Retailing and

Wholesaling
Marketing Strategies
(Written Report)
 Retailing
All activities involved in selling goods or services directly to final consumers for
their personal, nonbusiness use. Selling to final consumer

Retailer
Business whose sales come primarily from retailing.

Types of Retailers:
1. STORE RETAILING

• Pass through stages of growth and decline that can be describe as retail life cycle. Consists of
the sale of goods or merchandise from a fixed location

a. SPECIALTY STORE

• Carry a narrow product line with deep assortment within that line. Example: The Body Shop,

b. DEPARTMENT STORE

• Carry several product line. Managed by Specialist buyers or merchandisers. Example: SM

Department Store, Robinson Department Store

c. SUPERMARKET

• Relatively large, low-cost, low-margin, high-volume, self-service operations designed to

serve the consumer’s total needs for food, laundry, and households.

d. CONVENIENCE STORE

• Relatively small stores that are located near residential areas, are open long hours days a
week, and carry a limited line of high-turnover convenience products.

e. DISCOUNT STORE

• Sell standard merchandise at lower prices by accepting lower margins and selling higher
volumes.

f. OFF-PRICE RETAILERS

• Buy at less than regular wholesale price and charge consumers less than retail. Main types:
Factory Outlets, Independent off-price retailers and warehouse/wholesale clubs.

1. Factory Outlets

Owned and operated by manufacturers and normally carry the manufacturer’s

surplus, discontinued or irregular goods.

2. Independent off-price Retailers

Owned and run either by entrepreneurs or by divisions of larger retail corporations.

 3. Warehouse Clubs

Sell limited selection of brand-name. Serve small businesses and group members,
operate in huge, low-overhead, ware-houselike facilities, and offer few frills.

g. SUPERSTORES

• Offers services such as laundry, dry cleaning, shoe repair, check cashing, and bill paying.
Types: Combination Stores and Hypermarkets.

1. Combination Stores

Represent a diversification of the supermarket store into the growing drug-and-

prescription field

2. Hypermarkets

Combined supermarket, discount store and warehouse retailing principles.

h. CATALOG SHOWROOMS

• Sell a broad selection of high-markup, fast moving, brand-name goods, at discount prices.

2. NON-STORE RETAILING

• Retailing done without conventional store-based locations. Nonstore retailing

includes such services as vending machines, direct-to-home selling, telemarketing,
catalog sales, mail order, and television marketing programs.

1. Direct Selling

• Personal contact between a sales person and a consumer away from a store that
results in a sale. There are two types of Direct Selling: One-to-one selling and One-
to-many selling

a. One-to-one selling

o A sales person visits and tries to sell products to a single potential user.
Examples are Avon, Fuller Brush Company, Electrolux & World Book.

b. One-to-many selling

 A salesperson goes to the home of a host, who has invited friends and
neighbors to the party. The salesperson then demonstrates the product and
take orders. Examples are Tupperware & Mary Kay Cosmetics.

2. Direct Marketing

 Has roots in direct mail and catalog marketing but today includes reaching
people in other ways, including telemarketing, television direct response marketing &
electronic shopping. Examples are Home Shopping Network & QVC Network.
Infomercials.
 3. Automatic Vending

 The sale of products through a machine with no personal contact between

buyer and seller. Examples are Coca Cola Machines, The New Your Times
newspaper boxes.

4. Buying Service

 A store less retailer serving specific clienteles-usually the employees of large

organizations, such as schools, hospitals, unions, and government agencies. Example
is the United Buying Service (offers its 900,000 members the opportunity to buy
merchandise at “cost plus 8%”)

3. RETAIL ORGANIZATION

Types of Retail Organizations

1. Corporate Chain Stores

 Two or more outlets that are commonly owned and controlled, employ central buying
and merchandising, and sell similar lines of merchandise. Examples are Tower
Records, Fayva(shoes), Barn(dinnerware & Home Furnishings).

2. Voluntary Chain

 Consists of a wholesaler-sponsored group of independent retailers in bulk-buying

and common merchandising. Examples are Independent Groceries Alliance (IGA) in
groceries, True Value in Hardware.

3. Retailer Cooperative

 Consists of independent retailers who set up a central buying organization and

conduct joint promotion efforts. Examples are Associated Grocers (groceries), ACE
(hardware).

4. Consumer Cooperative

 A retail firm owned by its costumers. Consumer coops are started by community
residents who feel that local retailers are not serving them well, either charging too-
high prices or providing poor-quality products. xamples are various local consumer
cooperatives across the country.

5. Franchise Organization
  Contractual association between a franchiser and franchisees. Normally based on
some unique product, service, or method of doing business, or on trade name or
patent, or on goodwill that the franchiser has developed. Examples are McDonald’s,
Subway, Pizza Hut & 7-eleven.

6. Merchandising Conglomerate

 A free-form corporation that combines several diversified retailing lines and forms
under central ownership, along with some integration of their distribution-and-
management functions. Example is the F. W. Woolworth in addition to its variety
stores, operates an shoe stores.

Store Retailers are classified into Amount of Service:

1. Self-service retailer

• Used in many retailing operations, especially for obtaining convenience goods and shopping goods.
Cornerstone of all discount operations.

2. Self-selection retailers

• Involves customers in finding their own goods. Have higher operating expenses because
of the additional staff.

3. Limited-service retailers

• Provides more sales assistance because retailers carry more shopping goods, and
customer needs more information. Have higher operating costs

4. Full-service retailers

• Provides sales people who are ready to assist in every phase of the locate-compare-select process.
High cost retailing

Trends in Retailing
1. New Retail Form
o Emerge to threaten established retail forms.
2. Shortening Retail Life Cycles
o New Retail Forms are facing a shortening life style. They are rapidly copied and
quickly lose their novelty.
3. Nonstore Retailing
o The electronic age has significantly increased the growth of nonstore retailing.
4. Increasing Intertype Competition
o The competition between chain superstores and small stores has become
particularly heated.
5. Polarity of Retailing
o Increasing intertype competition has produced retailers positioning themselves on
extreme ends of the number of product lines carried.
6. Giant Retailers
o Super power retailers are emerging.
 7. Changing Definition of One Stop Shopping
o Department stores gave ways to malls, which feature a wide range of specialty
stores. Specialty stores are becoming more competitive.
8. Growth of Vertical Marketing Systems
o As large corporations extend their control over marketing channels,
independent stores are squeezed out.

9. Portfolio Approach
o Retail organizations are increasingly designing and launching new formats targeted
to different lifestyles group.
10. Growing Importance of Retail Technology
o Retail Technology are becoming critically important as competitive tools.
11. Global Expansion Of Major Retailers
o Retailers with unique formats and strong brand positioning are increasingly moving
into other countries.

12. Retail Store as Communication Centers or Hang-outs

o With the rise in the number of people living alone, working at home, or living in
isolated and sprawling suburbs, there has been a marked resurgence of
establishments that, regardless of the product or service they offer, also provide a
place for people to congregate.

Market Decisions of Retailing

1. Target Market
Target market has to be very clear to guide other decisions. Retailers needs to divide the
market to provide the best offer to customers

2. PRODUCT-ASSORTMENT-AND SERVICES DECISION

The retailers product assortment must match the target market’s expectation. The retailer
has to decide on product breadth and depth. Retailers must also decide on the service mix offer.

3. PRICING DECISION
Retailers prices are a key positioning factor and must be decide in relation to the target
market. Retailers must pay attention to pricing tactics.

4. PROMOTION DECISION
Retailers use a wide range of promotion tools to generate traffic and purchases.

5. PLACE DECISION
Retailers are accustomed to saying that the three keys to success are “Location, Location
and Location”.
 Wholesaling
Wholesaling includes all the activities involved in selling goods or services to those who
buy resale or business use. Wholesaling excludes manufactures because and farmers because
they are engaged primarily in production, and it excludes retailers.

A wholesaler is an organization providing the necessary means to: 1) allow suppliers (e.g.,
manufacturers) to reach organizational buyers (e.g., retailers, business buyers), and 2) allow
certain business buyers to purchase products which they may not be able to otherwise purchase.

Wholesalers (also known as distributors) are in business to provide products and services
to buyers (e.g., retailers) who either cannot purchase directly from suppliers because their
purchase quantities are too low to meet the supplier’s minimum order requirements or, if they
purchase directly from suppliers, will pay higher prices compared to bigger retailers who obtain
better pricing by purchasing in greater quantities. Since wholesalers sell to a large number of
buyers their order quantities may match those of large retailers thus allowing them to obtain
lower prices from suppliers. Wholesalers can then pass these lower prices along to their buyers,
which can enable smaller retailers to remain competitive with larger rivals. In this way
transacting through wholesalers is often the only way certain retailers can stay in business.

Wholesalers differ from retailers in a number of ways. Wholesalers pay less attention to
promotion, atmosphere and location because they are dealing with business customers rather
than final customers. Second, wholesale transactions are usually larger than retail transactions
because they usually cover large trade area than retailers. Third, government deals with
wholesalers and retailers differently in regard to legal regulations and taxes.

Functions of Wholesaling:

1. Selling and Promoting

Wholesalers provide a sales force that helps manufacturers reach many small business
customers at a relatively low cost. Wholesalers have more contacts and often buyers trust
wholesalers more than they trust the distant manufacturer.

2. Buying and Assortment building

Wholesalers are able to select items and build assortments their customers need, thus
saving the customers considerable work.

3. Bulk breaking
Wholesalers achieve savings for their customers through buying in large carload lots
and breaking the bulk into smaller units.

4. Warehousing

Wholesalers hold inventories, thereby reducing the inventory cost and risk to
suppliers and customers.

5. Transportation.
Wholesalers can often provide quicker delivery to buyers because they re closer to
the buyers than the manufacturers.
 6. Financing
Wholesalers finance their customers by granting credit, and they finance their
suppliers by ordering on time and paying the bills on time.

7. Risk bearing
Wholesalers absorb some risk by taking the title and bearing the cost of damage,
spoilage and obsolescence.

8. Market information
Wholesalers supply information to their suppliers and customers regarding
competitors’activities, new products, price developments and so on.

9. Management services and counseling

Wholesalers often help retailers improve their operations by training sales clerks,
helping with stores’ layouts and displays and inventory control systems

Types of Wholesalers
1. MERCHANT WHOLESALERS

o Independently owned businesses that take title to the merchandise they handle. In
different trades they called jobbers, distributors or mill supply houses

o Categories: Full-service Wholesalers and Limited Service Wholesalers

A. FULL-SERVICE WHOLESALERS

o Provide a full line of services: carrying stock, maintaining a sales force, offering credit,
making deliveries and providing management assistance

o Types: Wholesale Merchants and Industrial Merchants

a. WHOLESALE MERCHANTS

• Sell primarily to retailers and provide a full range of services. General Wholesalers carry several
merchandise lines, while General-line Wholesalers carry one or two lines in greater depth.
Specialty Wholesalers specialize in carrying only part of a line

b. INDUSTRIAL DISTRIBUTORS

• Sell to manufacturers rather than to retailers. Provide several services: carrying stock, offering
credit and providing delivery. May carry a broad range of merchandise, a general line or a
specialty line.

B. LIMITED-SERVICE WHOLESALERS

o Offer fewer services to their suppliers and customers.

o Types: Cash-and-Carry Wholesalers, Truck Wholesalers, Drop Shippers, Rack Jobbers,

Producers Cooperatives, Mail-order Wholesalers
 a. CASH-AND-CARRY WHOLESALERS

• Have a limited line of fast moving goods and sell to small retailers for cash. Normally do not
deliver

b. TRUCK WHOLESALERS

• Perform primarily a selling and delivery function. Carry a limited line of semi-perishable
merchandise which they sell for cash as they make their rounds of supermarkets, small
groceries, hospitals, restaurants, factory cafeterias and hotels.

c. DROP SHIPPERS

• Operate in bulk industries. Do not carry inventory or handle the product. Upon receiving an
order, they select manufacturer, who ships the merchandise directly to the customer on the
agreed upon terms and time of delivery. Assumes title and risk from the time the order is
accepted to its delivery to the customer

d. RACK JOBBERS

• Serve grocery and drug retailers, send delivery trucks to stores and the delivery people set
up toys, paperbacks, hardware items, health and beauty aids. They price the goods, keep
them fresh, set-up point of purchase displays, and keep inventory record. Retain title to the
goods and bill the retailers only for the good sold to customer. Do little promotion because
they carry many branded items.

e. PRODUCERS COOPERATIVE

• Owned by farmer members and assemble farm produce to sell in local markets. Profits are
distributed to members at the end of the year. Often attempt to improve product quality and
promote a co-op brand.

f. MAIL-ORDER WHOLESALERS

• Sends catalogs to retail, industrial, and institutional customers. Main customers are
businesses in small outlying areas. No sales force is maintained to call on customers.
Orders are filled and sent by mail, trucks and others.

2. BROKERS AND AGENTS

• Do not take title to goods and perform only a few function. Facilitate buying and selling. For which they
earn a commission of 2% to 6% of the selling price.

A. BROKERS

• Bringing buyers and sellers together and assisting in negotiation. They are paid by the party who hired
them and do not carry inventory, get involved in financing or assume risk.

• Examples: Food brokers, Real-state brokers, insurance brokers and security brokers.

B. SELLING AGENTS

• Have contractual authority to sell manufacturer’s entire output. Serves as a sales department and
influences over prices, terms and condition of sales. No territorial limits.
3. MANUFACTURER’S AND RETAILERS BRANCHES AND OFFICES

• Operations are conducted by sellers or buyers themselves rather than through independent
wholesalers. Separate branches and offices can be dedicated to either sales or purchasing.

A. SALES BRANCHES AND OFFICES

• Set up by manufacturers to improve inventory control, selling and promotion.

• Sales Branches carry inventory and are found in such industries

• Sales Offices do not carry inventory and are most prominent in dry-goods and notion industries.

B. PURCHASING OFFICERS

• Roles are similar to brokers and agents but are part of buyers organization

• Many retailers set up purchasing offices in major market centers.

Wholesaler Marketing Decision

• TARGET-MARKET DECISION. Wholesalers need to define their target market. They can
choose a target group of customers according to size criteria, type of customer, need for
service or other criteria.

• PRODUCT-ASSORTMENT-AND SERVICES DECISION. The wholesale “product” is their

assortment. Wholesalers are under great pressure to carry a full line and maintain
sufficient stock for immediate delivery.

• PRICING DECISION. Wholesalers usually mark up the cost of goods by a conventional

percentage, say 20%, to cover their expenses. Expenses may run 17% of the gross
margin, leaving a profit margin of approximately 3 percent.

• PROMOTION DECISION. Wholesalers rely primarily on their sales force to achieve

promotional objectives. They need to develop an overall promotion strategy involving
trade advertising, sales promotion and publicity.

• PLACE DECISION. In the past, wholesalers typically located in low-rent, low-tax areas and
put little money into their physical setting and offices. Today progressive wholesalers have
been improving materials-handling procedures and costs by developing automated
warehouses.

Trends in Wholesaling
 Price competition is still intense

 Successful wholesalers must add value by increasing efficiency and effectiveness

 The distinction between large retailers and wholesalers continues to blur

 More services will be provided to retailers

 Many wholesalers are going global