Marketing Management Text and Cases

Wholesaling and Retailing

19 Chapter
Wholesaling
and Retailing

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 Wholesaling and Retailing

Wholesaling is concerned with the activities of individuals and establishments

that sell to retailers and other merchants, or to industrial, institutional, and
commercial users, but do not sell in large amounts to ultimate consumers.

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Functions for Producers
Wholesaler
Market Coverage.
Functions for
Producers and Sales Contacts.
Customers Inventory Holding.
Order Processing.
Market Information.
Customer Support.
19-3 Marketing Management Text and Cases, S H H Kazmi
Wholesaling and Retailing
Functions for Customers
Product Availability.
Assortment Convenience.
Bulk-breaking.
Credit Facility and Finance.
Customer Service.
Technical Support.
© SHH Kazmi, 2007
Excel Books
 Wholesaling and Retailing

Major Types of Wholesalers

1. merchant wholesaler,
2. agents and brokers, and
3. manufacturer’s sales branches and offices.

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 Wholesaling and Retailing

Merchant Wholesalers
These are independent businesses that take title to goods and assume risks
associated with ownership and generally buy and resell products to industrial
or retail customers.

They are divided into two subtypes:

 full-service and

 limited-service wholesalers.

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 Wholesaling and Retailing

 Full-Service Merchant Wholesalers

 General merchandise wholesalers

 Industrial distributors

 Limited line-wholesalers

 Speciality-line wholesalers

 Rack jobbers

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 Wholesaling and Retailing

 Limited-Service Merchant Wholesalers

 Cash-and-carry
 Truck wholesalers
 Drop-shippers
 Mail-order wholesalers

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 Wholesaling and Retailing

Agents and Brokers

Agents and brokers form the second major category of wholesalers. They
negotiate purchase and speed up sales but do not take title to merchandise.
They perform fewer services for producers and work on commission, generally
based on product price. Agents represent buyers or sellers on an almost
permanent basis. Brokers are employed to represent buyers or sellers
temporarily.

Manufacturer’s Agents:

 A selling agent

 Commission merchants

 Export or import

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 Wholesaling and Retailing

Manufacturers’ Sales Branches and Offices

Manufacturers set up Sales branches and offices to improve selling, promotion,
and inventory control. Sales branches carry inventory and provide support
services to manufacturer’s sales force, particularly in areas with concentration
of large customers and considerable demand. Sales offices do not carry
inventory and operate much like agents and in addition to manufacturer’s
products may sell other complimentary products produced by other firms.

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 Wholesaling and Retailing

Retailing
A retailer is a business and can be an individual, chain store, departmental
store, supermarket, speciality store, small locality shop, paan-bidi kiosk, or
a service retailer etc., who links the producers and the final consumer.

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 Wholesaling and Retailing

Vulnerability phase Entry phase

Top heaviness
Conservatism Low price
The Wheel of Declining ROI Low margin
Retailing Poor facilities
Becomes Low status
Limited products

Up-market location
Trading-up phase Fashion orientation
Becomes
Extended assortment
Higher prices
Elaborate facilities
Exotic services

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 Wholesaling and Retailing

Functions of Retailers
 Arranging Assortment
 Breaking Bulk
 Holding Stock
 Channel of Communication
 Promotional Support
 Extending Services

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 Wholesaling and Retailing

Major Types of Retail Stores

Various schemes have been proposed to categorise retailers based on (a)
number of outlets, (b) margin vs turnover, (c) location, and (d) size.

An independent store is a single retail unit owned by an individual, partnership,

or corporation. A retail chain store is a part of a multiple retail outlet business.

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 Wholesaling and Retailing

1. General Merchandise Retailers

General merchandise retailers carry a variety of product lines, with considerable
depth. Some major types of these stores include supermarkets and
hypermarkets, discount stores, and department stores.
 Supermarkets: A supermarket is a large self-service retail store that carries
a wide variety of consumer products under one roof, such as complete line
of food products, laundry requirements, household maintenance items, and
OTC or non-prescription drugs etc.
 Discount Store: These stores are self-service, standard general
merchandise retailers regularly offering brand name and private brand items at
low prices, earn lower margins, and push for high sales turnover.
 Department Stores: A department store is large retail store organised into
several departments, offering a broad variety and depth of product lines.
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 Wholesaling and Retailing

2. Speciality Stores
Speciality stores carry a narrow product mix and deep product lines.
 Speciality Retail Stores
 Off-Price Retailers
 Category Killers

3. Shopping Malls
4. Retail Chains
5. Non-Store Retailing

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 Wholesaling and Retailing

Target Market and Store Location

Identifying target market is essential to determine all other aspects of
retailing decisions, such as location, merchandise mix, pricing, store
atmospherics, promotional efforts, and level of service. Location decision is
quite significant because it dictates the area of customer coverage and it is
the least flexible strategic issue.

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 Wholesaling and Retailing

Merchandise Variety and Assortment

Merchandise variety generally means breadth of product lines and
assortment refers to different models in the same or different brands in a
category.

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 Wholesaling and Retailing

Store Image and Atmospherics

This would require proper location, consideration of traffic congestion, exterior
storefront appearance, display windows, and entrance etc.

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 Wholesaling and Retailing

Services, Price, and Promotion

Service mix includes pre-purchase, and post-purchase services, such as
accepting customers’ orders on telephone or by mail, advertising and
promotions, helpful sales personnel, gift-wrapping, delivery, returns,
installations, extending credit, and repairs etc.

Price is also a critical differentiating factor and needs to be carefully

determined in relation to target customers, the nature of product mix, desired
level of service, and what kind of competition exists and anticipated.

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