Retailing, Direct Marketing & Wholesaling
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Wholesaling | Selling products directly to industrial, reseller, and institutional users, not to ultimate consumers. It includes all marketing transactions in which purchases are intended for resale or are used in making other products. | |
Services Wholesalers Provide to Retailers | 1)Help in selecting inventory 2)Understand market conditions 3)Negotiatate final purchases 4)Provide good assortments 5)Provide services much more than a producer 6)Provide quick and frequent delivery | |
Services Wholesalers Provide to Producers | 1)Accumulate and allocate products 2)Provide salesforce 3)Pay transportation costs 4)Provide information 5)Pass producers promotional plans | |
3 Categories of Market Coverage Intensity | 1)Intensive distribution 2)Selective distribution 3)Exclusive distribution | |
Intensive Distribution | product is everywhere (convenience products, ex. soft drinks) | |
Selective Distribution | distributed in some stores (shopping products) | |
Exclusive Distribution | sold in one store (specialty products) | |
3 Types of Wholesalers | 1)Merchant 2)Agents and brokers 3)Manufacturers' sales branches and offices | |
2 Types of Merchant Wholesalers | 1)Full-service wholesaler 2)Limited-service wholesaler | |
Merchant Wholesalers | take title/ownership of products | |
Agents and Brokers | do not take title/ownership of products | |
Full-Service Wholesalers | provide all kinds of services | |
4 Types of Full-Service Wholesalers | 1)General merchandise wholesaler 2)Limited-line wholesaler 3)Specialty line wholesaler 4)Rack jobbers | |
General Merchandise Wholesalers | a type of full-service wholesaler; offers wide product mix, limited depth | |
Limited Line Wholesaler | a type of full-service wholesaler; offers few product lines, but extensive depth | |
Specialty Line Wholesaler | a type of full-service wholesaler; focus on 1 product line and providing extensive knowledge (Ex. fish wholesaler) | |
Rack Jobber | a type of full-service wholesaler; own the product and maintain their own display racks (Ex. newspapers at HyVee) | |
4 Types of Limited-Service Wholesalers | 1)Cash & Carry 2)Truck Wholesalers 3)Drop Shippers 4)Mail Order | |
Cash & Carry | a type of limited service wholesaler; handle a limited line of products with high turnover; do NOT offer delivery or credit | |
Truck Wholesaler | a type of limited service wholesaler; transport a limited line of products to retailers; they provide delivery and sometimes credit | |
Drop Shipper | a type of limited service wholesaler; they take title but not possession | |
Mail Order | a type of limited service wholesaler; they send small quantities to remote areas; they do not deliver, but they sometimes provide credit | |
Limited-Service Wholesalers | provide some services, but not others | |
Agents | represent sellers on a permanent basis (Ex. travel agent) | |
Brokers | represent sellers on a temporary basis (Ex. real estate broker) | |
Retailing | focusing on the activities required to facilitate exchanges with ultimate consumers. Retail exchanges are entered into for personal, family, and household purposes. | |
3 Utilities Created by Retailers | 1)place 2)time 3)possession | |
2 Major Types of Retailers | 1)Retail Stores 2)Non-store retailing and direct marketing | |
3 Types of Retail Stores | 1)Department Stores 2)Mass Merchandisers 3)Specialty Stores | |
Department Store | Large retailer with extensive assortment (Ex. Macy's) | |
Mass Merchandisers | Have lower prices, fewer services, high product turnover | |
8 Types of Mass Merchandisers | 1)Discount Stores 2)Supermarkets 3)Superstores 4)Box Stores 5)Hypermarkets 6)Warehouse/Wholesale Club 7)Warehouse Showroom 8)Catalog Showroom | |
Specialty Stores | carry narrow product mix, deep product lines | |
3 Types of Specialty Stores | 1)Traditional 2)Category Killer 3)Off-Price Retailers | |
5 Types of Non-Store Retailers | 1)In-home retailing 2)Telemarketing 3)Automatic Vending 4)Mail-Order Retailing 5)Internet | |
Franchising | an arrangement whereby a supplier, or franchisor, grants a dealer, or franchisee, the right to sell products in exchange for a royalty fee | |
2 Major Types of Franchising | 1)Product Franchising 2)Business Franchising | |
Product Franchising | allows franchisee to sell a product to consumers (ex. car dealership) | |
Business Franchising | allows franchisee to use all aspects of the business including the name (ex. McDonald's) | |
4 Advantages of Franchising | 1)start with limited capital 2)customers are assured from day one 3)obtain advice 4)selective distribution | |
2 Disadvantages of Franchising | 1)franchisor dictates terms 2)franchisee must pay fees | |
2 Strategic Issues in Retailing | 1)Scrambled Merchandising 2)Wheel of Retailing | |
Scrambled Merchandising | the addition of unrelated products to existing ones | |
Wheel of Retailing | new retailers enter the market when existing ones become expensive (Example with general stores, dept. stores, discount stores, category killers, etc.) |
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