Marketing Chapter 12 - Retailers, Wholesalers, and Their Strategy Planning

Supermarkets

large stores specializing in groceries with self-service and wide assortments, developed in the US during the 1930s Depression. supermarkets are planned for maximum efficiency. survival depends on efficiency and high sales volume. net profits in supermarkets usually run a thin 1-2% of sales or less

Service wholesalers

merchant wholesalers that provide all the wholesaling functions. within this basic group there are three types: general merchandise, single-line, and specialty

Stockturn rate / inventory turnover

number of times the average inventory is sold in a year

Export brokers / import brokers

operate like other brokers, but they specialize in bringing together buyers and sellers from different countries

Cash-and-carry wholesalers

operate like service wholesalers - except that the customer must pay cash. common in less-developed nations

Drop-shippers

own (take title to) the products they sell - but they do not actually handle, stock, or deliver them. are mainly involved in selling. commonly sell bulky products (like lumber) for which additional handling would be expensive and possibly damaging

Wheel of retailing theory

says that new types of retailers enter the market as low-status, low-margin, low-price operators and then, if successful, evolve into more conventional retailers offering more services with higher operating costs and higher prices. then they're threatened by new low-status, low-margin, low-price retailers - any the wheel turns again. department stores, supermarkets, and mass-merchandisers went through this cycle and some online retailers are on this path

Mass-merchandising concept

says that retailers should offer low prices to get faster turnover and greater sales volumes by appealing to larger markets

Catalog wholesalers

sell through catalogs that may be distributed widely to smaller industrial customers or to retailers that might not be called on by other wholesalers. customers place orders at a website or by mail, e-mail, fax, or telephone

Automatic vending

selling and delivering products through vending machines. vending machine sales account for only about 1.5% of total US retail sales. consumers like their convenience

Single-line (or general-line) wholesalers

service wholesalers that carry a narrower line of merchandise than general merchandise wholesalers. for ex: they might carry only food, apparel, or certain types of industrial tools or supplies. in consumer products, they serve the single- and limited-line stores. in business products, they cover a wider geographic area and offer more specialized service

Specialty wholesalers

service wholesalers that carry a very narrow range of products and offer more information and service than other service wholesalers. for ex: a firm that produces specialized lights for vehicles might rely on specialty wholesalers to help reach automakers in different countries

General merchandise wholesalers

service wholesalers that carry a wide variety of nonperishable items such as hardware, electrical supplies, furniture, drugs, cosmetics, and automobile equipment. with their broad line of convenience and shopping products, they serve hardware stores, drugstores, and small department stores

Truck wholesalers

specialize in delivering products that they stock in their own trucks. their big advantage is that they promptly deliver perishable products that regular wholesalers prefer not to carry

Rack jobbers

specialize in hard-to-handle assortments of products that a retailer doesnt want to manage - and rack jobbers usually display the products on their own wire racks. for ex: a grocery store or mass-merchandiser might rely on a rack jobber to decide which paperback books or magazines it sells

Online retailers

stores that sell exclusively or almost exclusively online. these stores usually dont have a physical store that consumers can visit

Selling agents

take over the whole marketing job or producers - not just the selling function. a selling agent may handle the entire output of one or more producers, even competing producers, with almost complete control of pricing, selling, and advertising. financial trouble is one of the main reasons a producer calls a selling agent

Supercenters (hypermarkets)

very large stores that try to carry not only food and drug items but all goods and services that the consumer purchases routinely. these superstores look a lot like a combination of the supermarkets, drugstores, and mass-merchandisers from which they have evolved. examples: Meijer, Fred Meyer, Target, and Walmart (whose supercenters have turned it into the largest food retailer in the US)

Manufacturer's sales branches

warehouses that producers set up at separate locations away from their factories - they're classified as wholesalers by the US Census Bureau and by government agencies in many other countries. sales per branch are so high because they are usually placed in the best market areas, which helps explain why their operating costs, as a percentage of sales, are often lower

Agent wholesalers

wholesalers that do not own the products they sell. their main purpose is to help in buying and selling. agent wholesalers normally specialize in customer type and by product or product line. but they usually provide even fewer functions than the limited-function wholesalers. they operate at relatively low cost - sometimes 2-6% of their selling price

Scrambled merchandising

carrying any product lines modern retailers think they can sell profitably. supermarkets and drugstores sell anything they can move in volume

Corporate chain

firm that owns and manages more than one store - and often its many. ex: nordstrom, walmart, kroger, 7-eleven, and chipotle - have grown rapidly and now account for about half of all retail sales. chains can buy in larger quantities and earn lower prices, they get operational efficiencies from running many stores, and they can apply advertising and other promotion costs over many stores. you can expect chains to continue to grow and take business from independent stores

Merchant wholesales

own (take title to) the products they sell. they often specialize by certain types of products or customers. for ex: Fastenal is a wholesaler that specializes in distributing threaded fasteners for some period before selling to its customers - their profits have grown at about the same pace as Microsoft's

Auction companies

provide a place where buyers and sellers can come together and bid to complete a transaction. traditionally they were important in certain lines - such as livestock, fur, tobacco, and used cars - where demand and supply conditions change rapidly

Limited-function wholesalers

provide only some wholesaling function. variations include: cash and carry, drop-shippers, truck wholesalers, rack jobbers, and catalog wholesalers

Door-to-door selling

salesperson going directly to the consumer's home. examples: Amway Global and Mary Kay

Manufacturers' agent

sells similar products for several noncompeting producers - for a commission on what is actually sold. such agents work almost as members of each company's sales force, but they're really independent wholesalers. more than half of all agent wholesalers are manufacturers' agents. their big plus is that they already call on some customers and can add another product line at relatively low cost - and at no cost to the producer until something sells

Single-line / limited-line stores

stores that specialize in certain lines of related products rather than a wide assortment. many specialize not only in a single line, such as clothing, but also in a limited line within the broader line. within the clothing line, a retailer might carry only shoes, formal wear, or even neckties but offer depth in that limited line

Combination export manager

a blend on manufacturers' agent and selling agent - handling the entire export function for several producers of similar but noncompeting lines

Specialty shop

a type of conventional limited-line store. is usually small and has a distinct "personality." they sell special types of shopping products, such as high-quality sporting goods, exclusive clothing, baked goods, or even antiques. they aim at a carefully defined target market by offering a unique product assortment, knowledgeable salesclerks, and better service

Department stores

are larger stores that are organized into many separate departments and offer many product lines. examples: Macy's and Nordstrom

Export agents / import agents

basically manufacturers' agents who specialize in international trade. these agent wholesalers operate in every country and help international firms adjust to unfamiliar market conditions in foreign countries

Brokers

bring buyers and sellers together. brokers usually have a temporary relationship with the buyer and seller while a particular deal is negotiated. they are especially useful when buyers and sellers dont come into the market very often

General stores

carried anything they could sell in reasonable volume. about 150 years ago they were the main retailers in the US. but with the growing number of consumer products after the Civil War, general stores couldnt offer enough variety in all their traditional lines

Wholesaling

concerned with the activities of those persons or establishments that sell to retailers and other merchants, or to industrial, institutional, and commercial users, but that do not sell in large amounts to final consumers. wholesaling activities are just variations of the basic marketing functions - gathering and providing information, buying and selling, grading, storing, transporting, financing, and risk taking

Convenience (food) stores

convenience-oriented variation of the conventional limited-line food stores. instead of expanding their assortment, however, convenience stores limit their stock to pickup or fill-in items such as bread, milk, beer, and eat-on-the-go snacks. many also sell gas

Retailing

covers all of the activities involved in the sale of products to final consumers. retailers range from large chains of specialized stores, such as Bath & Body Works, to individual merchants like the woman who sells baskets from an open stall in Nigeria

Wholesalers

firms whose main function is providing wholesaling activities. wholesalers sell to all of the different types of organizational customers

Franchise operation

franchisor develops a good marketing strategy, and the retail franchise holders carry out the strategy in their own units. each franchise holder benefits from its relationship with the larger company and its experience, buying power, promotion, and image. examples: Hampton Hotels, Anytime Fitness, Subway, and Supercuts

Mass-merchandisers

large self-service stores with many departments that emphasize "soft goods" (housewares, clothing, and fabrics) and staples (like health and beauty aids) and offer lower prices to get faster turnover. examples: Walmart and Target