For use only with Perreault and McCarthy texts. © 2006 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin CHAPTER TWELVE CHAPTER TWELVE Retailers, Wholesalers, and Their Strategy Planning

1. Understand how retailers plan their marketing strategies. 2. Know about the many kinds of retailers that work with producers and wholesalers as members of channel systems. 3. Understand the differences among the conventional and nonconventional retailers— including Internet merchants and others who accept the mass-merchandising concept. 4. Understand scrambled merchandising and the “wheel of retailing.” © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin When we finish this lecture you should

5. See why size or belonging to a chain can be important to a retailer. 6. Know what progressive wholesalers are doing to modernize their operations and marketing strategies. 7. Know the various kinds of merchant wholesalers and agent middlemen and the strategies that they use. 8. Understand why retailing and wholesaling have developed in different ways in different countries. 9. See why the Internet is impacting both retailing and wholesaling. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin When we finish this lecture you should

Must Select Target Markets and Marketing Mixes Carefully Marketers Must Understand Retailer/ Wholesaler Evolution Must Select Target Markets and Marketing Mixes Carefully Marketers Must Understand Retailer/ Wholesaler Evolution Wholesalers and Retailers Plan Their Strategies © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Retailing Deals with Final Customers

Convenience Product Selection Fairness in Dealings Helpful Information Prices Social Image Convenience Product Selection Fairness in Dealings Helpful Information Prices Social Image Planning a Retailer’s Strategy © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Key Factors Affecting Consumers’ Retail Choice Shopping Atmosphere

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Conventional Retailers – Try to Avoid Price Competition Exhibit 12-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Expand Assortment & Service – To Compete at a High Price Exhibit 12-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Evolution of Mass-Merchandising Retailers Exhibit 12-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Some Retailers Focus on Added Convenience Exhibit 12-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Vending Machines Are Convenient +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Shop at Home in a Variety of Ways +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Interactive Exercise: Types of Retail Outlets

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Retailing on the Internet Exhibit 12-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Online vs. In-Store Shopping Exhibit

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Competitive Effects Influence Other Retailers

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Retailing Types Are Explained by Consumer Needs Filled +

Product Life Cycle Applies to Retailing Scrambled Merchandising = Higher Profits AND Scrambled Merchandising = Higher Profits Ethical Issues May Arise © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Why Retailers Evolve and Change The “Wheel of Retailing” Keeps on Rolling!

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Retailer Size and Profits Exhibit

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin An Example of a Large Retail Chain

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Big Chains Are Building Market Clout

New Ideas Spread Mass-Marketing Requires Mass Markets New Ideas Spread © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Differences in Retailing in Different Nations Some Countries Block Change

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin What Is a Wholesaler? Progressive Wholesalers Adapt Changing With the Times Producing Products, Not Chasing Orders Goodbye to Some? Ethical Issues? Goodbye to Some? Producing Products, Not Chasing Orders Ethical Issues? New Strategies Needed To Survive

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Wholesalers Add Value in Different Ways Exhibit 12-5

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Types of Wholesalers Exhibit 12-6

Types of Merchant Wholesalers Service Limited - Function Limited - Function © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin General merchandise Single line (or general- line) Specialty Cash and Carry Drop Shippers Truck Rack- Jobbers Catalog Types of Merchant Wholesalers

Manufacturer’s Agents Manufacturer’s Agents Brokers Selling Agents Brokers Manufacturer’s Agents Manufacturer’s Agents © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Agent Middlemen Are Strong on Selling Auction Companies Types of Agent Middlemen

New Web- Based Retailers Development of Specialized Intermediaries New Internet Applications Improved Logistics Efficiency Improved Logistics Efficiency Improved Logistics Efficiency Improved Logistics Efficiency What Will Happen to Retailers and Wholesalers in the Future? Increasing Competition Marketers and Consumers Can Expect © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Retailing General stores Single-line stores Limited-line stores Specialty shop Department stores Mass-merchandising concept Supermarkets Discount houses © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Key Terms Mass-merchandisers Supercenters Hypermarkets Convenience (food) stores Automatic vending Door-to-door selling Telephone and direct- mail retailing Wheel of retailing theory

Scrambled merchandising Corporate chain Cooperative chains Voluntary chains Franchise operation Wholesaling Wholesalers Manufacturers’ sales branches Merchant wholesalers © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Key Terms Service wholesalers General merchandise wholesalers Single-line (or general-line) wholesalers Specialty wholesalers Limited-function wholesalers Cash-and-carry wholesalers Drop-shippers

Truck wholesalers Rack jobbers Catalog wholesalers Agent middlemen Manufacturer’s agents Export agents Import agents Brokers Export brokers Import brokers Selling agents © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Key Terms Combination export manager Auction companies