1. Managing Retailing, Wholesaling, and Logistics
Chapter 16
Managing Retailing, Wholesaling, and Logistics

2. Discussion 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?
What does the future hold for private label brands?

3. Retailing
All the activities in selling goods or services directly to final consumers for personal, nonbusiness use.
Any organization selling to final consumers—whether it is a manufacturer, wholesaler, or retailer—is doing retailing. It doesn’t matter how the goods or services are sold (in person, by mail, telephone, vending machine, or on the Internet) or where (in a store, on the street, or in the consumer’s home).

4. Types of Retailers Limited Service Self-Service Full Service
Different formats of store retailers will have different competitive and price dynamics. Retailers position themselves as offering one of four levels of service:
Self-service—the cornerstone of all discount operations.
Self-selection—Customers find their own goods, although they can ask for assistance.
Limited service—carry more shopping goods and services such as credit and merchandise-return privileges. Customers need more information and assistance.
Full service—Salespeople are ready to assist in every phase of the “locate-compare-select” process. Customers who like to be waited on prefer this type of store.
Self-Selection

5. Major Types of Store Retailers
Specialty store
Narrow product line
Department store
Several product lines
Supermarket
Large, low-cost, low-margin, high-volume, self-service store designed to meet total needs for food and household products.
Convenience store
Small store in residential area, often open 24/7, limited line of high-turnover convenience products plus takeout. 7-Eleven, Circle K
Drug store
CVS, Walgreens
Discount store
Wal-Mart, K-Mart
Extreme value or hard-discount store
Aldi, Lidl, Family Dollar, Dollar General
Off-price retailer
Factory outlets, TJ Ma23, Costco
Superstore
Staples, Jewel-Osco, Carrefour
Catalog showroom
Inside Edge Ski and Bike
Specialty store: Narrow product line
Department store: Several product lines
Supermarket: Large, low-cost, low-margin, high-volume, self-service store designed to meet total needs for food and household products.
Convenience store: Small store in residential area, often open 24/7, limited line of high-turnover convenience products plus takeout.
Drug store: Prescription and pharmacies, health and beauty aids, other personal care, small durable, miscellaneous items.
Discount store: Standard or specialty merchandise; low-price, low-margin, high-volume stores.
Extreme Value or hard-discount store: A more restrictive merchandise mix than discount stores, but lower prices.
Off-price retailer: Leftover goods, overruns, irregular merchandise sold at less than retail.
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6. Major Types of Store Retailers
Drug store
CVS, Walgreens
Discount store
Wal-Mart, K-Mart
Extreme value or hard-discount store
Aldi, Lidl, Family Dollar, Dollar General
Off-price retailer
Factory outlets, TJ Ma23, Costco
Superstore
Staples, Jewel-Osco, Carrefour
Catalog showroom
Inside Edge Ski and Bike
Drug store: Prescription and pharmacies, health and beauty aids, other personal care, small durable, miscellaneous items.
Discount store: Standard or specialty merchandise; low-price, low-margin, high-volume stores.
Extreme Value or hard-discount store: A more restrictive merchandise mix than discount stores, but lower prices.
Off-price retailer: Leftover goods, overruns, irregular merchandise sold at less than retail.
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7. Nonstore Retailing Automatic Vending Direct Selling Direct Marketing
The major types of nonstore retailing are direct selling (one-to-one selling, one-to-many party selling, and multilevel network marketing), direct marketing (which includes ecommerce and Internet retailing), automatic vending, and buying services (serving employees of large organizations)
Buying Service

8. Franchising Franchisee Pays: Royalty Payments Start-up / Licensing Fee
In a franchising system, individual franchisees are a tightly knit group of enterprises whose systematic operations are planned, directed, and controlled by the operation’s innovator, called a franchisor. Franchises are distinguished by three characteristics:
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. Start-up costs include rental and lease equipment and fixtures, and usually a regular license fee. McDonald’s franchisees may invest as much as $1.6 million in total start-up costs and fees. The franchisee then pays McDonald’s a certain percentage of sales plus a monthly rent.
The franchisor provides its franchisees with a system for doing business. McDonald’s requires franchisees to attend “Hamburger University” in Oak Brook, Illinois, for two weeks to learn how to manage the business. Franchisees must follow certain procedures in buying materials.
Franchisee Receives:
Well-known brand name
Developed system

9. New Retail Environment
Store / Non-store Competition
Global Retailers
The retail environment has changed considerably in recent years, as new retail forms have emerged, intertype and store-based versus nonstore-based competition has increased, the rise of giant retailers has been matched by the decline of middle-market retailers, investment in technology and global expansion has grown, and shopper marketing inside stores has become a priority.
New Retail Forms
Giant Retailers

10. Marketing Decisions Target Market Prices Channels
Like all marketers, retailers must prepare marketing plans that include decisions on target markets, channels, product assortment and procurement, prices, services, store atmosphere, store activities and experiences, communications, and location.
Prices

11. Marketing Decisions Communications Atmosphere Product Assortment
Location

12. Wholesaling
All the activities in selling goods and services to those who buy for resale or business use.

13. Types of Wholesalers Merchant wholesalers
Take title to merchandise; Full-service and limited-service jobbers and distributors
Full-service wholesalers
Carry stock, maintain a sales force, offer credit, make deliveries, and provide management assistance.
Limited-service wholesalers
Limited line of fast-moving goods. Truck wholesalers, drop shippers, rack jobbers, mail-order wholesalers
Brokers and agents
Facilitate buying and selling; earn 2% - 6% commission on selling price.
Specialized wholesalers
Agricultural assemblers, petroleum bulk plants, and actions companies.

14. Buying and assortment building
Wholesaler Functions
Selling and Promoting
Warehousing
Wholesalers are more efficient in performing the following functions:
Selling and promoting: help manufacturers reach many small business customers at a relatively low cost.
Buying and assortment building: select items and build the assortments their customers need.
Bulk breaking: achieve savings for their customers by buying large carload lots and breaking the bulk into smaller units.
Warehousing: reduce inventory costs and risks to suppliers and customers
Transportation
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Bulk breaking
Buying and assortment building

15. Market Logistics Supply Chain Management
Supply chain management (SCM) is a broad perspective that looks at how the company’s suppliers obtain their input. SCM starts before physical distribution and means strategically procuring the right inputs (raw materials, components, and capital equipment); converting them efficiently into finished products; and dispatching them to the final destinations.
Market logistics includes planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use, to meet customer requirements at a profit.

16. Market-Logistics Decisions
Order Processing
Warehouse Locations
The firm must make four major decisions about its market logistics: (1) How should we handle orders (order processing)? (2) Where should we locate our stock (warehousing)? (3) How much stock should we hold (inventory)? and (4) How should we ship goods (transportation)?
Inventory Levels
Transportation Mode