Copyright © 2003 Prentice-Hall, Inc. 18-1 Chapter 18 Managing Retailing, Wholesaling, and Market Logistics by PowerPoint by Milton M. Pressley University

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Copyright © 2003 Prentice-Hall, Inc.

Chapter 18 Chapter 18 Managing Retailing, Managing Retailing, Wholesaling, and Market Wholesaling, and Market LogisticsLogisticsbyby

PowerPoint byPowerPoint byMilton M. PressleyMilton M. Pressley

University of New OrleansUniversity of New Orleans

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Successful “go-to-market” strategies require integrating retailers, wholesalers, and logistical organizations.

Kotler on Marketing

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Table 18.1: Major Retailer Types

Specialty Store: Specialty Store: Narrow product line with a deep assortment. A clothing store Narrow product line with a deep assortment. A clothing store would be a would be a single-linesingle-line store; a men’s clothing store would be a store; a men’s clothing store would be a limited-linelimited-line store; and a men’s custom-shirt store would be a store; and a men’s custom-shirt store would be a superspecialtysuperspecialty store. store. Examples: Athlete’s Foot, Tall Men, The Limited, The Body Shop.Examples: Athlete’s Foot, Tall Men, The Limited, The Body Shop.

Department Store: Department Store: Several product lines—typically clothing, home Several product lines—typically clothing, home furnishings, and household goods—with each line operated as a separate furnishings, and household goods—with each line operated as a separate department managed by specialist buyers or merchandisers. department managed by specialist buyers or merchandisers. ExamplesExamples: : Sears, JCPenney, Nordstrom, Bloomingdale’s.Sears, JCPenney, Nordstrom, Bloomingdale’s.

Supermarket: Supermarket: Relatively large, low-cost, low-margin, high volume, self-Relatively large, low-cost, low-margin, high volume, self-service operation designed to serve total needs for food, laundry, and service operation designed to serve total needs for food, laundry, and household products. household products. ExamplesExamples: Kroger, Food Emporium, Jewel.: Kroger, Food Emporium, Jewel.

Convenience Store: Convenience Store: Relatively small store located near residential area, Relatively small store located near residential area, open long hours, seven days a week, and carrying a limited line of high-open long hours, seven days a week, and carrying a limited line of high-turnover convenience products at slightly higher prices, plus takeout turnover convenience products at slightly higher prices, plus takeout sandwiches, coffee, soft drinks. sandwiches, coffee, soft drinks. ExamplesExamples: 7-Eleven, Circle K.: 7-Eleven, Circle K.

See text for complete table

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Retailing

Levels of ServiceLevels of Service Wheel-of-retailingWheel-of-retailing Four levels of service:Four levels of service:

Self-serviceSelf-service Self-selectionSelf-selection Limited serviceLimited service Full serviceFull service

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Figure 18.1: Retail Positioning Map

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Retailing Nonstore retailingNonstore retailing Categories of nonstore retailingCategories of nonstore retailing

Direct sellingDirect selling Direct marketingDirect marketing

TelemarketingTelemarketing Television direct-response marketingTelevision direct-response marketing Electronic shoppingElectronic shopping

Automatic vendingAutomatic vending Buying serviceBuying service

Corporate RetailingCorporate Retailing

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Table 18.2: Major Types of Retail Organizations

Corporate Chain Store: Corporate Chain Store: Two or more outlets commonly owned and Two or more outlets commonly owned and controlled, employing central buying and merchandising, and selling similar controlled, employing central buying and merchandising, and selling similar lines of merchandise. Their size allows them to buy in large quantities at lower lines of merchandise. Their size allows them to buy in large quantities at lower prices, and they can afford to hire corporate specialists to deal with pricing, prices, and they can afford to hire corporate specialists to deal with pricing, promotion, merchandising, inventory control, and sales forecasting. promotion, merchandising, inventory control, and sales forecasting. ExamplesExamples: Tower Records, GAP, Pottery Barn.: Tower Records, GAP, Pottery Barn.

Voluntary Chain: Voluntary Chain: A wholesaler-sponsored group of independent retailers A wholesaler-sponsored group of independent retailers engaged in bulk buying and common merchandising. engaged in bulk buying and common merchandising. ExamplesExamples: Independent : Independent Grovers Alliance (IGA), True Value Hardware.Grovers Alliance (IGA), True Value Hardware.

Retailer Cooperative: Retailer Cooperative: Independent retailers who set up a central buying Independent retailers who set up a central buying organization and conduct joint promotion efforts. organization and conduct joint promotion efforts. ExamplesExamples: Associated : Associated Grocers, ACE Hardware.Grocers, ACE Hardware.

Consumer CooperativeConsumer Cooperative: A retail firm owned by its customers. In consumer : A retail firm owned by its customers. In consumer coops residents contribute money to open their own store, vote on its policies, coops residents contribute money to open their own store, vote on its policies, elect a group to manage it, and receive patronage dividends.elect a group to manage it, and receive patronage dividends.


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Retailing

Marketing DecisionsMarketing Decisions Target MarketTarget Market Product Assortment and ProcurementProduct Assortment and Procurement

BreadthBreadth DepthDepth

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Retailing Product-differentiation Strategy PossibilitiesProduct-differentiation Strategy Possibilities

Feature exclusive national brands that are not Feature exclusive national brands that are not available at competing retailersavailable at competing retailers

Feature mostly private branded merchandiseFeature mostly private branded merchandise Feature blockbuster distinctive merchandise Feature blockbuster distinctive merchandise

eventsevents Feature surprise or ever-changing merchandiseFeature surprise or ever-changing merchandise Feature the latest or newest merchandise firstFeature the latest or newest merchandise first Offer merchandise customizing servicesOffer merchandise customizing services Offer a highly targeted assortmentOffer a highly targeted assortment

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Retailing Merchandise managersMerchandise managers Direct product profitability (DPP)Direct product profitability (DPP)

Services and Store AtmosphereServices and Store Atmosphere Prepurchase services include accepting telephone and Prepurchase services include accepting telephone and

mail orders, etc.mail orders, etc. Postpurchase services include shipping Postpurchase services include shipping

and delivery, etc.and delivery, etc. Ancillary services include general information, check Ancillary services include general information, check

cashing, parking, etc.cashing, parking, etc. Price DecisionPrice Decision

High-markup, lower volumeHigh-markup, lower volume Low-markup, high volumeLow-markup, high volume

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Retailing

Promotion DecisionPromotion Decision Place DecisionPlace Decision

General business districtsGeneral business districts Regional shopping centersRegional shopping centers Community centersCommunity centers Strip malls (a.k.a. shopping strips)Strip malls (a.k.a. shopping strips) A location within a larger storeA location within a larger store

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Wholesaling WholesalingWholesaling

Wholesalers’ functions:Wholesalers’ functions: Selling and promotingSelling and promoting Buying and assortment buildingBuying and assortment building Bulk breakingBulk breaking WarehousingWarehousing TransportationTransportation FinancingFinancing Risk bearingRisk bearing Market information Market information Management services and counselingManagement services and counseling

The Growth and Types of WholesalingThe Growth and Types of Wholesaling

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Table 18.3: Major Wholesaler Types

Merchant Wholesalers: Merchant Wholesalers: Independently owned businesses that take Independently owned businesses that take title to the merchandise they handle. They are called title to the merchandise they handle. They are called jobbers, jobbers, distributorsdistributors, or , or mill supply housesmill supply houses and fall into two categories: full and fall into two categories: full service and limited service.service and limited service.

Full-Service WholesalersFull-Service Wholesalers: Carry stock, maintain a sales force, offer : Carry stock, maintain a sales force, offer credit, make deliveries, and provide management assistance. There credit, make deliveries, and provide management assistance. There are two types of full-service wholesalers: (1) Wholesale merchants are two types of full-service wholesalers: (1) Wholesale merchants sell primarily to retailers and provide a full range of services. General-sell primarily to retailers and provide a full range of services. General-merchandise wholesalers carry several merchandise lines. General-merchandise wholesalers carry several merchandise lines. General-line wholesalers carry one or two lines. Specialty wholesalers carry line wholesalers carry one or two lines. Specialty wholesalers carry only part of a line. (2) Industrial distributors sell to manufacturers only part of a line. (2) Industrial distributors sell to manufacturers rather than to retailers and provide several services—carrying stock, rather than to retailers and provide several services—carrying stock, offering credit, and providing delivery.offering credit, and providing delivery.


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Wholesaling

Wholesaler Marketing DecisionsWholesaler Marketing Decisions Target MarketTarget Market Product Assortment and ServicesProduct Assortment and Services Price DecisionPrice Decision Promotion DecisionPromotion Decision Place DecisionPlace Decision

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Market Logistics Supply chain management (SCM)Supply chain management (SCM) Value networkValue network Demand chain planningDemand chain planning Market logisticsMarket logistics

Market logistics planning has four steps:Market logistics planning has four steps: Deciding on the company’s value Deciding on the company’s value

proposition to its customersproposition to its customers Deciding on the best channel design and Deciding on the best channel design and

network strategy for reaching the customersnetwork strategy for reaching the customers Developing operational excellence in sales forecasting, Developing operational excellence in sales forecasting,

warehouse management, transportation management, warehouse management, transportation management, and materials managementand materials management

Implementing the solution with the best information Implementing the solution with the best information systems, equipment, policies, and proceduressystems, equipment, policies, and procedures

Integrated logistics systems (ILS)Integrated logistics systems (ILS)

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Market Logistics Market-logistics ObjectivesMarket-logistics Objectives Market-logistics DecisionsMarket-logistics Decisions

Order ProcessingOrder Processing Order-to-payment cycleOrder-to-payment cycle

WarehousingWarehousing Storage warehousesStorage warehouses Distribution warehousesDistribution warehouses Automated warehousesAutomated warehouses

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InventoryInventory Inventory cost increases at an accelerating rate Inventory cost increases at an accelerating rate

as the customer service level approaches 100%as the customer service level approaches 100% Order (reorder) pointOrder (reorder) point Order-processing costsOrder-processing costs Inventory-carrying costsInventory-carrying costs Just-In-Time production (JIT)Just-In-Time production (JIT)

Market Logistics

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Figure 18.2: Determining Optimal Order Quantity

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Copyright © 2003 Prentice-Hall, Inc. 18-1 Chapter 18 Managing Retailing, Wholesaling, and Market Logistics by PowerPoint by Milton M. Pressley University