chapter 13 Flashcards
retailing
includes all the activities in selling goods or services directly to final consumers for personal, nonbusiness use.
retailer/retail store
any business enterprise whose sales volume comes primarily from retailing.
types of retailers
- store retailers
- non-store retailers
- retail organisations
store retailers’ levels of service
- self-service
- self-selection
- limited service
- full service
self-selection
customers find their own goods, but they can ask for help.
limited service
carry more shopping goods and services such as credit and merchandise return privileges.
full service
salespeople are ready to assist in every phase of the ‘locate-compare-select’ process.
major types of store retailers
- specialty store (narrow product line)
- department store (several product lines)
- supermarket (self-service store)
- convenience store (limited line high-turnover convenience and takeout products)
- drug store
- discount store (low price, low margin, high volume)
- extreme value or hard-discount store (more restricted merchandise mix, even lower prices)
- off-price retailer (leftover goods, irregular merchandise. factory outlets are independent off-price retailers)
- superstore (category killer: deep assortment in one category or hypermarket: eg. carrefour)
- catalogue showroom (high-markup, fast-moving, brand-name goods)
non-store retailing categories
- direct marketing
- direct selling/multilevel selling/network marketing
- automatic vending
- buying service
direct marketing
including telemarketing, direct mail, catalog marketing, and online shopping.
direct selling/multilevel selling/network marketing
door-to-door selling or through at-home sales parties.
automatic vending
offers a variety of merchandise, including impulse goods such as soft drinks.
buying service
a store-less retailer serving a specific clientele - usually employees of large organisations - who are entitled to discounts in return for membership.
corporate retailing
to achieve economies of scale, greater purchasing power, wider brand recognition, and better-trained employees than independent stores can usually gain alone.
major types of corporate retail organisations
- corporate chain store
- voluntary chain
- retailer cooperative
- consumer cooperative
- franchise organisation
- merchandising conglomerate
voluntary chain
a wholesaler-sponsored group of independent retailers engaged in bulk buying and common merchandising.
retailer cooperative
independent retailers using a central buying organisation and joint promotion efforts.
consumer cooperative
a retail firm owned by its customers. members contribute money to open their own store, vote on its policies, elect a group to manage it, and receive dividends.
merchandising conglomerate
a corporation that combines several diversified retailing lines and forms under central ownership, with some integration of distribution and management.
corporate chain store
two or more outlets owned and controlled, employing central buying and merchandising, and selling similar lines of merchandise.
developments in the retail market
- net retail forms and combinations
- growth of giant retailers
- growth of intertype competition
- emergence of fast retailing
- decline of middle-market retailers
shopper marketing
the way manufacturers and retailers use stocking, displays, and promotions to influence customers for a product.
direct product profitability (DPP)
used by stores to measure a product’s handling costs (receiving, moving to storage, paperwork, selecting, checking, etc.) from the time it reaches the warehouse until a customer buys it in the retail store.
destination categories
may play a particularly important role because they have the greatest impact on where households choose to shop and how they view a particular retailer.
product differentiation strategy possibilities
- feature exclusive national brands not available at competing retailers
- mostly private-label merchandise
- blockbuster distinctive-merchandise events
- surprise or ever-changing merchandise
- the latest or newest merchandise first
- merchandise-customising services
- highly targeted assortment
private-label brand
a brand that retailers and wholesalers develop. recessions increase private-label sales, and once a customer switches to a private label, it does not always switch back.
generics
unbranded, plainly packaged, less expensive versions of common products such as spaghetti. they offer standard or lower quality at a price that may be 20 to 40 percent lower than nationally advertised brands and 10 to 20 percent lower than the retailer’s private-label brands.
“fighting” strategies against private labels
- investing in R&D to bring out new brands, line extensions, features, and quality improvements.
- investing in strong “pull” advertising programs to maintain high brand recognition and consumer preference to overcome the in-store marketing advantage private labels have.
- fighting selectively, partnering effectively, innovating, and creating winning value propositions.
wholesaling/distributors
includes all the activities in selling goods or services to those who buy for resale or business use.
major types of wholesalers
- merchant wholesalers
- full-service wholesalers
- limited-service wholesalers
- brokers and agents
- manufacturers’ and retailers’ branches and offices
- specialised wholesalers
merchant wholesalers
independently owned businesses that take title to the merchandise they handle. they are full-service and limited-service.
full-service wholesalers
carry stock, maintain a sales force, offer credit, make deliveries, and provide management assistance.
1. wholesale merchants: sell primarily to retailers.
2. industrial distributors: sell to manufacturers and also provide services such as credit and delivery.
limited-service wholesalers
- cash and carry wholesalers: sell a limited line of fast-moving goods to small retailers for cash.
- truck wholesalers: sell and deliver a limited line of semi-perishable goods to supermarkets, grocery stores, etc.
- drop shippers: serve bulk industries such as coal, lumber, and heavy equipment.
- rack jobbers: serve grocery retailers in nonfood items, setting up displays, etc.
- producers’ cooperatives: assemble farm produce to sell in local markets.
- mail-order wholesalers: send catalogs to retail, industrial, and institutional customers; orders are filled and sent by mail, rail, plane, or truck.
brokers and agents
facilitate buying and selling, working on commission; limited functions; generally specialise by product line or customer type.
1. brokers: bring buyers and sellers together and assist in negotiation, paid by the party hiring them.
2. agents: represent buyers or sellers on a more permanent basis (selling agents/purchase agents).
manufacturers’ and retailers’ branches and offices
wholesaling operations conducted by sellers or buyers themselves rather than through independent wholesalers. separate branches and offices are dedicated to sales or purchasing.
specialised wholesalers
agricultural assemblers, petroleum bulk plants and terminals, and auction companies.
wholesalers differ from retailers in a number of ways
- wholesalers pay less attention to promotion, atmosphere, and location because they are dealing with business customers rather than final customers.
- wholesale transactions are usually larger and cover a larger trade area.
- wholesalers and retailers are subject to different legal regulations and taxes.
wholesalers perform some functions more efficiently
- selling and promoting
- buying and assortment building
- bulk breaking
- warehousing
- transportation
- financing
- risk bearing
- market information
- management services and counselling
manufacturers’ major complaints against wholesalers
- they don’t aggressively promote the manufacturer’s product line
- don’t carry enough inventory so don’t fill customers’ orders fast enough
- don’t supply marketers with up-to-date market, customer, and competitive information
- don’t attract high-calibre managers to bring down costs
- they charge too much for their services
supply chain management (SCM)
starts before physical distribution and includes strategically procuring the right inputs, 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.
market logistics planning steps
there are four steps:
1. deciding on the company’s value proposition
2. selecting the best channel design and network strategy for reaching the customers
3. developing operational excellence in sales forecasting, warehouse management, transportation management, and materials management
4. implementing the solution with the best information systems, equipment, policies, and procedures
integrated logistics systems (ILS)
include materials management, material flow systems, and physical distribution aided by information technology.
decision-making on a total-system basis
a company has trade-offs, so managers must make decisions on total-system basis. steps:
1. study what customers want and what competitors offer
2. research the relative importance of these service outputs
3. consider the competitor’s service standards
4. establish some promise the firm makes to the market
major decisions about marketing logistics
- order processing
- warehousing
- inventory
- transportation
order-to-payment cycle
the time between an order’s receipt, delivery, and payment.
order/reorder point
the stock level at which management has to place a new order for inventory.
inventory-carrying costs
include storage charges, cost of capital, taxes and insurance, and depreciation and obsolescence.
order-processing costs
consists of setup costs and running costs (operating costs when the production is running) for the item.
containerisation
consists of putting the goods in boxes or trailers that are easy to transfer between two transportation modes.
piggyback
describes the use of rail and trucks
fishyback
water and trucks
trainship
water and rail
airtruck
air and trucks
private carrier
if the shipper owns its own truck or air fleet.
contract carrier
an independent organisation selling transportation services to others on a contract basis.
common carrier
provides services between predetermined points on a scheduled basis and is available to all shippers at standard rates.
