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Marketing Management MBA CP 205
Managing Retailing, Wholesaling and Logistics
<ul><li>Learning Objectives: </li></ul><ul><li>Know what the major types of marketing intermediaries that occupy  </li></u...
Managing Retailing, Wholesaling &  Logistics <ul><li>Retailing </li></ul><ul><li>Retailing includes all the activities inv...
Managing Retailing, Wholesaling &  Logistics <ul><li>Types of Retailers </li></ul><ul><li>Specialty store: Narrow product ...
Managing Retailing, Wholesaling &  Logistics <ul><li>Retailers can position themselves as one of four levels of service: <...
Managing Retailing, Wholesaling &  Logistics <ul><li>Though most of goods and services are sold through stores, non- </li>...
Managing Retailing, Wholesaling &  Logistics <ul><li>Retailers’ Marketing decisions   </li></ul><ul><li>These include deci...
Managing Retailing, Wholesaling &  Logistics <ul><li>Retailer has to decide on  product-assortment   breadth  and  depth  ...
Managing Retailing, Wholesaling &  Logistics <ul><li>Feature the latest or newest merchandise first. </li></ul><ul><li>Off...
Managing Retailing, Wholesaling &  Logistics <ul><li>Services and store ambience: The services mix is a key tool to  </li>...
Managing Retailing, Wholesaling &  Logistics <ul><li>In-store activities and experience  can be another tool for  </li></u...
Managing Retailing, Wholesaling &  Logistics <ul><li>Communication tools like placing ads, run special sales and issue  </...
Managing Retailing, Wholesaling &  Logistics <ul><li>Wholesaling  </li></ul><ul><li>Wholesaling  includes all the activiti...
<ul><li>Wholesalers are used when they perform one of the following  </li></ul><ul><li>functions more efficiently:  </li><...
<ul><li>Warehousing: They hold inventories, thereby reducing inventory  </li></ul><ul><li>costs and risks to suppliers and...
Managing Retailing, Wholesaling &  Logistics <ul><li>Major Wholesaler types </li></ul><ul><li>Merchant wholesalers : Indep...
<ul><li>Wholesaler Marketing Decisions </li></ul><ul><li>These involve strategic decisions in the following areas:  </li><...
<ul><li>Wholesalers’ ‘product’ is their assortment. They need to examine  </li></ul><ul><li>how many product lines to carr...
<ul><li>Market Logistics </li></ul><ul><li>Physical distribution now has been expanded into the broader  </li></ul><ul><li...
<ul><li>Market planning logistics has four steps: </li></ul><ul><li>Deciding on the company’s value proposition to its cus...
<ul><li>Market-Logistics Decisions </li></ul><ul><li>Four decisions are made with respect to market logistics: </li></ul><...
<ul><li>Inventory levels represent a major cost. Inventory decision making involves when to order and how much to order. <...
<ul><li>Recap: </li></ul><ul><li>What the major types of marketing intermediaries that occupy  </li></ul><ul><li>this sect...
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  1. 1. Marketing Management MBA CP 205
  2. 2. Managing Retailing, Wholesaling and Logistics
  3. 3. <ul><li>Learning Objectives: </li></ul><ul><li>Know what the major types of marketing intermediaries that occupy </li></ul><ul><li>this sector. </li></ul><ul><li>Know what marketing decisions these marketing intermediaries </li></ul><ul><li>make. </li></ul><ul><li>Know what are the major trends with marketing intermediaries. </li></ul>Managing Retailing, Wholesaling & Logistics
  4. 4. Managing Retailing, Wholesaling & Logistics <ul><li>Retailing </li></ul><ul><li>Retailing includes all the activities involved in selling goods and </li></ul><ul><li>services directly to final customers for personal, non-business use. </li></ul><ul><li>Any organization selling directly to final consumers whether a </li></ul><ul><li>producer, wholesaler or a retailer, irrespective of how and where the </li></ul><ul><li>goods are sold, is undertaking retailing. </li></ul><ul><li>Consumers can shop for goods in a variety of organizations such as </li></ul><ul><li>store retailers and non-store retailers. </li></ul>
  5. 5. Managing Retailing, Wholesaling & Logistics <ul><li>Types of Retailers </li></ul><ul><li>Specialty store: Narrow product line </li></ul><ul><li>Department store: Many product lines </li></ul><ul><li>Super market: Large low cost, low margin, high volume, self service store </li></ul><ul><li>designed to meet total needs for food and household products </li></ul><ul><li>Convenience store: Small store in residential area </li></ul><ul><li>Discount store: Standard or specialty merchandise; low price, low margin, </li></ul><ul><li>high volume stores. </li></ul><ul><li>Off-price retailer: Leftover goods, overruns, irregular merchandise sold at </li></ul><ul><li>less than retail. </li></ul><ul><li>Superstore: Huge selling space, routinely purchased food and household </li></ul><ul><li>items, hypermarket (huge stores that combine supermarket, discount and </li></ul><ul><li>warehouse retailing.) </li></ul>
  6. 6. Managing Retailing, Wholesaling & Logistics <ul><li>Retailers can position themselves as one of four levels of service: </li></ul><ul><li>Self service : corner store of all discount operations. Consumers </li></ul><ul><li>carry out their own locate-compare-select process. </li></ul><ul><li>Self selection : Consumers find their own goods but may need </li></ul><ul><li>assistance. </li></ul><ul><li>Limited service : These retailers carry more goods, consumer need </li></ul><ul><li>more information and assistance. </li></ul><ul><li>Full service : Sales persons are ready to assist in every phase of </li></ul><ul><li>locate-compare-select process. </li></ul>
  7. 7. Managing Retailing, Wholesaling & Logistics <ul><li>Though most of goods and services are sold through stores, non- </li></ul><ul><li>store selling is also on the rise. It falls into three major categories: </li></ul><ul><li>Direct selling : Also called multi-level selling or network marketing. It </li></ul><ul><li>involves recruiting independent business persons who act as </li></ul><ul><li>distributors. </li></ul><ul><li>Direct marketing : Has roots in direct mail and catalog marketing. </li></ul><ul><li>Automatic vending : Can be used for a variety of merchandise. </li></ul><ul><li>Vending machines can be installed at airports, factories and hotels. </li></ul>
  8. 8. Managing Retailing, Wholesaling & Logistics <ul><li>Retailers’ Marketing decisions </li></ul><ul><li>These include decisions in the following areas: </li></ul><ul><li>Target market. </li></ul><ul><li>Product assortment and procurement. </li></ul><ul><li>Store decor and service levels. </li></ul><ul><li>Price. </li></ul><ul><li>Communication. </li></ul><ul><li>Location. </li></ul>
  9. 9. Managing Retailing, Wholesaling & Logistics <ul><li>Retailer has to decide on product-assortment breadth and depth to </li></ul><ul><li>match target market's expectations. </li></ul><ul><li>The retailer must then develop product differentiation strategy. It </li></ul><ul><li>may include one of the following: </li></ul><ul><li>Feature national/global brands that are not available at competing </li></ul><ul><li>retailers. </li></ul><ul><li>Feature mostly private branded merchandise. </li></ul><ul><li>Feature surprise or ever-changing merchandise first. </li></ul>
  10. 10. Managing Retailing, Wholesaling & Logistics <ul><li>Feature the latest or newest merchandise first. </li></ul><ul><li>Offer merchandise customizing services. </li></ul><ul><li>Procurement involves establishing merchandise sources, policies and </li></ul><ul><li>practices. </li></ul><ul><li>Retailers are increasingly improving their skills in demand </li></ul><ul><li>forecasting, merchandise selection, stock control, space allocation </li></ul><ul><li>and display. </li></ul><ul><li>Retailers are using Direct Product Profitability (DPP) to measure a </li></ul><ul><li>product’s handling costs ( receiving, selecting, checking & space etc) </li></ul>
  11. 11. Managing Retailing, Wholesaling & Logistics <ul><li>Services and store ambience: The services mix is a key tool to </li></ul><ul><li>differentiate one store from another. It includes: </li></ul><ul><li>Pre-purchase services, like accepting telephone and mail orders, </li></ul><ul><li>advertising, window & interior display and shopping hours. </li></ul><ul><li>Post-purchase services like shipping & delivery, gift wrapping and </li></ul><ul><li>installation. </li></ul><ul><li>Ancillary services like general information, parking, repairs, credit </li></ul><ul><li>and baby attendant services. </li></ul><ul><li>Retailers need to differentiate based on prompt customer service. </li></ul>
  12. 12. Managing Retailing, Wholesaling & Logistics <ul><li>In-store activities and experience can be another tool for </li></ul><ul><li>differentiation. </li></ul><ul><li>Establishment provide a place for people to assemble in cafes and </li></ul><ul><li>bookshops. Some retailers create in-store entertainment in the hope </li></ul><ul><li>of attracting customers who want to have fun and excitement. </li></ul><ul><li>Prices are a vital positioning factor and must be decided in relation </li></ul><ul><li>to the target market, the product-and-assortment mix and the </li></ul><ul><li>competition. </li></ul>
  13. 13. Managing Retailing, Wholesaling & Logistics <ul><li>Communication tools like placing ads, run special sales and issue </li></ul><ul><li>money saving coupons are used by retailers to generate traffic and </li></ul><ul><li>purchases. </li></ul><ul><li>Each retailer must use communications that reinforce its image </li></ul><ul><li>positioning. </li></ul><ul><li>Retailers can locate their stores in central business district, a </li></ul><ul><li>shopping mall, a community shopping center, within a large store, in </li></ul><ul><li>a hotel or in airport lounges. </li></ul>
  14. 14. Managing Retailing, Wholesaling & Logistics <ul><li>Wholesaling </li></ul><ul><li>Wholesaling includes all the activities in selling goods or services to those who buy for resale or business use. It excludes manufacturers, farmers and retailers. </li></ul><ul><li>Wholesalers differ from retailers in the following ways: </li></ul><ul><li>Wholesalers pay less attention to promotion, atmosphere and location since they are dealing with business customers. </li></ul><ul><li>Wholesale transactions are usually larger than retail ones, wholesalers cover a larger trade area. </li></ul>
  15. 15. <ul><li>Wholesalers are used when they perform one of the following </li></ul><ul><li>functions more efficiently: </li></ul><ul><li>Selling and promoting: Wholesalers’ representatives help </li></ul><ul><li>manufacturers reach many small business customers at relatively </li></ul><ul><li>low cost. </li></ul><ul><li>Buying and assortment building: They are able to select items and </li></ul><ul><li>build the assortments their customers need, saving the customers’ </li></ul><ul><li>work. </li></ul><ul><li>Bulk breaking. Wholesalers achieve savings by buying in large lots </li></ul><ul><li>and breaking these lots into smaller units. </li></ul>Managing Retailing, Wholesaling & Logistics
  16. 16. <ul><li>Warehousing: They hold inventories, thereby reducing inventory </li></ul><ul><li>costs and risks to suppliers and customers. </li></ul><ul><li>Transportation: Wholesalers often provide faster delivery to buyers </li></ul><ul><li>since they are closer to them. </li></ul><ul><li>Financing: They finance customers by extending credit, and finance </li></ul><ul><li>suppliers by ordering early and paying bills on time. </li></ul><ul><li>Risk bearing: They absorb some risk by taking title and bearing cost </li></ul><ul><li>of theft, damage, spoilage and obsolescence. </li></ul><ul><li>Market information: Wholesalers supply information to suppliers </li></ul><ul><li>and customers regarding competitors activities, new products & </li></ul><ul><li>prices. </li></ul>Managing Retailing, Wholesaling & Logistics
  17. 17. Managing Retailing, Wholesaling & Logistics <ul><li>Major Wholesaler types </li></ul><ul><li>Merchant wholesalers : Independently owned businesses that take title to </li></ul><ul><li>the merchandise they handle. </li></ul><ul><li>Full-service wholesalers : Carry stock, maintain a sales force, offer credit, </li></ul><ul><li>make deliveries. Include wholesale merchants and industrial distributors </li></ul><ul><li>that provide services like credit and delivery. </li></ul><ul><li>Limited-service wholesalers : Cash and carry wholesalers, sell a limited line </li></ul><ul><li>of fast moving goods to small retailers for cash. </li></ul><ul><li>Brokers and agents : Facilitate buying and selling, on commission basis, </li></ul><ul><li>limited functions, generally specialize by product line or customer type. </li></ul><ul><li>Brokers bring buyers and sellers together and assist in negotiations. Agents </li></ul><ul><li>represent buyers or sellers on a more permanent basis. </li></ul><ul><li>Manufacturers’ branches and offices </li></ul><ul><li>Specialized wholesalers : Agricultural assemblers, petroleum bulk plants </li></ul><ul><li>and terminals and auction companies. </li></ul>
  18. 18. <ul><li>Wholesaler Marketing Decisions </li></ul><ul><li>These involve strategic decisions in the following areas: </li></ul><ul><li>Target market. </li></ul><ul><li>Product assortment and services. </li></ul><ul><li>Pricing decisions. </li></ul><ul><li>Promotion decisions. </li></ul><ul><li>Place decisions. </li></ul><ul><li>Wholesalers can define their target markets in terms of size, type of </li></ul><ul><li>customers, and need for service. </li></ul>Managing Retailing, Wholesaling & Logistics
  19. 19. <ul><li>Wholesalers’ ‘product’ is their assortment. They need to examine </li></ul><ul><li>how many product lines to carry which should be based on services </li></ul><ul><li>valued by their customers. </li></ul><ul><li>Wholesalers pursue a mark-up pricing policy. </li></ul><ul><li>They rely on their sales persons to achieve promotional objectives. </li></ul><ul><li>Wholesalers are located in low-rent, low-tax areas and do not invest </li></ul><ul><li>resources on their physical setting and offices. </li></ul>Managing Retailing, Wholesaling & Logistics
  20. 20. <ul><li>Market Logistics </li></ul><ul><li>Physical distribution now has been expanded into the broader </li></ul><ul><li>concept of Supply Chain Management (SCM) </li></ul><ul><li>SCM involves procuring the right inputs (raw materials, components </li></ul><ul><li>and capital equipment), converting them efficiently into finished </li></ul><ul><li>products, and dispatching them to the final destinations. </li></ul><ul><li>Market logistics involves planning the infrastructure to meet demand, </li></ul><ul><li>then implementing and controlling the physical flows of materials and </li></ul><ul><li>final goods from points of origin to points of use to meet customer </li></ul><ul><li>requirements at a profit. </li></ul>Managing Retailing, Wholesaling & Logistics
  21. 21. <ul><li>Market planning logistics has four steps: </li></ul><ul><li>Deciding on the company’s value proposition to its customers. </li></ul><ul><li>Deciding on the best channel design and network strategy for reaching the customers. </li></ul><ul><li>Developing operational excellence in sales forecasting, warehouse management, transportation management and materials management. </li></ul><ul><li>Implementing the solution with the best information systems, equipment, policies, and procedures. </li></ul><ul><li>Market logistics leads to an examination of the most efficient way to deliver value. </li></ul>Managing Retailing, Wholesaling & Logistics
  22. 22. <ul><li>Market-Logistics Decisions </li></ul><ul><li>Four decisions are made with respect to market logistics: </li></ul><ul><li>How should orders be handled (order processing). </li></ul><ul><li>Where should stocks be located (warehousing). </li></ul><ul><li>How much stock should be held (inventory). </li></ul><ul><li>How should goods be shipped (transportation). </li></ul><ul><li>Companies are trying to shorten the order to payment cycle . </li></ul><ul><li>Every company has to store the finished goods before they are sold </li></ul><ul><li>since production and consumption cycles rarely match. </li></ul>Managing Retailing, Wholesaling & Logistics
  23. 23. <ul><li>Inventory levels represent a major cost. Inventory decision making involves when to order and how much to order. </li></ul><ul><li>Transportation choices will affect product pricing, on time delivery performance, and conditions of goods when they arrive – all these affect customer satisfaction. </li></ul><ul><li>Shippers consider such criteria as speed, frequency, dependability, capability, availability, traceability, and cost. </li></ul><ul><li>Containerization has enabled shippers to combine two or more transportation modes. </li></ul>Managing Retailing, Wholesaling & Logistics
  24. 24. <ul><li>Recap: </li></ul><ul><li>What the major types of marketing intermediaries that occupy </li></ul><ul><li>this sector. </li></ul><ul><li>What marketing decisions these marketing intermediaries </li></ul><ul><li>make. </li></ul><ul><li>What are the major trends with marketing intermediaries. </li></ul>Managing Retailing, Wholesaling & Logistics
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