978-0134492513 Chapter 13 Lecture Notes Part 2

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Promotion Decision

Retailers use any or all of the promotion tools—

advertising, personal selling, sales promotion, public

relations, and direct and social media marketing—to reach

consumers.

Place Decision

Retailers often point to three critical factors in retailing

success: location, location, and location!

It’s very important that retailers select locations that are

accessible to the target market in areas that are consistent

with the retailer’s positioning.

Location options include:

Central business districts were the main form of

retail cluster until the 1950s.

A shopping center is a group of retail businesses

planned, developed, owned, and managed as a unit.

Regional shopping centers, or regional

shopping malls, are the largest and most

dramatic shopping center. They contain from

50 to over 100 stores, including two or more

full-line department stores.

Community shopping centers contain between

15 and 50 retail stores. It normally contains a

branch of a department store or variety store, a

supermarket, specialty stores, professional

offices, and sometimes a bank.

Neighborhood shopping centers or strip malls

generally contain between 5 and 15 stores.

They are close and convenient for consumers.

Power centers are huge unenclosed shopping

centers consisting of a long strip of retail stores,

including large, freestanding anchors.

Lifestyle centers are smaller open-air malls with

upscale stores, convenient locations, and non-retail

activities such as dining and a movie theater.

The most recent lifestyle centers often consist of

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Photo: CVS

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Key Term:

Shopping center

mixed-use developments with ground-floor retail

establishments and apartment or condominiums

above.

Review Learning Objective 2: Describe the major retailer

marketing decisions.

Assignments, Resources

Use Discussion Question 13-2 here

Use Critical Thinking Exercise 13-6, 13-7 and 13-8

here

Use Critical Thinking Exercises 13-8 here

Use Marketing by the Numbers here

Use Marketing Ethics here

Use Additional Projects 1 and 2 here

Use Small Group Project 2 here

Use Individual Project 1 here

Use Outside Example 2 here

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Discuss the major trends and developments in retailing.

Retailing Trends and Developments

Retailers operate in a harsh and fast-changing environment,

which offers threats as well as opportunities. To be

successful, retailers need to choose target segments

carefully and position themselves strongly.

Tighter Consumer Spending

Following many years of good economic times for

retailers, the Great Recession turned many retailers’

fortunes from boom to bust. Even as the economy has

recovered, retailers will feel the effects of changed

consumer spending patters well into the future.

Beyond cost cutting and price promotions, many retailers

have also added new value pitches to their positioning.

Instead of relying on cost-cutting and price reductions,

retailers should focus on building greater customer value

within their long-term store positioning strategies.

New Retail Forms, Shortening Retail Life Cycles, and

Retail Convergence

New retail forms continue to emerge to meet new situations

and consumer needs, but the life cycle of new retail forms

Learning Objective

3

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Photo: TGI Friday’s

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Photo: Pop-up

Stores

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is getting shorter.

Many new types of retailing forms begin as low-margin,

low-price, and low-status operations. New retail forms are

always emerging. Recent forms include online retailing,

pop-up stores, and flash sales sites.

Retail convergence occurs when different types of retailers

now sell the same products at the same prices to the same

consumers. It means greater competition for retailers and

greater difficulty in differentiating the product assortments

of different types of retailers.

The Rise of Megaretailers

Megaretailers are shifting the balance of power between

retailers and producers. A small handful of retailers now

control access to enormous numbers of consumers, giving

them the upper hand in their dealings with manufacturers.

Growth of Direct, Online, Mobile, and Social Media

Retailing

Today, thanks to advanced technologies, easier-to-use and

enticing online sites and mobile apps, improved online

services, and increasing sophistication of search

technologies, online retailing is thriving. It currently

accounts for only about 8 percent of total U.S. retail sales,

but is growing at a much brisker pace than retail buying as

a whole. Last year’s U.S. online retail sales grew 14

percent over the previous year versus a 2.2 percent increase

in overall retail sales.

Showrooming occurs when shoppers check out

merchandise at stores but then buy it online. The flip side is

webrooming in which consumers first check out

merchandise online, then buy it in a store.

The Need for Omni-Channel Retailing

An increasing share of the growth in online sales will go to

omni-channel retailers—the marketers who can

successfully merge the virtual and physical worlds.

Growing Importance of Retail Technology

Many retailers now routinely use technologies such as

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Key Term:

Showrooming

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Photo:

Omni-channel

retailing; Foot

Locker

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touch-screen kiosks, customer-loyalty cards, electronic

shelf labels and signs, handheld shopping assistants, smart

cards, and self-scanning checkout systems. Beacon

technology and virtual reality are the newest technologies

retailers are experimenting with to enhance the in-store

shopping experience.

Green Retailing

Today’s retailers are increasingly adopting environmentally

sustainable practices.

They are greening up their stores and operations,

promoting more environmentally responsible products,

launching programs to help customers be more responsible,

and working with channel partners to reduce their

environmental impact.

Green retailing yields both top- and bottom-line benefits.

Global Expansion of Major Retailers

Retailers with unique formats and strong brand positioning

are increasingly moving into other countries.

Many are expanding internationally to escape mature and

saturated home markets. Most U.S retailers are still

significantly behind Europe and Asia when it comes to

global expansion. International retailing presents

challenges as well as opportunities.

Review Learning Objective 3: Discuss the major trends

and developments in retailing.

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Photo: Retail

Technology

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Photo: IKEA

Assignments, Resources

Use Online, Mobile, and Social Media Marketing

here

Use Real Marketing 13.2 here

Use Company Case here

Use Additional Project 3 here

Use Individual Project 2 here

Use Think-Pair-Share 3 and 4 here

Use Video Case here

Troubleshooting Tip

Non-store retailing should be familiar to students,

but perhaps not by this name. Many students may

not realize that they are visiting a retailer when they

buy their textbooks or download music from

Amazon.com or Apple’s iTunes.

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Explain the major types of wholesalers and their

marketing decisions.

WHOLESALING

Wholesaling includes all activities involved in selling

goods and services to those buying for resale or business

use.

Wholesalers are those firms engaged primarily in

wholesaling activities.

Wholesalers buy mostly from producers and sell mostly to

retailers, industrial consumers, and other wholesalers.

Wholesalers add value by performing one or more of the

following channel functions:

Selling and promoting: Wholesalers’ sales forces

help manufacturers reach many small customers at a

low cost.



Buying and assortment building: Wholesalers can

select items and build assortments needed by their

customers, thereby saving the consumers much

work.

Bulk-breaking: Wholesalers save their customers

money by buying in carload lots and breaking bulk

(breaking large lots into small quantities).

Warehousing: Wholesalers hold inventories, thereby

reducing the inventory costs and risks of suppliers

and customers.

Transportation: Wholesalers can provide quicker

delivery to buyers because they are closer than the

producers.

Financing: Wholesalers finance their customers by

giving credit, and they finance their suppliers by

ordering early and paying bills on time.

Risk bearing: Wholesalers absorb risk by taking

title and bearing the cost of theft, damage, spoilage,

Learning Objective

4

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Key Terms:

Wholesaling,

Wholesaler

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Photo: Grainger

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and obsolescence.

Market information: Wholesalers give information

to suppliers and customers about competitors, new

products, and price developments.

Management services and advice: Wholesalers

often help retailers train their salesclerks, improve

store layouts and displays, and set up accounting

and inventory control systems.

Assignments, Resources

Use Think-Pair-Share 4 here

Use Think-Pair-Share 5 here

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Types of Wholesalers

Wholesalers fall into three major groups.

1. Merchant wholesalers are the largest single group of

wholesalers, accounting for roughly 50 percent of

all wholesaling. Merchant wholesalers include two

broad types:

a. Full-service wholesalers provide a full set of

services.

b. Limited-service wholesalers offer fewer

services to their suppliers and customers.

The different types of limited-service

wholesalers perform varied specialized

functions.

2. Brokers and agents differ from merchant whole–

salers in two ways:

They do not take title to goods.

They perform only a few functions.

A broker brings buyers and sellers together and

assists in negotiation.

Agents represent buyers or sellers on a more

permanent basis. Manufacturers’ agents (also called

manufacturers’ representatives) are the most

common type of agent wholesaler.

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Key Term:

Merchant

wholesaler

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Table 13.3

Major Types of

Wholesalers

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Key Terms: Broker,

Agent,

Manufacturers’ and

retailers’ branches

and offices

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3. Manufacturers’ and retailers’ branches and

offices are wholesaling by sellers or buyers

themselves rather than through independent

wholesalers.

Assignments, Resources

Use Discussion Question 13-4 here

Use Additional Project 4 here

Use Think-Pair-Share 6 here

Troubleshooting Tip

The description of the types of wholesalers is brief

but important. Examples will help tremendously,

even though most wholesalers, by their nature and

as discussed in the text, are virtually unknown to

consumers. Some students, however, might be

familiar with distributors who service grocery

stores and other retail outlets from summer jobs or

those held by family members. Table 13.3 will be

helpful in this discussion.

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Wholesaler Marketing Decisions

Wholesalers now face growing competitive pressures,

more-demanding customers, new technologies, and more

direct-buying programs on the part of large industrial,

institutional, and retail buyers. As a result, they have taken

a fresh look at their marketing strategies.

Segmentation, Targeting, Differentiation, and

Positioning Decisions

Like retailers, wholesalers must segment and define their

target markets and differentiate and position themselves

effectively—they cannot serve everyone.

Marketing Mix Decisions

Wholesalers add customer value though the products and

services they offer.

They are often under great pressure to carry a full line and

to stock enough for immediate delivery. But this practice

can damage profits.

Price is also an important wholesaler decision.

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Figure 13.2:

Wholesaler

Marketing

Strategies

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Photo: Sysco

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Most wholesalers are not promotion minded.

Their use of trade advertising, sales promotion, personal

selling, and public relations is largely scattered and

unplanned.

Distribution (location) is important—wholesalers must

choose their locations, facilities, and Web locations

carefully.

Trends in Wholesaling

The industry remains vulnerable to one of the most

enduring trends of the last decade—the need for

ever-greater efficiency. Recent economic conditions have

led to demands for even lower prices and the winnowing

out of suppliers who are not adding value based on cost

and quality.

The distinction between large retailers and large whole–

salers continues to blur.

Wholesalers will continue to increase the services they

provide to retailers—retail pricing, cooperative advertising,

marketing and management information reports,

accounting services, online transactions, and others.

Review Learning Objective 4: Explain the major types of

wholesalers and their marketing decisions.

Use Discussion Question 13-5 here