Managing Place of Marketing
Mix
Successful “go-to-market” strategies require
integrating retailers, wholesalers, and
logistical organizations.
~KOTLER
Retailing
• Types of Retailers
• Retail life cycle
Table 1: Major Retailer Types
Specialty Store: Narrow product line with a deep assortment. A clothing store
would be a single-line store; a men’s clothing store would be a limited-line
store; and a men’s custom-shirt store would be a superspecialty store.
Examples: Athlete’s Foot, Tall Men, The Limited, The Body Shop.
Department Store: Several product lines—typically clothing, home
furnishings, and household goods—with each line operated as a separate
department managed by specialist buyers or merchandisers. Examples:
Sears, JCPenney, Nordstrom, Bloomingdale’s.
Supermarket: Relatively large, low-cost, low-margin, high volume, self-
service operation designed to serve total needs for food, laundry, and
household products. Examples: Kroger, Food Emporium, Jewel.
Convenience Store: Relatively small store located near residential area,
open long hours, seven days a week, and carrying a limited line of high-
turnover convenience products at slightly higher prices, plus takeout
sandwiches, coffee, soft drinks. Examples: 7-Eleven, Circle K.
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Retailing
– Levels of Service
• Wheel-of-retailing
• Four levels of service:
– Self-service
– Self-selection
– Limited service
– Full service
Figure 2:
Retail
Positioning
Map
Retailing
• Nonstore retailing
• Categories of nonstore retailing
– Direct selling
– Direct marketing
» Telemarketing
» Television direct-response marketing
» Electronic shopping
– Automatic vending
– Buying service
• Corporate Retailing
Table 3: Major Types of Retail Organizations
Corporate Chain Store: Two or more outlets commonly owned and
controlled, employing central buying and merchandising, and selling similar
lines of merchandise. Their size allows them to buy in large quantities at lower
prices, and they can afford to hire corporate specialists to deal with pricing,
promotion, merchandising, inventory control, and sales forecasting.
Examples: Tower Records, GAP, Pottery Barn.
Voluntary Chain: A wholesaler-sponsored group of independent retailers
engaged in bulk buying and common merchandising. Examples: Independent
Grovers Alliance (IGA), True Value Hardware.
Retailer Cooperative: Independent retailers who set up a central buying
organization and conduct joint promotion efforts. Examples: Associated
Grocers, ACE Hardware.
Consumer Cooperative: A retail firm owned by its customers. In consumer
coops residents contribute money to open their own store, vote on its policies,
elect a group to manage it, and receive patronage dividends.
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Challenges and Marketing Decisions
– Target Market
– Product Assortment and Procurement
• Breadth
• Depth
– Procurement
– Prices
– Services
– Store Atmosphere
– Location
Retailing
• Services and Store Atmosphere
– Prepurchase services include accepting telephone
and mail orders, etc.
– Postpurchase services include shipping
and delivery, etc.
– Ancillary services include general information, check
cashing, parking, etc.
• Price Decision
– High-markup, lower volume
– Low-markup, high volume
Retailing
– Product-differentiation Strategy Possibilities
• Feature exclusive national brands that are not
available at competing retailers
• Feature mostly private branded merchandise
• Feature blockbuster distinctive merchandise events
• Feature surprise or ever-changing merchandise
• Feature the latest or newest merchandise first
• Offer merchandise customizing services
• Offer a highly targeted assortment
Retailing
• Promotion Decision
• Place Decision
– General business districts
– Regional shopping centers
– Community centers
– Strip malls (a.k.a. shopping strips)
– A location within a larger store
– Stand-alone stores
Retailing
Trends in Retailing
1. New retail forms and combinations
2. Growth of intertype competition
3. Growth of giant retailers
4. Growing investment in technology
5. Global presence of major retailers
6. Selling an experience, not just goods
7. Competition between store-based
and non-store-based retailing
Wholesaling
– Wholesalers’ functions:
• Selling and promoting
• Buying and assortment building
• Bulk breaking
• Warehousing
• Transportation
• Financing
• Risk bearing
• Market information
• Management services and counseling
• The Growth and Types of Wholesaling
Table 4: Major Wholesaler Types
Merchant Wholesalers: Independently owned businesses that take
title to the merchandise they handle. They are called jobbers,
distributors, or mill supply houses and fall into two categories: full
service and limited service.
Full-Service Wholesalers: Carry stock, maintain a sales force, offer
credit, make deliveries, and provide management assistance. There
are two types of full-service wholesalers: (1) Wholesale merchants
sell primarily to retailers and provide a full range of services. General-
merchandise wholesalers carry several merchandise lines. General-
line wholesalers carry one or two lines. Specialty wholesalers carry
only part of a line. (2) Industrial distributors sell to manufacturers
rather than to retailers and provide several services—carrying stock,
offering credit, and providing delivery.
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Wholesaling
Wholesaler Marketing Decisions
– Target Market
– Product Assortment and Services
– Price Decision
– Promotion Decision
– Place Decision
Market Logistics
• Supply chain management (SCM)
• Value network
• Demand chain planning
• Market logistics
– Market logistics planning has four steps:
» Deciding on the company’s value
proposition to its customers
» Deciding on the best channel design and
network strategy for reaching the 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
• Integrated logistics systems (ILS)
Market Logistics
• Market-logistics Objectives
• Market-logistics Decisions
– Order Processing
• Order-to-payment cycle
– Warehousing
• Storage warehouses
• Distribution warehouses
• Automated warehouses
Market Logistics
– Inventory
• Inventory cost increases at an accelerating rate as
the customer service level approaches 100%
• Order (reorder) point
• Order-processing costs
• Inventory-carrying costs
Figure 1: Determining Optimal Order Quantity
Market Logistics
• Just-In-Time production (JIT)
– Transportation
• Containerization
– Piggyback
– Fishyback
– Trainship
– Airtruck
– Private carrier
– Contract carrier
– Common carrier
Thank you
