Chapter 12 Notes: Retailers, Wholesalers, and Their Strategy Planning

Chapter 12 Notes RETAILERS, WHOLESALERS, AND THEIR STRATEGY PLANNING RETAILING--all of the activities involved in the sale of products to final consumers. PLANNING A RETAILER'S STRATEGY • Consumers have reasons for buying from particular retailers • Retailer’s whole offering is its Product • Features of offering relate to needs • Strategy requires carefully set policies • Consumer needs relate to segmentation and positioning • Different types of retailers emphasize different strategies CONVENTIONAL RETAILERS--TRY TO AVOID PRICE COMPETITION GENERAL STORES--early retailers who carried anything they could sell in reasonable volume. SINGLE-LINE STORES or LIMITED-LINE STORES--stores that specialize in certain lines of related products rather than a wide assortment. EXPAND ASSORTMENT AND SERVICE--TO COMPETE AT A HIGH PRICE SPECIALTY SHOP--a type of conventional limited-line store-usually small and with a distinct "personality." Specialty products DEPARTMENT STORES--larger stores that are organized into many separate departments and offer many product lines. MASS-MERCHANDISING CONCEPT--the idea that retailers should offer low prices to get faster turnover and greater sales volumes--by appealing to larger markets. SUPERMARKETS--large stores specializing in groceries with self-service and wide assortments. DISCOUNT HOUSES--stores that sell "hard goods" (cameras, TVs, appliances) at substantial price cuts--to customers who go to discounter's low-rent store, pay cash, and take care of any service or repair problems themselves. MASS-MERCHANDISERS--large, self-service stores with many departments that emphasize "soft goods" (housewares, clothing, and fabrics) and staples (like health and beauty aids) and selling on lower margins to get faster turnover. 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. • BIG BOX STORES—concentrate on one category of product CONVENIENCE (FOOD) STORES--a convenience-oriented variation of the conventional limited-line food stores. AUTOMATIC VENDING--selling and delivering products through vending machines. DOOR-TO-DOOR SELLING--going directly to the consumer's home. TELEPHONE AND DIRECT-MAIL RETAILING--allow consumers to shop at home--usually placing orders by mail or a toll-free long distance telephone call and charging the purchase to a credit card. RETAILING ON THE INTERNET • Moving information versus moving goods • Convenience takes on new meanings • More or less information at the same time • Lost in the "aisles" of the Internet • Delivery charges affect price • Competitive effects will influence other retailers WHY RETAILERS EVOLVE AND CHANGE WHEEL OF RETAILING THEORY--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. SCRAMBLED MERCHANDISING--retailers carrying any product lines they think they can sell profitably. RETAILER SIZE AND PROFITS • A few big retailers do most of the business CORPORATE CHAIN--a firm that owns and manages more than one store--and often it's many. COOPERATIVE CHAINS--retailer-sponsored groups--formed by independent retailers--to run their own buying organizations and conduct joint promotion efforts. VOLUNTARY CHAINS--wholesaler-sponsored groups that work with "independent" retailers. FRANCHISE OPERATION--a franchisor develops a good marketing strategy, and the retail franchise holders carry out the strategy in their own units. DIFFERENCES IN RETAILING IN DIFFERENT NATIONS • New ideas spread across countries • Mass-merchandising requires mass markets • Some countries block change WHOLESALING--the activities of those persons or establishments that sell to retailers, industrial, institutional, and commercial users, but who do not sell in large amounts to final consumers. WHOLESALERS--firms whose main function is providing wholesaling activities. • Producing profits, not chasing orders MANUFACTURERS' SALES BRANCHES--separate warehouses that producers set up away from their factories. MERCHANT WHOLESALERS--wholesalers who own (take title to) the products they sell. SERVICE WHOLESALERS--merchant wholesalers who provide all the wholesaling functions. GENERAL MERCHANDISE WHOLESALERS--service wholesalers who carry a wide variety of nonperishable items such as hardware, electrical supplies, furniture, drugs, cosmetics, and automobile equipment. SINGLE-LINE (OR GENERAL-LINE) WHOLESALERS-service wholesalers who carry a narrower line of merchandise than general merchandise wholesalers. SPECIALTY WHOLESALERS--service wholesalers who carry a very narrow range of products--and offer more information and service than other service wholesalers. LIMITED-FUNCTION WHOLESALERS--merchant wholesalers who provide only some wholesaling functions. CASH-AND-CARRY WHOLESALERS--like service wholesalers--except that the customer must pay cash. DROP-SHIPPERS--wholesalers who own (take title to) the products they sell--but do not actually handle, stock, or deliver them. TRUCK WHOLESALERS--wholesalers who specialize in delivering products that they stock in their own trucks. RACK JOBBERS--specialize in hard-to-handle assortments of products that a retailer doesn't want to manage--and they often display them on their own wire racks. CATALOG WHOLESALERS--sell out of catalogs that may be distributed widely to smaller industrial customers or retailers who might not be called on by other middlemen. AGENT MIDDLEMEN--wholesalers who do not own (take title to) the products they sell. MANUFACTURERS' AGENT--agent middleman who sells similar products for several noncompeting producers--for a commission on what is actually sold. EXPORT AGENTS--manufacturers' agents who specialize in export trade. IMPORT AGENTS--manufacturers' agents who specialize in import trade. BROKERS--agent middlemen who specialize in bringing buyers and sellers together. EXPORT OR IMPORT BROKERS--brokers who specialize in bringing together buyers and sellers from different countries. SELLING AGENTS--agent middlemen who take over the whole marketing job of producers--not just the selling function. 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--agent middlemen who provide a place where buyers and sellers can come together and complete a transaction. WHAT WILL HAPPEN TO RETAILERS AND WHOLESALERS IN THE FUTURE?