BMGT 411: Chapter 14

Managing Retailing, Wholesaling, and Logistics

Chapter Questions

• What major types of marketing intermediaries occupy this sector and what marketing decisions do they face?

• What are the major trends with marketing intermediaries?

• What does the future hold for private label brands?

Table 14.1 Major Retailer Types

• Specialty store

• Department store

• Supermarket

• Convenience store

• Discount store

• Off-price retailer

• Superstore

• Catalog showroom

• Club

• Drug Stores

Speciality StoreNarrow Product LinesLower Volume, Higher Margins

Department StoresSeveral Product LinesHigh Volume/High Margins (Depends on Store)

Grocery StoreHigh Volume/Low MarginOften Regional due to Distribution Limitations

Drug Stores

Lower Volume/Higher MarginsConvenient Locations

Convenience StoresHigh Volume/Mixed MarginsGas = lowFood = High

Superstore Mass Retailers

Very High Sales, Very Low Margin, Low PriceSells Groceries + Everything Else

Superstore: Built on Distribution Systems Walmart distribution system

Supply Chain Management

• Supply chain management starts before physical distribution and means strategically procuring the right inputs (raw materials, components, and capital equipment); converting them efficiently into finished products; and dispatching them to the final destinations.

• Integrated Logistics Systems: An integrated logistics system (ILS) includes materials management, material flow systems, and physical distribution, aided by information technology.

• http://www.youtube.com/watch?v=SUe-tSabKag

Market Logistics

• Sales forecasting

• Distribution scheduling

• Production plans

• Finished-goods inventory decisions

• Packaging

• In-plant warehousing

• Shipping-room processing

• Outbound transportation

• Field warehousing

• Customer delivery and servicing

Market Logistics Decisions

• How should orders be handled?

• Where should stock be located?

• How much stock should be held?

• How should goods be shipped?

Figure 14.1 Determining Optimal Order Quantity

Levels of Retail Service

• Self service: Grocery stores, etc

• Self selection: Customers can find their own goods, can ask for assistance

• Specialty stores

• Limited service: limited service based on needs

• Full service: Service every step of the way (Most expensive)

• Cars, Luxury items

Trends in Retailing: Growth of Non-Store Selling

• Direct: Avon,

• Direct: 1-800 flowers

• Automatic Vending

Table 14.2 Major Types of Corporate Retail Organizations

• Corporate chain store: Chain stores and wholesalers owned by the same company

• Voluntary chain: A group of retailers owned by different companies that use one wholesaler (IGA Group)

• Franchise organization: Independently owned, pay a fee to be part of the franchise system. Reduction in marketing costs because of scale (McDonald’s, Jiffy Lube)

• Merchandising conglomerate: Combines several retailing lines under one central ownership group

Top Retailing Trends

• Entering Urban Areas

• Getting smaller

• Temporary Stores, or pop up stores

• Integrating technology into the experience

• http://www.youtube.com/watch?v=qJWcX3huiZs

Urban Store Trend East Liberty Target/New York Aldi

Walmart - Getting Smaller? Walmart Express

Pop Up Stores Starbucks

Retailers’ Marketing Decisions

• Target market

• Product assortment

• Procurement

• Prices

• Services

• Store atmosphere

• Store activities

• Store experiences

• Communications

• Location

Store Atmosphere and Experiences

Bass Pro Shops

Target Market Gap Inc

Private Label Brands

• Private Label Brand: a brand that retailers or wholesalers develop

• Consumer accepts private labels

• Private-label buyers come from all socioeconomic strata

• Private labels are not a recessionary phenomenon

• Consumer loyalty shifts from manufacturers to retailers

Private Label Brands are Often Manufactured by the Same Company

Clean and Unique StyleTarget’s Up and Up

Brand

Aldi - Only Sells Private Label

Multichannel Marketing

• “Multichannel marketing” or OmniChannel puts the emphasis on providing a range of choices for customers who buy through different channels at different times or for different reasons.

• http://www.lincoln.com/concierge-about/

Multichannel Marketing

• “Multichannel marketing” or OmniChannel puts the emphasis on providing a range of choices for customers who buy through different channels at different times or for different reasons.

• http://www.target.com/c/store-pickup/-/N-55fqz