Ch 11

Limited Service Wholesalers

-cash and carry -truck -drop shipper -rack jobbers -producers' cooperatives -mail order

Wholesaler Marketing Strategies

11.2 (more price oriented then promotion...distribution is important..product and services add customer value)

retailer

A business whose sales come primarily from retailing.

Wholesaling

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

Retailer Marketing Strategies

See Figure 11.1 (consider product assortment, services mix, store atmosphere, experiential retailing, price)

Major Store Retailer Types

See Table 11.1

Voluntary Chain

Wholesaler-sponsored group of independent retailers engaged in group buying and merchandising (Independent Grocers Alliance)

Manufacturers' and retailers' branches and offices

Wholesaling by sellers or buyers themselves rather than through independent wholesalers. Sales branches and offices-- set up by manufacturers to improve inventory control, selling, and promotion. sales branches carry inventory and are found in industries such as lumber and automotive equipment and parts. sales offices do not carry inventory and are most prominent in the dry goods and notions industries. Purchasing offices--Perform a role similar to that of brokers or agents but are part of the buyer's organization. Many retailers set up purchasing offices in major market centers, such as New York and Chicago

cash-and-carry wholesalers

carry a limited line of fast-moving goods and sell to small retailers for cash. normally do not deliver

Organizational Approach

corporate chains, voluntary chains, retailer cooperatives, franchise organizations

pricing techniques

everyday low pricing or high-low pricing (higher everyday prices couples with frequent sales).

Producers' cooperatives

farmer-owned members that assemble farm produce for sale in local markets. Producers' cooperatives often attempt to improve product quality and promote a co-op brand name, such as sun-Maid raisins, sunkist oranges, or Diamond nuts

Adapting techniques

popup stores flash sales

Mail-order or Web wholesalers

send catalogs to or maintain Web sites for retail, industrial, and institutional customers featuring jewelry, cosmetics, specialty foods, and other small items. its primary customers are businesses in small outlying area

Rack Jobbers

serve grocery and drug retailers, mostly in nonfood items. rack jobbers send delivery trucks to stores, where the delivery people set up toys, paperbacks, hardware items, health and beauty aids, or other items. rack jobbers price the goods, keep them fresh, set up point-of-purchase displays, and keep inventory records.

Types of Wholesalers

-Merchant wholesalers -Brokers and agents -Manufacturers' and retailers' branches and offices

Franchise Organization

A 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). Based on some unique product or service. (McDonalds)

Wholesaler

A firm engaged primarily in wholesaling activities

shopping center

A group of retail businesses built on a site that is planned, developed, owned, and managed as a unit regional (largest and dramatic) community (15-50 stores) neighborhood (5-15) power centers--huge enclosed shopping centers long strip of retail stores. lifesyle centers--smaller, open-air malls with upscale stores & non-retail activities mixed-use--"" and includes apartments

Broker

A wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation.

Agent

A wholesaler who represents buyers or sellers on a relatively permanent basis, performs only a few functions, and does not take title to good manufacturers'--represents two or more manufacturers of complementary lines. Selling--has to sell entire output of a manufacturer. (coal) Purchasing--makes purchases for buyers. Helps clients obtain best goods and prices. Commission Merchants--takes physical possession of product and negotiate sales. Has power over price and commission. (agricultural marketing)

retailing

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

Merchant Wholesaler

An independently owned wholesale business that takes title to the merchandise it handles includes Full-service and limited-service

independent off-price retailer

An off-price retailer that is independently owned and operated or a division of a larger retail corporation. (TJ MAXX)

Warehouse club

An off-price retailer that sells a limited selection of brand name grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees (Sams)

factory outlet

An off-price retailing operation that is owned and operated by a manufacturer and normally carries the manufacturer's surplus, discontinued, or irregular goods.

omni-channel retailing

Creating a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping.

Relative Prices

Discount Stores--A retail operation that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume. (Target) off-price retailer--A retailer that buys at less-than-regular wholesale prices and sells at less than retail. (independents, factory outlets, warehouse clubs)

Drop Shippers

Do not carry inventory or handle the product. on receiving an order, drop shippers select a manufacturer, who then ships the merchandise directly to the customer. Drop shippers operate in bulk industries, such as coal, lumber, and heavy equipment.

Shopper Market

Focusing the entire marketing process on turning shoppers into buyers as they approach the point of sale, whether during in-store, online, or mobile shopping.

truck wholesalers

Perform primarily a selling and delivery function. carry a limited line of semiperishable merchandise (such as milk, bread, snack foods)

full-service wholesalers

Provide a full line of services: carrying stock, maintaining a sales force, offering credit, making deliveries, and pro-viding management assistance. Includes: Wholesale Merchants and Industrial Distributors

Why use a wholesaler instead of selling directly to consumers?

Selling and promoting Buying and assortment building Bulk breaking (breaks bulk into small pieces) Warehousing (holds inventory) Transportation Financing (orders early--gives customers credit) Risk bearing (absorbs risk) Market information Management services and advice

Product Line

Specialty Stores-- carry narrow product lines with deep assortments within those lines. Department Stores--carries a wide variety of product lines, each operated as a separate department managed by specialist buyers or merchandisers. Supermarket-- A large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of grocery and household products. Convenience store--A small store, located near a residential area, that is open long hours seven days a week and carries a limited line of high-turnover convenience goods. Superstore--A store much larger than a regular supermarket that offers a large assortment of routinely purchased food products, nonfood items, and services Category killer--A giant specialty store that carries a very deep assortment of a particular line (Best Buy) Service retailer--A retailer whose product line is actually a service; examples include hotels, airlines, banks, colleges, and many others.

showrooming

The shopping practice of coming into retail store showrooms to check out merchandise and prices but instead buying from an online-only rival, sometimes while in the store.

corporate chains

Two or more outlets that are commonly owned and controlled. (Macy's, Target, Kroger)

Retailer Cooperative

group of independent retailers who jointly establish a central buying organization and conduct joint promotion efforts (Associated Grocers, Ace Hardware)

retail convergence

many retailers of the same products coexist within a convenient location of the consumer without much differentiation in price; like the mall or the internet convergence makes it harder to differentiate

Amount of Service

self service-- serve customers who are willing to perform their own locate-compare-select process to save time or money (supermarket, such as Target or Kohl's). limited service-- such as Sears or JCPenney, provide more sales assistance because they carry more shopping goods about which customers need information. Their increased operating costs result in higher prices full service--, such as high-end specialty stores (Tiffany or Williams-Sonoma) and first-class department stores (Nordstrom) assist customers in every phase of the shopping process. More specialty goods for which customers need or want assistance or advice. They provide more services leads to higher operating cost leads to higher prices.

Wholesale Merchants

sell primarily to retailers and provide a full range of services. general merchandise-- carry several merchandise lines general line wholesalers--carry one or two lines in great depth. specialty wholesalers--carrying only part of a line.

Industrial Distributors

sell to manufacturers rather than to retailers. Provide several services, such as carrying stock, offering credit, and providing delivery. May carry a broad range of merchandise, a general line, or a specialty line

Omni-channel buyers

who make little distinction between in-store and online shop-ping and for whom the path to a retail purchase runs across multiple channels.