Marketing Management

Part :

Place Chapter-16

Managing Retailing, Wholesaling,

and
Logistics

Marketing Manageme 1
MARKETING MANAGEMENT
12th edition

16
Managing Retailing,
Wholesaling, and
Logistics

Marketing Manageme 2
Kotler
nt Keller
 Chapter 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?

Marketing Manageme 3
 Retailing

Marketing Manageme 4
 Retailing
 Retailing includes all the activities involved in selling goods or
services directly to final consumers for personal, non-business
use.
 A Retailer or Retail Store is any business enterprise whose
sales volume comes primarily from retailing.

 Note : Any organization selling to final customers-whether it

is a manufacturer, wholesaler, or retailer-is doing retailing.

Marketing Manageme 5
 Types of Retailers

Convenience
Store

Catalogue Specialty
Showroom Store

Types
of
Retailers Department
Superstore
Store

Off-Price Discount
Retailer Store

Marketing Manageme 6
 Types of Retailers
 There are seven different types of Retailers.
i. Convenience Store (Small store in residential area, often
open 24/7, normally offers convenience goods; example : 7-
Eleven)
ii. Specialty Store (Narrow Product Line; example : The Body
Shop)
iii. Department Store (Several Product Lines; examples : Sears,
Nordstrom, JC Penney)
iv. Discount Store (Standard or specialty merchandise; low
price, low margin, high-volume stores; example : Wal-Mart)
v. Off-Price Retailer (Left-over goods, overruns, irregular
merchandise sold at less than retail; example : Factory
Outlets)

Marketing Manageme 7
 Types of Retailers
vi. Superstore (Huge selling space, food and household items,
plus services; examples : Category Killers (deep assortment
in one category, like Home Depot), Hypermarket (huge
stores that combine supermarket, discount and warehouse
retailing; like Carrefour)

vii. Catalogue Showroom (Broad selection of brand-name goods

sold by catalogue at discount)

Marketing Manageme 8
 Types of Retailers

7 Eleven-USA The Body Shop-UK

A Convenience Store Cosmetic Chain-Specialty Store

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 Types of Retailers

Nordstrom-USA JC-Penney-USA
An upscale Department Store A mid-range Department Store

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 Types of Retailers

Carrefour-France Home Depot-USA

A Hypermarket A Category Killer

Marketing Manageme 11
 Non-store Retailing

Direct
Selling

Non-store
Retailing

Automatic Direct
Vending Marketing

Marketing Manageme 12
 Non-store Retailing

 Although 97 percent of and services are sold through stores,

however Non-store Retailing has been growing much faster
than store retailing.
 Non-store retailing falls into three major categories.

1. Direct Selling
2. Direct Marketing
3. Automatic Vending

Marketing Manageme 13
 Non-store Retailing-Types
1. Direct Selling (It is the personal contact between a sales
person and a consumer away from a retail store; like door-to-
door selling)
2. Direct Marketing (Direct-Mail, Catalogue Marketing,
Telemarketing, Television Direct-Response Marketing, E-
Shopping)
3. Automatic Vending (It is the sale of products through a
machine with no personal contact between buyer and seller.
It is used for variety of merchandise, like for soft-drinks,
dandy, newspapers etc.)

Marketing Manageme 14
 Non-store Retailing

Vending Machines
A Non-store Retailing
Marketing Manageme 15
 Wheel-of-Retailing Concept
 The Wheel-of-Retailing hypothesis explains one reason that
new store types emerge.
 According to this concept, the conventional retail stores
typically increase their services and raise their prices to cover
the costs. These higher costs provide an opportunity for new
store forms to offer lower prices and less service.

Marketing Manageme 16
 Trends in Retailing
i. New Retail Forms and Combinations (Some supermarkets
now include bank branches, bookstores, coffee shops, gas
stations, and fitness clubs to their stores)

ii. Growth of Intertype Competition (Different types of stores-

discount stores, catalogue showrooms, department stores-all
compete for the same consumers by carrying the same type
of merchandise)

iii. Competition Between Store-based and Nonstore-based

Retailing

iv. Growth of Giant Retailers

Marketing Manageme 17
 Trends in Retailing
v. Decline of Middle Market Retailers

vi. Growing Investment in Technology (Like check-out scanning

systems, EDI, in-store television, store traffic radar systems
etc.)

vii. Global Presence of Major Retailers

Marketing Manageme 18
 Trends in Retailing

Check-Out Scanner at
In-Store Television
a grocery store

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 Private Labels vs National Brands
 Private Label Brand : It is the one developed by the middle-
men, like wholesaler or retailer etc. (e.g. Gourmet Milk,
Gourmet Ice-cream etc.)
 National Brand or Manufacturer’s Brand : It is the one
developed by the manufacturer of a product (e.g. Pepsi, Coke
etc.)
 Generics : These are unbranded, plainly packaged, less
expensive versions of common household products.

Marketing Manageme 20
 The Private Label Threat
 In the confrontation between manufacturers’ and private
label brands, the retailers have many advantages.
 Because shelf-space is scarce, many supermarkets now
charge a ‘Slotting Fee’ for accepting a new national brand.
 Retailers also charge for special display space and in-store
advertising space.
 Retailers typically give more prominent display to their own
brands and make sure they are well-stocked.
 The consumers have become more price sensitive, therefore
they are attracted towards relatively cheaper private labels.

Marketing Manageme 21
 The Private Label Threat

The retailers ask for slotting fee for

allocating their scarce shelf-space to
National Brand manufacturers

Marketing Manageme 22
 Wholesaling

Marketing Manageme 23
 Wholesaling

 Wholesaling includes all the activities involved in selling

goods or services directly to those who buy for resale or
business use.

Marketing Manageme 24
 Difference between Wholesalers and Retailers
 Wholesalers differ from retailers in a number of ways.
1. Wholesalers pay less attention to promotion, atmosphere,
and location because they deal with business customers
rather than final consumers.
2. Wholesale transactions are usually larger than retail
transactions.
3. Wholesalers cover a larger trade area than retailers.
4. The government deals with wholesalers and retailers
differently in-terms of legal regulations and taxes.

Marketing Manageme 25
 Types of Wholesalers

Merchant
Wholesalers

Specialized Full-Service
Wholesalers Wholesalers

Types
of
Wholesalers

Manufacturers’
Limited-Service
and Retailers’
Wholesalers
Branches and Offices

Brokers
and
Agents

Marketing Manageme 26
 Types of Wholesalers
1. Merchant Wholesalers (Independently owned, take title to the
merchandise they handle. They can provide full service or
limited service)
2. Full-Service Wholesalers (Provide full service like maintain sales
force, offer credit, make deliveries etc.)
3. Limited-Service Wholesalers (Provide limited service, like cash
and carry wholesalers sell FMCGs to small retailers for cash)
4. Brokers and Agents (Do not take title of goods. They facilitate
buying and selling on commission basis)
5. Manufacturers’ and Retailers’ Branches and Offices (Wholesaling
operations conducted by sellers (manufacturers) or buyers
(retailers) themselves rather than through independent
wholesalers)
6. Specialized Wholesalers (Auction Companies, Agricultural
Assemblers (they buy agricultural output of many farms))
Marketing Manageme 27
 Market Logistics

Marketing Manageme 28
 Market Logistics
 Physical Distribution : Physical Distribution starts at the
factory, in which managers choose a set of warehouses and
transportation carriers that will deliver the goods to final
destinations in the desired time or at the lowest total cost.
 Supply Chain Management (SCM) : Physical Distribution has
now been expanded into the broader concept of Supply Chain
Management (SCM). SCW starts before Physical Distribution,
it includes procuring right inputs from suppliers (inbound
logistics), production processes (operations), then dispatching
to the final destination to end consumers (outbound
logistics). (See Next Slide)
 The supply chain perspective can help a company identify
superior suppliers and distributors and help them improve
productivity, which ultimately brings down the company’s
cost.

Marketing Manageme 29
 Inbound and Outbound Logistics
 Inbound Logistics, referred to as physical supply, deals with
the logistical relationship between the firm and its suppliers.
It addresses the flow of materials from suppliers to the plant.

 Outbound Logistics, referred to as physical distribution, is the

logistical relationship between the firm and its customers. It
is the movement of finished goods out of the plant to the
final customer.

Marketing Manageme 30
 Activity

Marketing Manageme 31