Marketing Management Chapter 19

8/9/2019 Marketing Management Chapter 19

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Excel BooksMarketing Management Text and Cases,S H H Kazmi19-1

Wholesaling and Retailing

Marketing Management Text and Cases

Excel Books19-1

Wholesaling

and Retailing

19Chapter


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Wholesaling is concerned with the activities of individuals and establishments

that sell to retailers and other merchants, or to industrial, institutional, and

commercial users, but do not sell in large amounts to ultimate consumers.


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WholesalerFunctionsfor

Producers and

Customers

Functions for Producers Functions for Customers

Market Coverage. Product Availability.

Sales Contacts. Assortment Convenience.

Inventory Holding. Bulk-breaking.

OrderProcessing. Credit Facility and Finance.

Market Information. CustomerService.

CustomerSupport. Technical Support.


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Major Types of Wholesalers

1. merchant wholesaler,

2. agents and brokers, and

3. manufacturerssales branches andoffices.


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Merchant Wholesalers

These are independent businesses that take title to goods and assumerisks

associatedwithownership and generally buy andresellproducts to industrial

orretailcustomers.

They aredivided into twosubtypes:

full-service and

limited-servicewholesalers.


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Full-Service Merchant Wholesalers

General merchandisewholesalers

Industrialdistributors

Limitedline-wholesalers

Speciality-linewholesalers

Rack jobbers


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Limited-Service Merchant Wholesalers

Cash-and-carry

Truckwholesalers

Drop-shippers

Mail-orderwholesalers


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Agents and Brokers

Agents and brokersform thesecond majorcategory ofwholesalers.They

negotiatepurchase andspeedupsales but do not take title to merchandise.

They perform fewerservicesforproducers andworkon commission, generally

basedon product price.Agents represent buyersorsellerson an almostpermanent basis.Brokers areemployed torepresent buyersorsellers

temporarily.

Manufacturers Agents:

Asell

ing agent

Commission merchants

Export or import


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Manufacturers Sales Branches and OfficesManufacturersset up Sales branches andoffices to improveselling, promotion,

and inventory control.Sales branches carry inventory andprovidesupport

services to manufacturerssalesforce, particularly in areaswithconcentration

oflargecustomers andconsiderabledemand.Sales offices do not carryinventory andoperate muchlike agents and in addition to manufacturers

products may sellothercomplimentary productsproduced by otherfirms.


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RetailingA retaileris a business andcan be an individual, chain store, departmental

store, supermarket, speciality store, smalllocality shop,paan-bidikiosk, or

a serviceretaileretc., wholinks theproducers and thefinalconsumer.


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TheWheelofRetailing

Vulnerability phase Entry phase

Topheaviness

Conservatism

Declining ROI

Trading-upphase

Becomes

Lowprice

Low marginPoorfacilities

Lowstatus

Limitedproducts

Up-market location

Fashion orientation

Extended assortment

Higherprices

Elaboratefacilities

Exoticservices

Becomes


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Functions of Retailers Arranging Assortment

Breaking Bulk

Holding Stock

Channel ofCommunication

Promotional Support

Extending Services


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Major Types of Retail StoresVariousschemeshave been proposed tocategoriseretailers basedon (a)

numberofoutlets, (b) margin vs turnover, (c) location, and (d) size.

An independent store is a singleretailunit owned by an individual, partnership,

orcorporation. A retailchain store is a part ofa multipleretailoutlet business.


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1. General Merchandise RetailersGeneral merchandiseretailerscarry a variety ofproduct lines, withconsiderable

depth. Some majortypesof thesestores includesupermarkets and

hypermarkets, discount stores, anddepartment stores.

Supermarkets:A supermarket is a largeself-serviceretailstore that carriesa wide variety ofconsumerproductsunderoneroof, such ascompleteline

offoodproducts, laundry requirements, household maintenance items, and

OTCornon-prescription drugsetc.

DiscountStore: Thesestores areself-service, standard general

merch

and

ise

re

tailers

re

gul

arly

offering b

ran

dnam

ean

dpr

ivate

bran

dit

em

sat lowprices, earn lowermargins, andpushforhighsales turnover.

DepartmentStores:A department store islargeretailstoreorganised into

severaldepartments, offering a broad variety anddepthofproduct lines.


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2. Speciality Stores

Speciality storescarry a narrowproduct mix anddeepproduct lines.

Speciality Retail Stores

Off-Price Retailers

Category Killers

3. Shopping Malls

4. Retail Chains

5. Non-Store Retailing


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Target Market and Store Location

Identifying target market isessential todetermine allotheraspectsof

retailing decisions, such aslocation, merchandise mix, pricing, store

atmospherics, promotionalefforts, andlevelofservice. Location decision is

quitesignificant because it dictates the area ofcustomercoverage and it is

theleast flexiblestrategic issue.


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Merchandise Variety and Assortment

Merchandise variety generally means breadthofproduct lines and

assortment refers todifferent models in thesameordifferent brands in a

category.


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Store Image and Atmospherics

Thiswouldrequireproperlocation, consideration oftrafficcongestion, exterior

storefront appearance, display windows, andentranceetc.


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Services, Price, and PromotionService mix includespre-purchase, andpost-purchaseservices, such as

accepting customersorderson telephoneorby mail, advertising and

promotions, helpfulsalespersonnel, gift-wrapping, delivery, returns,

installations, extending credit, andrepairsetc.

Price is also a criticaldifferentiating factorand needs to becarefully

determined in relation to target customers, the natureofproduct mix, desired

levelofservice, andwhat kindofcompetition exists and anticipated.

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Marketing Management Chapter 19