Learning Objectives

Explain the role of retailers in the

distribution channel and describe the

major types of retailers.
Describe the major retailer marketing
decisions.
Discuss the major trends and
developments in retailing.
Explain the major types of wholesalers
and their marketing decisions.
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First Stop: Walmart: The Worlds

Largest Retailer
Dedicated to long-time, low-price
value proposition and what it means
to the customers
Lowest cost structure in the industry
Faced difficulty to maintain its
growth rates
Solution - Pushed into new, fastergrowing product and service lines
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Retailing
Activities involved in selling goods or
services directly to consumers for their
personal use
Retailer: Business whose sales come
primarily from retailing

Shopper marketing: Using in-store

promotions and advertising to extend
brand equity to the last mile
Encourages favorable point-of-purchase
decisions
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Types of Retailers
Retailer classification can be based
on:

Amount of service offered

Breadth and depth of the product lines
Relative prices charged
Way they are organized

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Levels of Service

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Major Store Retailer Types

Type
Specialty
store

Type description
Carries a narrow product line with a deep
assortment

Department Carries several product lines

store
Each line is operated as a separate department
Supermarke Large, low-cost, low-margin, high-volume, selft
service operation
Convenienc Carries a limited line of high-turnover convenience
e store
products at slightly higher prices
Discount
store

Sells goods at lower prices with lower margins and

higher volumes

Off-price
retailer

Sells merchandise bought at less-than-regular

wholesale prices and sold at less than retail

Superstore

Very large store for routinely purchased items 11 - 7

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Major Types of
Retail Organizations
Type

Description

Corporate chain

Two or more outlets that are commonly

owned and controlled

Voluntary chain

Independent retailers engaged in group

buying and merchandising
Sponsored by wholesaler

Retailer
cooperative

Group of independent retailers who

jointly establish a central buying
organization and conduct joint promotion
efforts

Franchise
organization

Contractual association between a

franchisor and franchisees
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Figure 11.1 - Retailer

Marketing Strategies

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Segmentation, Targeting,
Differentiation, and Positioning
Decisions

Target markets must be segmented

and defined.
Retailers then decide how to
differentiate and position
themselves in those markets.

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Product Assortment and

Services Decision
Retailers must determine three
product variables.
Product assortment - Offer merchandise
that is carried by no other competitor
Services mix Offer unique services
Store atmosphere Create a unique
store experience, such as with
experiential retailing

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Price Decision
Price policy must fit the retailers

Target market and positioning

Product and service assortment
Competition
Economic factors

Retailers seek either

Everyday low pricing (EDLP), or
High-low pricing
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Promotion Decision
Retailers use many promotional
tools

Advertising
Personal selling
Sales promotion
Public relations (PR)
Direct marketing

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Place Decision
Locations should be accessible to
the target market in areas that are
consistent with the retailers
positioning.
Shopping center: Group of retail
businesses built on a site that is
planned, developed, owned, and
managed as a unit
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Types of Shopping Centers

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Retailing Trends
and Developments
Tighter consumer spending
Impact of the Great Recession on
consumers
Changed spending patterns

Impact of the Great Recession on retailers

Cost-cutting, price promotions, bankruptcy
New value pitches in positioning

New retail forms, shortening retail life

cycles, and retail convergence
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Retailing Trends
and Developments
Rise of megaretailers
Offer better merchandise selections, good
service, and strong price savings to
consumers
Have shifted the balance of power between
retailers and producers

Growth of direct, online, mobile, and

social media retailing
Availability of a variety of nonstore
alternatives
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Retailing Trends
and Developments
Showrooming: Checking out
merchandise and prices in a retail
showroom but buying from an
online-only rival
Sometimes occurs in the store

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Retailing Trends
and Developments
Growing importance of retail
technology

Produce better forecasts

Control inventory costs
Interact electronically with suppliers
Send information between stores
Sell to customers within stores

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Retailing Trends
and Developments
Green retailing
Promoting more environmentally
responsible products
Launching programs to help customers
be more responsible
Working with channel partners to
reduce their environmental impact

Global expansion of major retailers

Escaping saturated home markets
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Wholesaling
Involves all the
activities in selling
goods and services
to those buying for
resale or business
use
Wholesaler: A firm
engaged primarily in
wholesaling activities

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Channel Functions
Performed
by Wholesalers

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Types of Wholesalers
Type

Description

Merchant
wholesalers

Independently owned wholesale business

that takes title to the merchandise it
handles
Full-service wholesalers provide a full
set of services.
Limited-service wholesalers offer fewer
services to their suppliers and
customers.

Broker

Does not take title to goods

Functions
Bringing buyers and sellers together
Assisting in negotiation
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Types of Wholesalers
Type

Description

Agents

Represent buyers or sellers on a

relatively permanent basis
Perform only a few functions
Do not take title to goods

Manufacture
rs and
retailers
branches
and offices

Wholesaling by sellers or buyers

themselves rather than through
independent wholesalers

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Types of Full-Service
Wholesalers

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Types of
Limited-Service Wholesalers
Types

Description

Cash-and-carry
wholesalers

Carry a limited line of fast-moving

goods
Sell to small retailers for cash

Truck wholesalers

Perform primarily a selling and

delivery function

Drop shippers

Do not carry inventory or handle the

product

Rack jobbers

Producers
cooperatives

Price the goods

Keep goods fresh
Set up point-of-purchase displays
Keep inventory records

Farmer-owned members
Assemble farm produce for sale in
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2015 Pearson
Education, Inc.
local
markets

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Types of Agents

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Types of Manufacturers and

Retailers Branches and Offices
Sales branches and offices
Set up by manufacturers to improve
inventory control, selling, and promotion
Sales branches carry inventory.
Sales offices do not carry inventory.

Purchasing offices
Role similar to that of brokers or agents
Part of the buyers organization

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Figure 11.2 - Wholesaler

Marketing Strategies

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Trends in Wholesaling
Need for greater efficiency
Demands for lower prices
Sorting out suppliers who are not
adding value based on cost and quality
Blurring distinction between large
retailers and wholesalers
Increased use of technology to contain
costs and boost productivity
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Learning Objectives
Explain the role of retailers in the
distribution channel and describe the
major types of retailers.

Describe the major retailer marketing

decisions.

Discuss the major trends and

developments in retailing.

Explain the major types of wholesalers

and their marketing decisions.
Copyright 2015 Pearson Education, Inc.

11 - 31

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Copyright 2015 Pearson Education, Inc.