Marketing: An Introduction: Fourteenth Edition

Marketing: An Introduction
Fourteenth Edition
Chapter 11
Deliver the Goods:
Determine the
Distribution Strategy
Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved
Objectives Outline (1 of 2)
11.1 Explain the role of retailers in the distribution channel
and describe the major types of retailers.
11.2 Discuss how retailers are using omni-channel retailing
to meet the cross-channel shopping behavior of today’s
digitally connected consumers.
11.3 Describe the major retailer marketing decisions.
11.4 Discuss the major trends and developments in retailing.
11.5 Explain the major types of wholesalers and their
marketing decisions.
First Stop: Walmart The World’s
Largest Retailer—the World’s Largest
Company
“Save money. Live better.”

Says Walmart’s CEO,
“We’re obsessed with
delivering value to
customers.”
Objective Outline 11-1
Explain the role of retailers in the distribution channel and
describe the major types of retailers.
Retailing: Connecting Brands with
Consumers
• Activities involved in selling goods or services directly to
consumers for their personal use
– Retailer: Business whose sales come primarily from
retailing
The Shifting Retailing Model
• Shopper marketing: Focusing the entire marketing
process toward turning shoppers into buyers as they
approach the point of sale
• Omni-channel retailing: Creating a seam-less cross-
channel buying experience that integrates in-store, online,
and mobile shopping
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
Amount of Service
Self-service retailers
• Serve customers who are willing to perform their own
locate-compare-select process
Limited-service retailers
• Carry more shopping goods about which customers need
information
• Provide more sales assistance
Full-service retailers
• Carry more specialty goods
• Assist customers in every phase of the shopping process
Major Store Retailer Types (1 of 2)
Type Description Examples
Specialty A store that carries a narrow product line with a deep assortment, such as REI, Sunglass Hut, Sephora,
store apparel stores, sporting-goods stores, furniture stores, florists, and Williams-Sonoma
bookstores.
Department A store that carries several product lines—typically clothing, home Macy’s, Sears, Neiman
store furnishings, and household goods—with each line operated as a separate Marcus
department managed by specialist buyers or merchandisers..
Supermarket A relatively large, low-cost, low-margin, high-volume, self-service operation Kroger, Publix, Safeway,
designed to serve the consumer’s total needs for grocery and household SuperValu.
products.
Convenience A relatively small store located near residential areas, open 24/7, and 7-Eleven, Circle K, Speedway,
store carrying a limited line of high-turnover convenience products at slightly higher Sheetz
prices.
Superstore A very large store that meets consumers’ total needs for routinely purchased Walmart Supercenter,
food and nonfood items. This includes supercenters, combined supermarket SuperTarget, Meijer (discount
and discount stores, and category killers, which carry a deep assortment in a stores); Best Buy, Petco,
particular category. Staples, Bed Bath & Beyond
(category killers)
Discount store A store that carries standard merchandise sold at lower prices with lower Walmart, Target, Kohl’s
margins and higher volumes.
Off-price A store that sells merchandise bought at less-than-regular wholesale prices Mikasa (factory outlet); TJ
retailer and sold at less than retail. These include factory outlets owned and operated Maxx (independent off-price
by manufacturers; independent off-price retailers owned and run by retailer); Costco, Sam’s Club,
entrepreneurs or by divisions of larger retail corporations; and warehouse (or BJ’s (warehouse clubs).
wholesale) clubs selling a limited selection of goods at deep discounts to
consumers who pay membership fees.
Major Store Retailer Types (2 of 2)
Discounter Dollar
General is the nation’s
largest small-box
discount retailer.
Major Types of Retail Organizations
Type Description Examples
Corporate Two or more outlets that are commonly owned and Macy’s (department
chain controlled. Corporate chains appear in all types of stores), Target
retailing but they are strongest in department stores, (discount stores),
discount stores, food stores, drugstores, and Kroger (grocery
restaurants. stores), CVS
(drugstores)
Voluntary Wholesaler-sponsored group of independent retailers Independent Grocers

chain engaged in group buying and merchandising. Alliance (IGA),
Western Auto (auto
supply), True Value
(hardware)
Retailer Group of independent retailers who jointly establish a Associated Grocers

cooperative central buying organization and conduct joint promotion (groceries), Ace
efforts. Hardware (hardware)
Franchise Contractual association between a franchisor (a McDonald’s, Subway,

organization manufacturer, wholesaler, or service organization) and Pizza Hut, Jiffy Lube,
franchisees (independent businesspeople who buy the Meineke Mufflers, 7-
right to own and operate one or more units in the Eleven
franchise system).
Objective Outline 11-1 Summary
• Retailing—selling goods or services directly to final
consumers
• Shopper marketing—turning shoppers into buyers
• Omni-channel retailing—integrates in-store, online, and
mobile shopping
• Retailers classified by amount of service, product line sold,
and relative prices
• Corporate and contractual retail organizations
Discuss how retailers are using omni-channel retailing to
meet the cross-channel shopping behavior of today’s digitally
connected consumers.
Omni-Channel Retailing: Blending In-
Store, Online, Mobile, and Social
Media Channels (1 of 2)
• In this age of websites, smartphones, mobile apps, social
media, and other things digital—shopping typically involves
a dazzling array of channels and platforms.
• Omni-channel consumers readily research products and
prices online, shopping digitally from home, from work, in
stores, or anywhere in between.
• The boundaries between in-store and online retailing are
rapidly blurring.
Omni-Channel Retailing: Blending In-
Store, Online, Mobile, and Social
Media Channels (2 of 2)
Athletic footwear and apparel giant Foot Locker has
mastered omni-channel retailing.
Describe the major retailer marketing decisions.
Figure 11.1 Retailer Marketing
Strategies
Segmentation, Targeting,
Differentiation, and Positioning
Decisions (1 of 2)
• Target markets must be segmented and defined.
• Retailers then decide how to differentiate and position
themselves in those markets.
Segmentation, Targeting, Differentiation,
and Positioning Decisions (2 of 2)
Furnishings retailer
Restoration Hardware has
unleashed a new
generation of furniture
where you don’t just see
the furnishings, you
experience them.
Product Assortment and Services
Decision
• Retailers must determine three product variables.
– Product assortment
– Services mix
– Store atmosphere
Price Decision
• Price policy must fit the retailers’
– Target market and positioning
– Product and service assortment
– Competition
– Economic factors
• Retailers practice either
– Everyday low pricing (EDLP)
– High-low pricing
Promotion Decision
• Retailers use various combinations of the five promotion
tools:
– Advertising
– Personal selling
– Sales promotion
– Public relations (PR)
– Direct and social media marketing
Place Decision
• Locations should be accessible to the target market in
areas that are consistent with the retailer’s positioning.
• Shopping center: Group of retail businesses built on a
site that is planned, developed, owned, and managed as a
unit
Types of Shopping Centers
• Regional shopping center
• Community shopping center
• Neighborhood shopping center
• Power center
• Lifestyle center
• Major retailer marketing decisions
– Segmentation and targeting
– Store differentiation and positioning
• Retail marketing mix decisions
– Product and services assortment
– Price, promotion, and place
Discuss the major trends and developments in retailing.
Retailing Trends and Developments
(1 of 4)
• 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
(2 of 4)
• 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
(3 of 4)
• Growing importance of retail technology
– Produce better forecasts
– Control inventory costs
– Interact digitally with suppliers
– Send information between stores
– Sell to customers within stores
(4 of 4)
• 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
• Major trends and developments in retailing
– New economic realities---thrift-minded consumers
– New retail forms and retail convergence
– Rise of mega retailers
– Growth of direct, online, mobile, and social media
retailing and retail technology
– Green retailing and global expansion of major retailers
Explain the major types of wholesalers and their marketing
decisions.
Wholesaling (1 of 2)
• 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
Wholesaling (2 of 2)
Many of the nation’s largest and most important wholesalers
—like Grainger—are largely unknown to final consumers.
Channel Functions Performed by
Wholesalers
• Selling and promoting
• Buying and assortment building
• Bulk breaking
• Warehousing
• Transportation
• Financing
• Risk bearing
• Market information
• Management services and advice
Table 11.3 Major Types of Wholesaler
(1 of 3)
Type Description
Merchant Independently owned businesses that take title to all merchandise handled. There are full-service Wholesalers
wholesalers and limited-service wholesalers.
Full-service Provide a full line of services: carrying stock, maintaining a sales force, offering credit, making deliveries, and providing
wholesalers management assistance. Full-service wholesalers include wholesale merchants and Industrial distributors.
Wholesale Sell primarily to retailers and provide a full range of services. General merchandise wholesalers carry several
merchants merchandise lines, whereas general line wholesalers carry one or two lines in great depth. Specialty wholesalers
specialize in carrying only part of a line.
Industrial Sell to manufacturers rather than to retailers. Provide several services, such as carrying stock, offering credit, and
distributors providing delivery. May carry a broad range of merchandise, a general line, or a specialty line.
Limited-service Offer fewer services than full-service wholesalers. Limited-service wholesalers are of several types:
wholesalers
Cash-and-carry Carry a limited line of fast-moving goods and sell to small retailers for cash. Normally do not deliver..
wholesalers
Truck wholesalers Perform primarily a selling and delivery function. Carry a limited line of semiperishable merchandise (such as milk, bread,
(or truck jobbers) snack foods), which is sold for cash as deliveries are made to supermarkets, small groceries, hospitals, restaurants,
factory cafeterias, and hotels.
Drop shippers Do not carry inventory or handle the product. On receiving an order, drop shippers select a manufacturer, who then ships
the merchandise directly to the customer. Drop shippers operate in bulk industries, such as coal, lumber, and heavy
equipment.
Rack jobbers Serve grocery and drug retailers, mostly in nonfood items. Rack jobbers send delivery trucks to stores, where the
delivery people set up toys, paperbacks, hardware items, health and beauty aids, or other items. Rack Jobbers price the
goods, keep them fresh, set up point-of-purchase displays, and keep inventory records.
Producers’ Farmer-owned members that assemble farm produce for sale in local markets. Producers’ cooperatives Often attempt to
cooperatives improve product quality and promote a co-op brand name, such as Sun-Maid raisins, Sunkist oranges, or Diamond nuts.
Mail-order or web Send catalogs to or maintain websites for retail, industrial, and institutional customers featuring jewelry,
wholesalers cosmetics, specialty foods, and other small items. Its primary customers are businesses in small outlying areas.
(2 of 3)
Do not take title to goods. The main function is to facilitate buying and
Brokers and
agents selling, for which they earn a commission on the selling price.
Generally specialize by product line or customer type.
Brokers Bring buyers and sellers together and assist in negotiation. Brokers are paid
by the party who hired the broker and do not carry inventory, get involved in
financing, or assume risk. Examples include food brokers, real estate
brokers, insurance brokers, and security brokers.
Agents Represent either buyers or sellers on a more permanent basis than brokers
do. There are four types:
Manufacturers’ Represent two or more manufacturers of complementary lines. Often used in
agents such lines as apparel, furniture, and electrical goods. A manufacturer’s agent
is hired by small manufacturers who cannot afford their own field sales
forces and by large manufacturers who use agents to open new territories or
cover territories that cannot support full-time salespeople.
Selling agents Have contractual authority to sell a manufacturer’s entire output. The selling
agent serves as a sales department and has significant influence over
prices, terms, and conditions of sale. Found in product areas such as
textiles, industrial machinery and equipment, coal and coke, chemicals, and
metals.
(3 of 3)
Type Description
Purchasing agents Generally have a long-term relationship with buyers and make purchases for
them, often receiving, inspecting, warehousing, and shipping the merchandise
to buyers. Purchasing agents help clients obtain the best goods and prices
available.
Commission Take physical possession of products and negotiate sales. Used most often in
merchants agricultural marketing by farmers who do not want to sell their own output.
Take a truckload of commodities to a central market, sell it for the best price,
deduct a commission and expenses, and remit the balance to the producers.
Manufacturers’ Wholesaling operations conducted by sellers or buyers themselves
and retailers’ rather than operating through independent wholesalers. Separate
branches and branches and offices can be dedicated to either sales or purchasing.
offices
Sales branches and Set up by manufacturers to improve inventory control, selling, and promotion.
offices Sales branches carry inventory and are found in industries such as lumber and
automotive equipment and parts. Sales offices do not carry inventory and are
most prominent in the dry goods and notions industries.
Purchasing offices Perform a role similar to that of brokers or agents but are part of the buyer’s
organization. Many retailers set up purchasing offices in major market centers,
such as New York and Chicago.
Figure 11.2 Wholesaler Marketing
Strategies
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
• Wholesaling—selling goods or services to those buying
for the purpose of resale or business use
• Wholesalers fall into three groups:
– Merchant wholesalers
– Brokers and agents
– Manufacturers’ and retailers’ branches and offices
Objectives Outline (2 of 2)
11.1 Explain the role of retailers in the distribution channel
and describe the major types of retailers.
11.2 Discuss how retailers are using omni-channel retailing
to meet the cross-channel shopping behavior of today’s
digitally connected consumers
11.3 Describe the major retailer marketing decisions.
11.4 Discuss the major trends and developments in retailing.
11.5 Explain the major types of wholesalers and their
marketing decisions.
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Marketing: An Introduction

“Save money. Live better.”

Voluntary Wholesaler-sponsored group of independent retailers Independent Grocers

Retailer Group of independent retailers who jointly establish a Associated Grocers

Franchise Contractual association between a franchisor (a McDonald’s, Subway,

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