Marketing Management Chapter 19

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    SHH Kazmi, 2007

    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 and Retailing

    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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    Wholesaling and Retailing

    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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    Wholesaling and Retailing

    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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    Wholesaling and Retailing

    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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    Wholesaling and Retailing

    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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    Wholesaling and Retailing

    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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    Wholesaling and Retailing

    Functions of Retailers Arranging Assortment

    Breaking Bulk

    Holding Stock

    Channel ofCommunication

    Promotional Support

    Extending Services

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    Wholesaling and Retailing

    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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    Wholesaling and Retailing

    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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    Wholesaling and Retailing

    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.