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05/23/22 14:41 Prof. U.M. Amin, CMS, JMI University, New Delh i 1 Marketing Management MBA CP 205

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Marketing ManagementMBA CP 205

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Managing Retailing, Wholesaling and Logistics

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Learning Objectives:

• Know what the major types of marketing intermediaries that occupy this sector.• Know what marketing decisions these marketing intermediaries make.• Know what are the major trends with marketing intermediaries.

Managing Retailing, Wholesaling & Logistics

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Managing Retailing, Wholesaling & Logistics

Retailing

• Retailing includes all the activities involved in selling goods and services directly to final customers for personal, non-business use. • Any organization selling directly to final consumers whether a producer, wholesaler or a retailer, irrespective of how and where the goods are sold, is undertaking retailing.

• Consumers can shop for goods in a variety of organizations such as store retailers and non-store retailers.

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Managing Retailing, Wholesaling & Logistics

Types of Retailers

Specialty store: Narrow product line Department store: Many product lines Super market: Large low cost, low margin, high volume, self service store

designed to meet total needs for food and household products Convenience store: Small store in residential area Discount store: Standard or specialty merchandise; low price, low margin,

high volume stores. Off-price retailer: Leftover goods, overruns, irregular merchandise sold at

less than retail. Superstore: Huge selling space, routinely purchased food and household

items, hypermarket (huge stores that combine supermarket, discount and

warehouse retailing.)

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Managing Retailing, Wholesaling & Logistics

• Retailers can position themselves as one of four levels of service: Self service: corner store of all discount operations. Consumers carry out their own locate-compare-select process. Self selection: Consumers find their own goods but may need assistance. Limited service: These retailers carry more goods, consumer need more information and assistance. Full service: Sales persons are ready to assist in every phase of locate-compare-select process.

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Managing Retailing, Wholesaling & Logistics

• Though most of goods and services are sold through stores, non- store selling is also on the rise. It falls into three major categories:

Direct selling: Also called multi-level selling or network marketing. It involves recruiting independent business persons who act as distributors. Direct marketing: Has roots in direct mail and catalog marketing. Automatic vending: Can be used for a variety of merchandise. Vending machines can be installed at airports, factories and hotels.

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Managing Retailing, Wholesaling & Logistics

Retailers’ Marketing decisions

• These include decisions in the following areas: Target market. Product assortment and procurement. Store decor and service levels. Price. Communication. Location.

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Managing Retailing, Wholesaling & Logistics• Retailer has to decide on product-assortment breadth and

depth to match target market's expectations.

• The retailer must then develop product differentiation strategy. It may include one of the following:

Feature national/global brands that are not available at competing retailers. Feature mostly private branded merchandise. Feature surprise or ever-changing merchandise first.

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Managing Retailing, Wholesaling & Logistics

Feature the latest or newest merchandise first. Offer merchandise customizing services.

• Procurement involves establishing merchandise sources, policies and practices.

• Retailers are increasingly improving their skills in demand forecasting, merchandise selection, stock control, space allocation and display.

• Retailers are using Direct Product Profitability (DPP) to measure a product’s handling costs ( receiving, selecting, checking & space etc)

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Managing Retailing, Wholesaling & Logistics

• Services and store ambience: The services mix is a key tool to differentiate one store from another. It includes:

Pre-purchase services, like accepting telephone and mail orders, advertising, window & interior display and shopping hours. Post-purchase services like shipping & delivery, gift wrapping and installation. Ancillary services like general information, parking, repairs, credit and baby attendant services.

• Retailers need to differentiate based on prompt customer service.

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Managing Retailing, Wholesaling & Logistics

• In-store activities and experience can be another tool for differentiation.

• Establishment provide a place for people to assemble in cafes and bookshops. Some retailers create in-store entertainment in the hope of attracting customers who want to have fun and excitement.

• Prices are a vital positioning factor and must be decided in relation to the target market, the product-and-assortment mix and the competition.

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Managing Retailing, Wholesaling & Logistics

• Communication tools like placing ads, run special sales and issue money saving coupons are used by retailers to generate traffic and purchases.

• Each retailer must use communications that reinforce its image positioning.

• Retailers can locate their stores in central business district, a shopping mall, a community shopping center, within a large store, in a hotel or in airport lounges.

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Managing Retailing, Wholesaling & Logistics

Wholesaling

• 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.

• Wholesalers differ from retailers in the following ways:

1. Wholesalers pay less attention to promotion, atmosphere and location since they are dealing with business customers.

2. Wholesale transactions are usually larger than retail ones, wholesalers cover a larger trade area.

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• Wholesalers are used when they perform one of the following functions more efficiently:

Selling and promoting: Wholesalers’ representatives help manufacturers reach many small business customers at relatively low cost. Buying and assortment building: They are able to select items and build the assortments their customers need, saving the customers’ work. Bulk breaking. Wholesalers achieve savings by buying in large lots and breaking these lots into smaller units.

Managing Retailing, Wholesaling & Logistics

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Warehousing: They hold inventories, thereby reducing inventory costs and risks to suppliers and customers. Transportation: Wholesalers often provide faster delivery to buyers since they are closer to them. Financing: They finance customers by extending credit, and finance suppliers by ordering early and paying bills on time. Risk bearing: They absorb some risk by taking title and bearing cost of theft, damage, spoilage and obsolescence. Market information: Wholesalers supply information to suppliers and customers regarding competitors activities, new products & prices.

Managing Retailing, Wholesaling & Logistics

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Managing Retailing, Wholesaling & Logistics

Major Wholesaler types

Merchant wholesalers: Independently owned businesses that take title to the merchandise they handle. Full-service wholesalers: Carry stock, maintain a sales force, offer credit, make deliveries. Include wholesale merchants and industrial distributors that provide services like credit and delivery. Limited-service wholesalers: Cash and carry wholesalers, sell a limited line of fast moving goods to small retailers for cash. Brokers and agents: Facilitate buying and selling, on commission basis, limited functions, generally specialize by product line or customer type. Brokers bring buyers and sellers together and assist in negotiations. Agents represent buyers or sellers on a more permanent basis. Manufacturers’ branches and offices Specialized wholesalers: Agricultural assemblers, petroleum bulk plants and terminals and auction companies.

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Wholesaler Marketing Decisions

• These involve strategic decisions in the following areas:

Target market. Product assortment and services. Pricing decisions. Promotion decisions. Place decisions.

• Wholesalers can define their target markets in terms of size, type of customers, and need for service.

Managing Retailing, Wholesaling & Logistics

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• Wholesalers’ ‘product’ is their assortment. They need to examine how many product lines to carry which should be based on services valued by their customers.

• Wholesalers pursue a mark-up pricing policy.

• They rely on their sales persons to achieve promotional objectives.

• Wholesalers are located in low-rent, low-tax areas and do not invest resources on their physical setting and offices.

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Market Logistics

• Physical distribution now has been expanded into the broader concept of Supply Chain Management (SCM)

• SCM involves procuring the right inputs (raw materials, components and capital equipment), converting them efficiently into finished products, and dispatching them to the final destinations.

• Market logistics involves planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use to meet customer requirements at a profit.

Managing Retailing, Wholesaling & Logistics

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• Market planning logistics has four steps:

1. Deciding on the company’s value proposition to its customers.

2. Deciding on the best channel design and network strategy for reaching the customers.

3. Developing operational excellence in sales forecasting, warehouse management, transportation management and materials management.

4. Implementing the solution with the best information systems, equipment, policies, and procedures.

• Market logistics leads to an examination of the most efficient way to deliver value.

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Market-Logistics Decisions

• Four decisions are made with respect to market logistics:

How should orders be handled (order processing). Where should stocks be located (warehousing). How much stock should be held (inventory). How should goods be shipped (transportation).

• Companies are trying to shorten the order to payment cycle.

• Every company has to store the finished goods before they are sold since production and consumption cycles rarely match.

Managing Retailing, Wholesaling & Logistics

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• Inventory levels represent a major cost. Inventory decision making involves when to order and how much to order.

• Transportation choices will affect product pricing, on time delivery performance, and conditions of goods when they arrive – all these affect customer satisfaction.

• Shippers consider such criteria as speed, frequency, dependability, capability, availability, traceability, and cost.

• Containerization has enabled shippers to combine two or more transportation modes.

Managing Retailing, Wholesaling & Logistics

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Recap:

• What the major types of marketing intermediaries that occupy this sector.• What marketing decisions these marketing intermediaries make.• What are the major trends with marketing intermediaries.

Managing Retailing, Wholesaling & Logistics