Mark man chapter-16

www. facebook.com/v65ASMPHMarkma
Prof. Remigio Joseph De Ungria
Chapter 16
Managing Retailing,
Wholesaling, and Logistics

Chapter 16:
Managing Retailing,
Wholesaling, and Logistics
Reported by
Kamille Gabrielle G. Alvarado
Ateneo School of Medicine and Public Health
21st Century
Edition

OUTLINE
1. Retailing
2. Marketing Decisions
3. Wholesaling
4. Market Logistics

Retailing
• All activities involved in selling goods or services
for personal, nonbusiness use
• Any business whose whole sales volume comes
primarily from retailing
• Types of Retailing
– Store Retailers
– Non-Store Retailing
– Corporate Retailing and Franchising

Store Retailers
• Position themselves as offering one of four levels of
service:
– Self-Service
• Customers are independent; carry out their own “locate-compare-
select” process
– Self-Selection
• Assistance is available to customers; though only if it is wanted
– Limited Service
• More goods and services available to customers; and they will need
more information and assistance
– Full Service
• Salespeople are ready to assist in every phase of the “locate-compare-
select” process; result in high-cost retailing

Major Types of Self-Service Store
Retailers
Major Type Kotler’s Example Local / Medical
Example
Convenience Store 7-Eleven Mini Stop
Drugstore Walgreens Mercury Drug
Discount Store Walmart There is no
applicable
example in the
Philippines since
the culture of the
Filipinos is very
service-oriented,
thus discount
stores fall under
Self-Selection
rather than Self-
Service.
Extreme Value /
Hard-Discount
Store
Family Dollar
Off-Price Retailers TJ Maxx

Example
Department Store JCPenny SM Department
Store
Supermarket
*classified as self-
service, but in the
Philippines, more
of self-selection
Kroger Cherry Foodarama
Superstore Jewel-Osco /
Carrefour
(hypermarket in
France)
Shopwise, Pioneer
Shopping Center
Catalog Showroom Inside Edge Ski
Major Types of Self-Selection
Store Retailers

Example
Specialty Store
- Narrow product
line
The Body Shop Bambang Medical
Stores
Major Types of Limited Service
Store Retailers
*Kotler did not provide any concrete example for Full
Service Store Retailers; however, an example of this
category would be the purchasing of cars (Honda),
laptops (Mac), cellphones (Samsung), cameras
(Canon), etc.

Major Categories Kotler’s Example Local / Medical
Example
Direct Selling
- Network
marketing /
multilevel
selling
- Door-to-Door /
At-Home Sales
Avon Nuskin,
Medical Sales
Representatives
Direct Marketing
- telemarketing,
television direct-
response
marketing,
electronic
shopping
Amazon.com Health Plan
Philippines, Inc.
Non-Store Retailing

Major Categories Kotler’s Example Local / Medical
Examples
Automatic Vending Vendo Machines in
Japan
Vendo Machines in
the female
bathroom
Buying Service
- Entitled to buy
from a list of
retailers that
agreed to give
discounts in return
for membership
*none given
Non-Store Retailing

• Achieve economies of scale, greater purchasing
power, wider brand recognition, and better-trained
employees than independent stores gain alone
Corporate Retail Organizations

Major Types Kotler’s Examples Local / Medical
Examples
Corporate Chain
Store
Gap Penshoppe
Voluntary Chain Independent
Grocers Alliance
Retailer
Cooperative
ACE Hardware National
Bookstore
Consumer
Cooperative
*None given
Franchise
Organization
McDonald’s Jollibee
Merchandising
Conglomerate
Macy’s and
Bloomingdales
Seventeen and
Cinderella
Corporate Retail Organizations

Recent
Developments
Description Local / Medical
Examples
New Retail Forms
and Combinations
Putting together
two products or
services that
aren’t necessarily
related
Shell Gasoline and
SM (rewards card)
Growth of
Intertype of
Competition
Different levels of
competition as
other stores
branch out
Robinsons
Department Store
vs. Watsons
Competition Bet.
Store-Based vs.
Non-Store Based
The internet or
phone is much
more accessible
SM Department
Store vs. Online
Selling Instagram
Accounts
New Retail Environment

Recent
Developments
Description Local / Medical
Examples
Growth of Giant
Retailers
Retailers that have
more diverse
products / services
are category
killers
Pioneer Shopping
Center vs. Bow &
Wow
Decline of Middle-
Market Retailers
Customers either
go for luxuries or
discounts
Nokia
Growing
Investments in
Technology
Preference for
more advanced
technology
The Medical City
vs. QMMC
Global Profile Strong Brand
Positioning have
the upper hand
Colgate vs. Happy
New Retail Environment

• Target Market
– Retailer cannot make consistent decisions about product
assortment, store décor, advertising messages and media, price,
and service levels
– Very critical and can be costly
– Zales (market jeweler)
• Decided to chase upscale customers so they started purchasing more
expensive jewelry, losing their traditional customers without penetrating the
newly targeted market
• Channels
– Means by which a company reaches out to its customers
– Mostly choose multiple channels but these channels have to be
designed to work together effectively
– Victoria’s Secret
• Made use of retail stores, catalogs, and internet
Marketing Decisions

• Product Assortment
– Choosing the products that will match the shopping expectations of
the target market in terms of breadth and depth
– Types
• Narrow and Shallow (e.g. Pizza Hut stall)
• Narrow and Deep (e.g. Rita’s Italian Ice)
• Broad and Shallow (e.g. Hospital Cafeterias or Food Courts)
• Broad and Deep (e.g. Hotel Buffets, Vikings)
– Aeropostale
• Research on 11-18 year-olds in order to stay up-to-date with fashion trends; had
them be involved in programs on the internet to create new styles
– Penshoppe
• For a while, they had difficulty in determining their target market and their
products suffered, as well; but when they redefined their target market and did
more research on fashion trends in the West, sales picked up again
Marketing Decisions

• Product Differentiation Strategy
– Generates more consumer interest
– Some examples:
• SM got Forever 21 and other international brands so that customers would rather
go to SM malls compared to others. (gaining exclusive rights over merchandise
not available in the regular market)
• Folded and Hung generated sales by selling Marvel and Star Wars apparel.
(blockbuster distinctive merchandise)
• Tubby makes clothes for plus-size women. (offer a highly targeted assortment)
• Procurement
– Establishing merchandise sources, policies, and practices
– Involves tracking inventory, computing economic order quantities,
order goods, and analyze dollars spent on vendors and products
Marketing Decisions

• Prices
– Key positioning factor; must be set in relationship to the target
market, product-and-service assortment mix, and competition
– High mark-up, low volume vs. Low mark-up, high volume
– Everyday Low Pricing
• Can sometimes be beneficial to the company in terms of lowering advertising
costs, greater pricing stability, a stronger image of fairness and reliability, and
higher retail profits
• Services
– Prepurchase, Postpurchase, Ancillary
• Example: Fitting a dress, Having it altered, Going to the restroom while waiting
– Most important: Customer Service
Marketing Decisions

• Store Atmosphere
– Appealing to all 5 senses of the customer, depending on the target
market
– Bayo
• Appeals to the more laid back fashion / personality compared to professional
attire
• Stores have very white, bright, or pastel colors; Music is usually pop or acoustic
but never heavy on the ears; The shelves used are very smooth and also white
in color, etc.
• Communications
– Use of ads, coupons, fliers, social media, magazines, etc. to
promote the brand, product, or service
• Location
– Consider accessibility, traffic, parking availability, and consumer
shopping habits
Marketing Decisions

• Selling goods or services that will be sold again for
business use
• Pay less attention to promotion, atmosphere, location
• Cover a larger area than retailers
• Differs from retailers in terms of legal regulations and
taxes
• Adjust and adapt to both their suppliers’ and target
customers’ changing needs
Wholesaling

• Supply Chain Management
– Strategically procuring the right inputs and converting them into
finished products, and dispatching them to final destinations
• Four Steps
– Deciding company’s value proposition to customers
– Best channel design and network strategy for reaching customers
– Developing operational excellence in sales forecasting, warehouse
management, transportation management, and materials
management
– Implementing the solution with the best information systems,
equipment, policies, and procedures
• Objective
– Getting the right goods to the right places at the right time for the
least cost
Market Logistics

• Sales Forecasting
– Basis for the distribution, production, and inventory levels of the
company
• The goal of the company is to reduce market logistics
costs in order to permit lower prices or to yield higher
profit
• Lean Manufacturing
– Produce goods with minimal waste of time, materials, and money
– Can be a risk, especially in terms of quality (e.g. Toyota)
• Problem: Minimizing distribution costs usually goes hand-
in-hand with compromising customer service
– Example: Cheaper mode of transportation means slower delivery of
products
Market Logistics

M = T + FW + VW + S
T = total freight cost of proposed system
FW = total fixed warehouse cost of proposed system
VW = total variable warehouse costs (including inventory) of proposed system
S = total cost of lost sales due to average delivery delay under proposed system
*The objective is to take all things into consideration and choose the system that
best minimizes the cost of market logistics without compromising the needs of the
customer, and without giving competition the upper hand.
Market Logistics

• Order Processing
– Shortening the order-payment cycle
– The longer the cycle, the lower customer’s satisfaction and the lower
company’s profit
• Warehousing
– Storage of goods until they are sold
– Goal: Not spend too much on storage, but still getting products to
customers on time by producing in bulk; so transportation needs to be
fast
Market Logistics Decisions: Four
Major Decisions

• Inventory
– Inventory costs increase at an accelerating rate as
customer-service level approaches 100%
– Re-order point: Knowing at which point the company needs
to make new orders
– Goal: Balancing the order-processing costs and inventory-
carrying costs
• Order-processing costs include costs when production is running
• Inventory-carrying include storage costs, capital, taxes, insurance,
depreciation.
Market Logistics: Four Major
Decisions

Decisions
• The lower the cost, the
more units will be
ordered
• Inventory costs
increase as more units
are ordered
• Goal: Achieve the
optimal order quantity
where just enough
goods are ordered
while not spending too
much on inventory-
processing
Determining Optimal Order Quantity

• Transportation
– Affects prices, punctuality of delivery, and condition of goods
delivered  all affecting customer satisfaction
– Consider speed, frequency, dependability, capability,
availability, traceability, cost
• Determines the mode of transportation chosen
– Also consider the packaging of the product to reduce
damaged goods upon arrival
Decisions

Mark man chapter-16

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Mark man chapter-16

Similar to Mark man chapter-16 (20)

Recently uploaded

Recently uploaded (20)

Mark man chapter-16

Editor's Notes