Retailing and Wholesaling

refers to all activities involved in selling goods and services directly to final consumers for their own
personal and non-business use.
Store Retailing
Most retailing activity is done through retail stores
They can be classified according to varied specifics.  They include amount of service, product line sold,
relative prices, control of outlets, and type of store cluster.
Amount of service

Self-service retailing
is the basis of all discount operations.
Limited-service retailers
provide more sales assistance to customers because they carry more shopping goods information is
needed.
Full-service retailing
assists customers in every phase of the shopping process

Product-line Sold
retailers can be classified by the length and breadth of their products assortment.
Specialty store
carries a narrow product line with deep variety within the product line.
Department store
carries a wide variety of product lines: clothing, shoes, home furnishings, and household goods.
Supermarkets
are large, low-cost, low-margin, high volume, self service stores that carry a wide variety of foods.

Convenience store
are small stores that carry limited product lines with high turnovers.
Relative Prices
retailers can also be classified with respect to the price they set for their products and services.
Discount store
sells standard merchandises at lower prices by accepting lower margins and selling higher volume.

Catalog showroom
sells a wide selection of high market and fast moving brand name goods at discount prices.

Control of Outlets
several forms of ownership include corporate chains, consumers cooperatives, franchising organizations
and merchandising conglomerates.
Corporate Chains
appear in all types of retailing – in supermarkets and discounts, variety, specialty, and department
stores
Ex. Puregold, South Supermarket, Mercury Drug Stores, National Bookstores

Franchise Organization
The main difference between a franchise and other contractual systems is that franchise systems are
normally based on some unique product or service; method of doing business; trade name, goodwill or
patent that the franchiser has developed.
Ex. Jollibee, McDonalds, Gas stations, ACA Video Sales Rentals, Pizza Hut, Shakeys, etc.

Merchandising Conglomerate
is also known as diversified retailing.
Ex. Ayala Group of Companies

Consumer cooperatives
residents of a community may start a consumer cooperative when they feel that local retailers are
charging high prices or are providing poor production and quality.

Type of Store Cluster

most stores today cluster together to increase the so-called customer pulling power.
Every large city and town has a central business district.
Ex. Alabang Town Center, Araneta Center, Ayala Center

Shopping center
can be classified by the number and type of stores they contain the nature of trade as they serve.
Regional shopping center
is larger and the most dramatic of the shopping centers. It is like a mini-downtown that contains from
40-100 stores. Hence customers are “pulled” from all over
Ex. SM City, Shangri-La Plaza, Harrison Plaza

Community shopping center

contains from 15 to 50 retail stores.
Neighborhood shopping center
contains from 5 to 15 stores that included a supermarket and services stores like a dry cleaner,
drugstores, barber and beauty shops, hardware stores, and many others

Non-store retailing
form of retailing where store outlets are not physically existent
Forms of retailing include the following:
Direct Marketing

is a form of non-stop retailing that uses various advertising media to interact directly with consumers.

Direct mail and catalog marketing

Television marketing - One form of this kind of marketing is the home shopping channels

Direct Selling

these are some customers who prefer more personal service and attention.
Other door-to-door retailers are Tupperware and AVON

Retailing Marketing Decision

Target Market Decision
In this type of retail marketing decisions, the retailers should be able to define its target market and
decide how it would be positioned.

Price Decision
Every company would like to have profits. What some retailers do is charge a high mark-up and would
expect to achieve high volume.
Promotion Decision
In order for the retailers products and services be known to consumers, promote tools like advertising,
personal selling, sales promotion and publicity should be utilized.

Place Decision
In a business enterprise one of the most important factor is its location.
In the case of small retailers, they settle for whatever location they can afford. However for large
companies, they even hire experts to find them a location which will really bring in large profits
Wholesaling

includes all activities involved in selling goods and services to those buying for resale or business use.
Difference between Wholesaler and Retailer
They deal with mostly with business customers rather than final customers.
They usually cover larger trade areas and have larger transactions than retailers
They face different legal regulations and taxes
9 Channel Functions

Selling and promoting

Buying and assortment building
Bulk-breaking
Warehousing
Transportation
Financing
Risk bearing
Management information
Management service and advice
Types of Wholesalers

Merchant Wholesalers

are independently owned and operated organizations that acquire title ownership of the goods that
they handle.

Full-service Wholesalers

usually handle larger sales volumes; they may perform a broad range of services for their customers,
such as stocking inventories, operating warehouses, and supplying credit.
Wholesale Merchants - who sell mostly to retailers and provide a full range of services.
Industrial Distributors - who sell to the producers rather than retailers.
Limited-service Wholesalers

offer fewer services to their customers and suppliers, emerged in order to reduce the costs of service.
Cash-and-carry wholesalers- it has a limited line of fast-moving goods, sells for cash, and normally does
not deliver.
Truck jobbers - perform both selling and delivery function.
Rack jobbers- they conduct activities like pricing of the goods, keeping them arranged, and keeping
inventory records.

Brokers and Agents

Brokers - are individuals who bring buyers and sellers together and assist them in negotiating and
closing sales.
Agents - are engaged in presenting buyers and sellers on more permanent basis.
Classifications of Agents

Manufacturer's agents - represent two or more manufacturers of related lines.

Selling agents - are contracted to sell a producer's entire output.
Purchasing agents - make purchasers for buyers and often receive, inspect, warehouse, and ship goods
to buyers.
Commission merchants - take physical possession of products and negotiate sales.

Manufacturers' Sales Branches and Offices

manufacturers often set up their own sales branches and offices to improve inventory control, selling,
and promotion rather than through independent wholesalers.

Wholesalers marketing decisions

Target Market Decision

target market is chosen by its size of customer, type of customer, and need for service.
Product Assortment and Service Decision
Wholesalers carry a full-line of products and stock enough for immediate delivery. Since this puts a lot of
pressure on them, they try to cut down on the lines they carry. As much as possible, they carry out the
most profitable ones.

Pricing Decision
In the marking-up of goods, wholesalers usually use a standard percentage of about twenty percent.
When it comes to grocery wholesaling the average profit margin is less
Promotion Decision
Many wholesalers go for personal selling
In terms pf promotion, wholesalers usually undergo this procedure unplanned although they make use
of such tools like trade advertising, sales promotion, publicity, and personal selling
Place Decision
They usually go for low-rent, low-tax areas where just little money would be spent
Major channels of distribution

Produce-Consumer
Simplest channel of distribution with no middlemen involved
Producer-Retailer-Consumer
Many large retailers buy directly from manufacturers and agricultural producers

Producer-Wholesaler-Retailer-Consumer
Traditional channel for consumer goods. Small retailers and small manufacturers find this channel the
only economically feasible choice
Producer-Agent-Retailer-Consumer
Many producers prefer to use a manufacturer’s agent or broker, or some agent middlemen to reach the
retail market
Producer-Agent-Wholesaler-Retailer-Consumer
Producers often use agent middlemen, who in turn call on wholesalers to sell to small stores

Franchising
Is the means by which a company can expand its physical distribution network by selling or leasing for a
fee the company’s image, name, business knowledge, technology, and product
A franchise is a “complete business package”

Advantages of franchising

Revenues from the franchisee

This is the fixed amount for the initial or purchase rights and/or royalties that are paid regularly during
the life of the franchise
Fewer management-relate problems
The company is free from the daily operations of that branch or outlet. What would just be required
would be some form of supervision or inspection to assure constant quality of product or service

Franchising can be distinguished as follows:

Manufacturer-sponsored retailer franchise system

The manufacturer licenses dealers to sell its products; these dealers are independent businesses who
agree to meet various conditions of sales and service.
Ex. Car manufacturer
Manufacturer-sponsored wholesale franchise system
Exemplified in the soft drink industry, soft drink manufacturer licenses bottlers (wholesalers) in various
markets who buy its concentrate and then carbonate, bottle and sell it to retailers in markets
Service-firm sponsored retailer franchise system
Example of these are fast food outlets, hotels, and auto rental shops