Marketing Chapter 12

Front 1

• Retailing

Back 1

—covers all the activities involved in the sale of products to final consumers
o Range from large chains to small stores (Toys R’ US → stand in a market)
o Can operate with or without a store (Internet, TV, vending machines)
o Most retailers sell physical goods produced by someone else
o Also exists service retail—dry cleaning, fast food, tourist attractions—the retailer is also the producer
• Total number of transactions with consumers is much greater than at other channel level b/c they serve individual consumers
• Rate of change of retailing are related to the stage and speed of a county’s economic development

interact directly with final consumers—cant afford to lose a customer to a competitor

Front 2

• Retailers and the whole marketing mix

Back 2

o Product → choices about what products to carry, how much assortment to offer, and which services to support.
o Place → where stores will be located: online? # of stores, store layout
o Promotion → letting customers know about the business and the goods and services offered through advertising, salespeople, etc.
o Price → whether to accept credit cards or charge for delivery, and how frequently to offer discounted sales prices

Front 3

o General stores

Back 3

—(150 years ago) which carried anything they could sell in reasonable volume—were the main retailers in the US
• With growing number of consumer products after the Civil War, general stores couldn’t offer enough variety in all their traditional line
• So, some stores began specializing in dry goods, apparel, furniture, or groceries

Front 4

single-line or limited-line stores

Back 4

o Now most conventional retailers are this

stores that specialize in certain lines of related products rather than a wide assortment
• Most don’t just specialize in a single line but also a limited line within the broader line
• Ex: within clothing line, a retailer may only carry shoes but offer depth in that limited line

o Advantages of limited-line: they can satisfy some target markets better
• Conveniently located
• Adjust to suit specific customer needs
• Build relationships with their customers
o Problems: Having to stock some slow-moving items to satisfy target market
• Small stores—with high expenses relative to sales
• Try to avoid competition on identical products to avoid price cuts

Front 5

o Specialty shop

Back 5

a type of conventional limited-line store—usually small and has a distinct “personality”
• Sell specialty types of shopping products
• Aim a at carefully defined target market by offering a unique product assortment, knowledgeable salesclerks, and better service
• Simplifies buying, speeds turnover, and cuts costs due to obsolescence and style changes

Front 6

o Department stores

Back 6

—are larger stores that are organized into many separate departments and offer many product lines
• Each department is like a separate limited-line store and handles a wide variety of a shopping product
• Usually strong in customer service, including credit, merchandise return, delivery, and sales help.

Front 7

• Mass-merchandising concept

Back 7

different from conventional retailing
o Conventional retailers = think demand in their area is fixed—and they have a “buy low and sell high” philosophy
• Many modern retailers reject this idea

this = —retailers should offer low prices to get faster turnover and greater sales volumes—by appealing to larger markets

Front 8

o Supermarkets

Back 8

—large stores specializing in groceries with self-service and wide assortments
• Planned for maximum efficiency → survival depends on efficiency
• Scanners at check out, shelf space, fast moving/high profit items
• Thin net profits

Front 9

o Discount houses

Back 9

—offered “hard goods” (cameras, TVs, and appliances) at substantial price cuts to customers who would go to the discounter’s low-rent store, pay cash, and take care of any service or repair problem themselves

Front 10

o Mass-merchandisers

Back 10

—large self-service stores with many departments that emphasize “soft goods” (house wares, clothing, and fabrics) and staples (like health and beauty aids) but still follow the discount house’s emphasis on lower margins to get faster turnover
• Ex: Wal-Mart and Target

Front 11

supercenters (hypermarkets)—

Back 11

—very large stores that try to carry not only food and drug items but all G&S that the consumer purchases routinely
• Combo of supermarket, drug store, and mass-merchandiser
• Trying to meet all the customer’s routine needs at a low price
• Ex: Target and Wal-Mart too
• Sometimes not seen as convenient by time-pressured consumers → due to crowds, lines, and “wandering around”

Front 12

o Convenience (food) stores

Back 12

—a convenience-oriented variation of the conventional limited-line food stores
• Limit their stock to pickup of fill-in items like bread, milk, beer, and eat on the go snacks
• Many also sell gas
• 7-eleven
• Offer convenience, not assortment, and often charge prices 10 to 20 % higher than nearby supermarkets

Front 13

o Automatic vending

Back 13

–selling and delivering products through vending machines
• Consumers like convenience

Front 14

o Door-to-door selling

Back 14

—a salesperson going directly to the consumer’s home
• Convenient personal attention
o NOTE: Home shopping → QVC & Home shopping network

Front 15

• ( Brick-and-mortar stores )

Back 15

o Multichannel approach—physical store plus website—offers customers some of the best of both worlds

Front 16

o Wheel of retailing theory

Back 16

—the 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 threatened by new low-status, low-margin, low-price retailers—and the wheel turns again
• **Doesn’t explain ALL major retailing development
• Ex: vending machines enter as high-cost, high-margin operations; convenience stores = high price; suburban shopping centers = higher price

Front 17

o Scrambled merchandising

Back 17

—carrying any product lines they think they can sell profitably
• Supermarkets moving towards this: selling panty hose, potted plants etc.

Front 18

o Corporate chain

Back 18

—(creates economies to scale) is a firm that owns and manages more than one store—and often it’s many
• Central buying for different stores
• Take advantage of quantity discounts and develop their own efficient distribution centers

Front 19

o Cooperative chains

Back 19

—retailer-sponsored groups—formed by independent retailers—that run their own buying organizations and conduct joint promotion efforts

Front 20

o Voluntary chains

Back 20

—are wholesaler-sponsored groups that work with “independent” retailers → Ex: Ace hardware

Front 21

• Franchise operation

Back 21

—the franchisor develops a good marketing strategy and the retail franchise holders carry out the strategy in their own units

Front 22

• Wholesaling

Back 22

—is 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 amount to final consumers

Front 23

• Wholesalers

Back 23

—are all firms whose main function is providing wholesaling activities

Front 24

• Merchant wholesalers

Back 24

—own (take title to) the products they sell. They often specialize by certain types of products or customers
o Very popular

Front 25

o Manufacturers’ sales branches

Back 25

—warehouses that producers set up at separate locations away from factories

Front 26

o Service wholesalers

Back 26

—are merchant wholesalers that provide all the wholesaling functions
• Three types:
1. General merchandise
2. Single-line
3. Specialty

Front 27

• General merchandise wholesalers

Back 27

—service wholesalers that carry a wide variety of nonperishable items such as hardware, electrical supplies, furniture, drugs, cosmetics, and automobile equipment
o They serve hardware stores, drugstores, and small department stores

Front 28

• Single-line (or general-line) wholesalers

Back 28

—service wholesalers that carry a narrower line of merchandise than general merchandise wholesalers

Front 29

• Specialty wholesaler

Back 29

—service wholesalers that carry a very narrow range of products and offer more information and service than other service wholesalers
o Products might limit itself to fields requiring special technical knowledge or service

Front 30

• Limited-line wholesalers

Back 30

—provide only some wholesaling functions

Front 31

• Cash-and-carry wholesalers

Back 31

—operate like service wholesalers—except that the customer must pay cash
o Common in less developed nations

Front 32

• Drop shippers

Back 32

—own (take title to) the products they sell—but they do not actually handle, stock, or deliver them
o Mainly involved in selling
o Get orders and pass them to producers
o Usually bulky items like lumber

Front 33

• Truck wholesalers

Back 33

—specialize in delivering products that they stock in their own trucks

Front 34

• Rack jobbers

Back 34

—specialize in hard-to-handle assortments of products that a retailer doesn’t want to manage—and rack jobbers usually display the products on their own wire rack
o Ex: may decide what books to sell at a grocery store

Front 35

• Catalog wholesalers

Back 35

—sell out of catalogs that may be distributed widely to smaller industrial customers or retailers that might not be called on by other wholesalers
o Reach outlying areas
o Use Internet a lot

Front 36

• Agent sellers

Back 36

—are wholesalers who do not own the products they sell
o Their main purpose is to help in buying and selling
o Normally specialize by customer type and by product or product line
o Operate at relatively low cost

important in international trade

Front 37

• Manufacturers’ agent

Back 37

—sells similar products for several noncompeting producers—for a commission on what is actually sold
o Freewheeling sales reps
o They already call on some customers and can add another product line at a relatively low cost—and no cost to the producer until something sells!

Front 38

• Export or import agents

Back 38

—are basically manufacturers’ agents who specialize in international trade

Front 39

• Brokers

Back 39

—provide information and brig buyers and sellers together
o Usually only temporary relationships b/w buyers and sellers

Front 40

• Export and import brokers

Back 40

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

Front 41

• Selling agents

Back 41

—take over the whole marketing job of producers—not just the selling function
o May handle the entire output of one or more selling producers or even competing producers, with almost complete control of pricing, selling, and advertising
• Basically becomes the producers’ marketing manager
o Usually called on by a producer due to financial trouble

Front 42

• Combination export manager

Back 42

—is a blend of manufacturers’ agents and selling agents—handling the entire export function for several producers of similar but noncompeting lines

Front 43

• Auction companies

Back 43

—provide a place where buyers and sellers can come together and bid to complete a transaction