Retailing and Wholesaling
Previewing The Concepts: Chapter Objectives
1. Explain the roles of retailers and wholesalers in the distribution channel 2. Describe the major types of retailers and give examples of each 3. Describe the major types of wholesalers and give examples of each 4. Explain the marketing decisions facing retailers and wholesalers
Just the Basics
This chapter is a continuation of the prior chapter on marketing channels; it provides more detail on retailing and wholesaling, two very important concepts in the value delivery network.
Retailers can be classified according to several characteristics, including the amount of service they offer, the breadth and depth of their product lines, the relative prices they charge, and how they are organized.
The major decisions retailers make are centered around their target market and positioning, their product assortment and services, their price, their promotion strategies, and where they are located.
The wheel of retailing concept says that many new retailing forms begin as low-margin, low-price, low-status operations. They challenge established retailers, and then the new retailers’ success leads them to upgrade their facilities and offer more services. In turn, their costs increase, and eventually they become like the conventional retailers they replaced. The cycle begins again.
There are many types of wholesalers, including merchant wholesalers, agents and brokers, and manufacturers’ sales branches and offices.
The distinction between large retailers and large wholesalers continues to blur.
Annotated Chapter Notes/Outline
Costco is trouncing Wal-Mart at its own low-price game. With about the same number of members but 50 fewer stores, Costco outsells Sam’s Club by 50 percent. Its $60 billion in sales makes Costco the nation’s third-largest retailer, behind only Wal-Mart and Home Depot.
How is Costco beating Sam’s Club at its own low-price game? The two retailers are very similar in many ways. But inside the store, Costco adds a certain merchandising magic that Sam’s Club just can’t match.
Both Costco and Sam’s Club excel at low-cost operations and low prices.
As one industry analyst puts it, “While Wal-Mart stands for low prices, Costco is a retail treasure hunt, where one’s shopping cart could contain a $50,000 diamond ring resting on top of a vat of mayonnaise.”
Costco brings flair to an otherwise dreary setting.
Mixed in with its regular stock of staples, Costco features a glittering, constantly-shifting array of one-time specials such as discounted Prada bags, Calloway gold clubs, or Kenneth Cole Bags—deals you just won’t find at Sam’s Club.
Use Key Terms Retailing, Retailer here.
Use Chapter Objective 1 here.
Use Discussing the Issues 1 here.
Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use.
Retailers: Businesses whose sales come primarily from retailing.
In recent years nonstore retailing has been growing much faster than has store retailing.
Types of Retailers (Table 11.1)
Use Table 11.1 here.
Amount of Service
Self‑service retailers serve customers who are willing to perform their own “locate-compare-select” process to save time or money.
Limited‑service retailers provide more sales assistance because they carry more shopping goods about which customers need information.
Full‑service retailers include high-end specialty stores and first‑class department stores. Salespeople assist customers in every phase of the shopping process.
Let’s Discuss This
What type of service strategy is implemented at a 7-Eleven? At J.C. Penney? At Neiman Marcus?
Specialty stores carry narrow product lines with deep assortments within those lines.
Department stores carry a wide variety of product...
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