Lecture 8

Stephen Ginns --- 4nov09 --- Slide 1 of 35

Managing Retailing, Wholesaling, and Logistics

Marketing Management, European ed

Lecture 8

Place


Chapter Questions

• What major types of marketing intermediaries occupy this sector?

• What marketing decisions do these marketing intermediaries make?

• What are the major trends with marketing intermediaries?


Retailing

“Includes all the activities involved inselling goods or services directlyto final consumers for personal,

non-business use.”


Company-to-Consumer Channels

Company

Indirect Direct

Telephone Mail ElectronicPersonal Selling

Wholesaler/Distributor

Broker/Rep

Retailer or Dealer

Customer


Major Retailer Types

• Speciality store - Maplin

• Department store – John Lewis

• Supermarket - Sainsbury

• Convenience store - Londis

• Discount store - Aldi• Off-price retailer -

TKMaxx• Superstore – Tesco

Bar Hill• Catalogue showroom

- Argos


Levels of Retail Service

Self-service - they even get you to scan the barcodes on your purchases!

Self-selection

Limited service

Full service


Retail Positioning Map

TescoHarrod’s

AldiCarphone Warehouse


Indicators of Sales Effectiveness (KPIs)

• Number of people passing by location

• Percentage who enter store

• Percentage of those who enter who also buy

• Average amount spent per sale.


Trends in Retailing

• New retail forms and combinations- eg coffee bar in a bookshop

• Growth of intertype competition• Competition between store-based and non-store-

based retailing (eg the Internet)• Growth of giant retailers• Decline of middle market retailers – eg Woolworth, Debenhams, House of Fraser

• Growing investment in technology, Lean Thinking• Global presence of major retailers• Ebay and other Internet providers.


Nonstore Retailing

Direct

selling

Buying

service

Automatic

vending

Direct

marketing


Characteristics of Franchises

• The franchisor owns a trade or service mark and licenses it to franchisees in return for royalty payments

• The franchisee pays for the right to be part of the system

• The franchisor provides its franchisees with a system for doing business


Retailers’ Marketing Decisions

Target market

Product assortment

Procurement

Prices

Services


Retailers’ Marketing Decisions (cont.)

Store atmosphere

Store activities

Communications

Locations

Selfridge’s store in Birmingham


Selfridge’s store in Birmingham

Retailers’ Marketing Decisions (cont.)

General business districts

Regional shopping centres

Community shopping centers

Retail Parks

Community shopping centres

Retail Parks

Location within a larger store.


Wholesaling Functions

• Selling and promoting

• Buying and assortment building

• Bulk breaking• Warehousing

• Transportation• Financing• Risk bearing• Market information• Management

services and counseling


Major Wholesaler Types

Merchant

Full-service

Limited-service

Brokers and agents

Manufacturers

Specialized Nisa-Today’s warehouse - Scunthorpe


Logistics

“That part of the supply chain process that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements”

Information, Control, Integration


Market Logistics Planning

• Deciding on the company’s value proposition* to its customers

• Deciding on the best channel design and network strategy

• Developing operational excellence

• Implementing the solution

*Value Proposition = Total Product Concept = The Marketing Mix = The USP


Market Logistics

• Sales forecasting• Distribution scheduling• Production plans• Finished-goods

inventory decisions• Packaging

• In-plant warehousing• Shipping-room

processing• Outbound

transportation• Field warehousing• Customer delivery and

servicing


Logistics Objectives Attain market coverage

Deliver Customer

Service

Ensure Adherence to

Product Specifications

Cost-Containment

LOGISTICSLOGISTICS

SYSTEMSYSTEM

LOGISTICSLOGISTICS

SYSTEMSYSTEM

These four key factors are inter-related, and should not be viewed in isolation. Often compromises need to be reached – maybe the cost-containment aspects force us to compromise on lowering our standards of customer service.


Market Logistics Decisions

• How should orders be handled?

• Where should stock be located?

• How much stock should be held?

• How should goods be shipped?

Load-planning board – thanks to Rom Ltd


Logistics and Channel Management

Right C

ostRight ConditionsRig

ht Tim

e

Right Price

The Aim of Logistics:


Relational Logistics Model


The Five Logistics Mediators – 1 - Inventory Management

• Electronic Data Interchange (EDI)• Just-in-Time Manufacturing (JIT)• Quick-Response Logistics

Inventory -- often called stock -- is a tangible asset capable of being mined, converted or created. It is one of the largest investments in any logistics system.


The Five Logistics Mediators –2 - Transportation

• Product Decisions• Location decisions• Purchasing Decisions• Pricing Decisions


The Five Logistics Mediators –3 - Warehousing

• Movement• Materials Handling• Storage• Information Transfer


The Five Logistics Mediators – 4 - Purchasing

• Forecasting Materials Demand• Selection of suppliers – “sourcing”• Minimizing transaction and product costs• Maximizing transaction and product quality


The Five Logistics Mediators – 5 - Packaging

Containment

Protection

Apportionment

Unitization

Communication


LOGISTICS TRENDS

SAME TIME, SAME PLACE DISTRIBUTIONSAME TIME, SAME PLACE DISTRIBUTION Technology-driven reduction in waiting times between channel Technology-driven reduction in waiting times between channel

members.members.

BOUNDARYLESS DISTRIBUTIONBOUNDARYLESS DISTRIBUTIONMultiple market entry facilitated by coordinated logistics systems.Multiple market entry facilitated by coordinated logistics systems.

THIRD-PARTY LOGISTICSTHIRD-PARTY LOGISTICSChannel members are increasingly “outsourcing” logistics Channel members are increasingly “outsourcing” logistics

functions.functions.

STRATEGIC LOGISTICS PARTNERINGSTRATEGIC LOGISTICS PARTNERINGAlliances between channel members will become a mainstay of Alliances between channel members will become a mainstay of

competitive distribution advantagecompetitive distribution advantage..


Determining Optimal Order Quantity


Transportation Factors

• Speed• Frequency• Dependability• Capability• Availability• Traceability• Cost


Sources

Banks: see chart from Economist, 8nov08

Minerals and Mining: See USGS

Insurance: see ABI website


See website www.sginns.co.uk for links to each business segment


Stephen Ginns --- 4nov09 --- Slide 35 of 35The Thiepval Memorial, the Memorial to the Missing of the Somme

Documents

Lecture 8