk breaking

wholesalers can save their customers money by buying in carload lots and breaking bulk.

selling and promoting

wholesalers' sales forces help manufacturers reach many small customers at a low cost.