Retailing

covers all of the activities involved in the sale of products to final consumers

- because they serve individual consumers, even the largest retailers face the challenge of handling small transactions

Features of a retailer's offering that relate to economic needs

1. Convenience- hours, easy to find, fast checkout, location, parking
2. Product Selection - assortment, brands, quality
3. Special Service - special orders, home delivery, gift wrap, entertainment
4. Fairness in Dealing- honesty, correct problems, return privileges, purchase risks
5. Helpful Information - courteous sales help, displays, prod. info., demonstrations
6. Prices - values, credit, special discounts, taxes/extra charges

Features that relate to social and emotional needs

1. Social Image - status, prestige, "fitting in" with other shoppers
2. Shopping Atmosphere - comfort, safety, excitement, relaxation, sounds, smells

General Stores

carried anything they could sell in reasonable volume

- were the main retailers in the United States until after the Civil War

Single-Line vs

Limited-Line Stores

today these are the most conventional retailers they are stores that specialize in certain lines of related products rather than a wide assortment

1. Single Line - focus on a single line such as clothing
2. Limited Line- focus on a limited line within the broader line (ex: shoes, formal wear, or neckties)

Specialty Shop

a type of conventional limited-line store

- is usually small and has a distinct "personality"

- sell special types of shopping products, such as high-quality sporting goods, exclusive clothing, cameras, or even antiques

Department Stores

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 products, such as men's wear or housewares

Mass-Merchandising Concept

says that retailers should offer low prices to get faster turnover and greater sales volumes

- this is done by appealing to larger markets

- applies to many types of retailers, including both those that operate stores and those that sell online

Supermarkets

large stores specializing in groceries with self-service and wide assortments

- however, many of the world's consumer don't have access to these stores

Discount Houses

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 problems themselves

- these retailers sold at 20 to 30 % off the list price being charged by conventional retailers

- in the 1950s these stores moved to better locations, offered more services and guarantees

* it was from these origins that today's mass-merchandisers developed

Mass-Merchandisers

large, self-service stores with many departments that emphasize "soft good" (housewares, clothing and fabrics) as well as staples (health and beauty aids)

- but still follow the discount house's emphasis on lower margins to get faster turnover

ex: Wal-Mart, Target

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

- a combination of the supermarkets, drugstores, and mass-merchandisers

- now trying to meet all the customer's routine needs at a low price

Category Killers

stores that focus on single product lines and also adapt the mass-merchandisers' approach

- Toys "R" Us, IKEA, Home Depot, Best Buy, Staples

- they make it very hard for less specialized retailers to compete

Convenience (food) Stores

a convenience-oriented variation of the conventional limited-line food stores

- they offer convenience, not assortment, and often charge prices 10 to 20 % higher than nearby supermarkets

- many also sell gas

- 7-Eleven, Stop-N-Go

Automatic Vending

selling and delivering products through vending machines

- can be costly to operate, but consumers like their convenience

Door-To-Door Selling

a salesperson going directly to the consumer's home

- now accounts for less than 1 % of retail sales in the US

- it is getting harder to find someone at home during the day

Telephone and Direct-Mail Retailing

allows consumers to shop at home

- place orders by mail, or a toll-free telephone call

- time-pressured, dual-career families are a prime target market for this

- this methode reduces cost by using mailing list, warehouse-type building and limited sales help

- shoplifting is no longer an issue

Wheel of Retailing Theory

new types of retailers enter the market as low-statue, 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 become threatened by new low status, etc retailers and the wheel turns again

- doesn't explain all major retailing developments

*vending machines are high-cost, high-margin operations and convenience food stores are high priced

Scrambled Merchandising

carrying any product lines they think they can sell profitably

- mass-merchandisers don't just sell everyday items but also cell phones, computer printers and jewelry

Corporate Chain

a firm that owns and manages more than one store - and often it's many

- the man way for a retailer to achieve economies of scale is with a corporate chain

- have grown rapidly and now account for about half of all retail sales

Cooperative Chains

and

Voluntary Chains

competitive pressure from corporate chains encouraged the development of both of these chains

1. Cooperative Chains - are retailer-sponsored groups, formed by independent retailers, that run their own buying orgs and conduct joint promotion efforts

(ex: True Value)

2. Voluntary Chains - are wholesaler-sponsored groups that work with "independent" retailers

(ex: SuperValu and Ace)

Franchise Operaction

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

- each franchise benefits from the buying power, promotion, and image of the larger company

- popular with service retailers

Wholesaling and Wholesalers

wholesaling 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 amounts to final consumers

wholesalersare firms whose main function is providing wholesaling activities: gathering and providing information, buying and selling, grading, storing, transportation, financing and risk taking

Manufacturers' Sales Branches

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

- they're classified as wholesalers by the U.S. Census Bureau and by government agencies in many other

countries

- branches are usually placed in the best market areas

Merchant Wholesalers

own (take title to) the products they sell

- often specialize by certain types of products or customers

- almost 90% of the wholesaling establishments in the US are merchant wholesalers and they handle over 61% of wholesale sales

Service Wholesalers

are merchant wholesalers that provide all the wholesaling functions - There are 3 types:

1. General Merchandise Wholesalers

2. Single-line (general-line) Wholesalers

3. Specialy Wholesalers

General Merchandise Wholesalers

are service wholesalers that carry a wide variety of nonperishable items

- such as hardware, electrical supplies, furniture, drugs, cosmetics, and auto equipment

- serve hardware store, drugstores, and small department stores

Single-line (general-line) Wholesalers

are service wholesalers that carry a narrower line of merchandise (only food, apparel, or certain tools, 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

are service wholesalers that carry a very narrow range of products and offer more information and service than other service wholesalers

* a firm that produces specialized lights for vehicles might rely on specialty wholesalers to help reach auto makers in different countries

Limited-Function Wholesalers

Cash and Carry, Drop-Shipper,

and Truck Wholesalers

provide only some wholesaling functions:

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) products they sell, but they do not actually handle, stock, or deliver them

Truck Wholesalers - specialize in delivering products that they stock in their own trucks; promptly deliver perishable products

Limited-Function Wholesalers (cont.)

Rack Jobbers and Catalog Wholesalers

Rack Jobbers- specialize in hard-to-handle assortments of products that a retailer doesn't want to manage; usually display the products on their own wire racks (books and magazines)

Catalog Wholesalers- sell out of catalogs that may be distributed widely to smaller industrial customers or retailers that might not be called on by other wholesalers; customers place orders at a website or by mail, email, fax or phone

Agent Wholesalers

are wholesalers who do not own the products they sell

- their main purpose is to help in buying and selling

- normally specialize by customer type and by product or product line

- usually provide even fewer functions than the limited-function wholesalers

- usually experts on local business customers and regulations in their own countries; can help marketing managers work through a foreign government's red tape

Manufacturers' Agent

sell similar products for several noncompeting producers - for a commission on what is actually sold

- such agents work almost as members of each company's sale force, but they're really independent wholesalers

- 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

Export or Import Agents

are basically manufaturers' agents who specialize in international trade

- these agent wholesalers operate in every country and help international firms adjust to unfamiliar market conditions in foreign markets

Brokers

bring buyers and sellers together

- usually have a temporary relationship with the buyer and seller while a particular deal is negotiated

- their product: give info. about what buyers need and what supplies are available (after the completed transaction they earn a commission from whichever party hired them)

Export and Import Brokers - operate like other brokers, but specialize in bringing buyers and sellers together from different countries

Selling Agents

take over the whole marketing job of 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

- in effect, the agent becomes each producer's marketing manager

Combination Export Manager

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

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: livestock, fur, tobacco and used cars - where demand and supply conditions change rapidly