PRINCIPLES OF MARKETING

Eighth Edition
Philip Kotler and Gary Armstrong

Chapter 13

Retailing and
Wholesaling
What is Retailing?

• All the activities involved in selling goods or

services directly to final consumers for their
personal, nonbusiness use.

• Retailers - businesses whose sales come primarily

from retailing.

• Retailers can be classified as:

– Store retailers such as Home Depot, Sears, Walmart
– Nonstore retailers such as the mail, telephone, and
Internet.
Classification
Classification of
of Retail
Retail Stores
Stores

Amount
Amount of
of Service
Service
Self-Service,
Self-Service, Limited-Service
Limited-Serviceand
and
Full-Service
Full-ServiceRetailers
Retailers
Product
Product Line
Line
Length
Lengthand
and Breadth
Breadth of
of the
theProduct
Product
Assortment
Assortment
Relative
Relative Prices
Prices
Pricing
Pricing Structure
Structurethat
thatisisUsed
Used
by
by the
theRetailer
Retailer
Retail
Retail Organizations
Organizations
Independent,
Independent, Corporate,
Corporate, or
or Contractual
Contractual
Ownership
OwnershipOrganization
Organization
Classification
Classification By
By Product
Product Line
Line

Store Type Length and Breadth of Product

Assortment
Specialty
SpecialtyStores
Stores Narrow
NarrowProduct
ProductLine,
Line,Deep
DeepAssortment
Assortment

Department Wide
WideVariety
Varietyof
ofProduct
ProductLines
Linesi.e.
i.e.Clothing,
Clothing,
DepartmentStores
Stores Home
Home Furnishings, & HouseholdItems
Furnishings, & Household Items
Supermarkets Wide
WideVariety
Varietyof
ofFood,
Food,Laundry,
Laundry,&&Household
Household
Supermarkets Products
Products
Convenience Limited
LimitedLine
Lineof
ofHigh-Turnover
High-TurnoverConvenience
Convenience
ConvenienceStores
Stores Goods
Goods
Superstores Large
LargeAssortment
Assortmentof ofRoutinely
RoutinelyPurchased
Purchased
Superstores Food
Food & Nonfood Products, PlusServices
& Nonfood Products, Plus Services
Category Giant
GiantSpecialty
SpecialtyStore
Storethat
thatCarries
CarriesaaVery
Very
CategoryKillers
Killers Deep Assortment of a Particular Line
Deep Assortment of a Particular Line
Hypermarkets
Hypermarkets Huge
HugeSuperstores
Superstores
 Classification By Retail
Organization

Merchandising
Merchandising Corporate
Corporate
Conglomerates
Conglomerates Chains
Chains

Retail
Franchise
Franchise Voluntary
Organizations Organizations Voluntary
Organizations Chains
Chains

Retailer
Retailer
Cooperatives
Cooperatives
 Characteristics of Direct Marketing

Privacy Targeted
Targeted
Privacy
Individuals
Individuals

Response
Response Customized
Customized
Key
Key
Measurement
Measurement Offer
Offer
Characteristics
Characteristics
of
of Immediate
Immediate
Testing
Testing Direct
Direct Orders
Orders
Marketing
Marketing

Higher
Higher Continuous
Continuous
Response
Response Relationship
Relationship
Types of NonStore Retailing
Nonstore Retailing Accounts for More Than 14% of All Consumer
Purchases, and May Account for 33% of All Sales by 2000.

Direct
Direct Marketing
Marketing

Direct
Direct Selling
Selling

Automatic
Automatic Vending
Vending

Catalogs
Catalogs &
& Direct
Direct Mail
Mail

TV
TV Shopping
Shopping Shows
Shows

Online
Online Shopping
Shopping

Home
Home &
& Office
Office Parties
Parties
Retailer Marketing Decisions

Retailer
Retailer Marketing
Marketing
Mix
Mix
Retailer
RetailerStrategy
Strategy
Product and
Service
Target Market Assortment

Retail Store Prices

Positioning

Promotion

Place (Location)
Click
Click to
to add
Retailer’s
Retailer’sadd title
Product
title Assortment
Product Assortment and
and
Services
Services Decisions
Decisions
Product
ProductAssortment
Assortment Decisions
Decisions
•• Width
Widthand
andDepth
DepthofofAssortment
Assortment
•• Quality
Qualityof
ofProducts
Products
•• Product
ProductDifferentiation
DifferentiationStrategies
Strategies

Services
Services Mix
Mix
Key
KeyTool
Toolof
ofNonprice
NonpriceCompetition
Competition
for
forSetting
SettingOne
OneStore
StoreApart
ApartFrom
From
Another.
Another.

Store’s
Store’sAtmosphere
Atmosphere
•• Physical
PhysicalLayout
Layout
•• “Feel”
“Feel”That
ThatSuits
Suitsthe
theTarget
TargetMarket
Market
and
andMoves
MovesCustomers
CustomerstotoBuy
Buy
Click
Click to
to add
Retailer’s
Retailer’sadd title
Price, Promotion,
Promotion, and
title
Price, and
Place
Place Decisions
Decisions

Price
Price Decisions
Decisions
Target
Target Market
Market
Product
Product &
& Services
Services Assortment
Assortment
Competition
Competition

Promotion
Promotion Decisions
Decisions
Using
Using Advertising,
Advertising, Personal
Personal Selling,
Selling,
Sales
Sales Promotion
Promotion and
and Public
Public
Relations
Relations to
to Reach
Reach Customers.
Customers.

Place
Place Decisions
Decisions
Shopping
Shopping Centers,
Centers, Central
Central Business
Business
Districts,
Districts, Power
Power Centers,
Centers, or
or Outlet
Outlet
Malls. Location!
 The Wheel of Retailing

High Margin
High Price
High Status

11
33
22
22 33 Low Margin
Low Price
Low Status
11
11 11 == Discount
Discount
22 == Superstore
Superstore
22 33 44 33 == Warehouse
Warehouse Club
Club
44 == Combination
Combination Store
Store
The
The Future
Future of
of Retailing
Retailing
New
New Retail
Retail Forms
Forms and
and Shortening
Shortening
Retail
Retail Lifecycles
Lifecycles
Growth
Growth of
of Nonstore
Nonstore Retailing
Retailing
Increasing
Increasing Intertype
Intertype Competition
Competition

Rise
Rise of
of Megaretailers
Megaretailers
Growing
Growing Importance
Importance of
of
Retail
Retail Technology
Technology
Global
Global Expansion
Expansion of
of Major
Major Retailers
Retailers
Retail
Retail Stores
Stores as
as “Communities”
“Communities”
or
or “Hangouts”
“Hangouts”
What is Wholesaling?

• All the activities involved in selling

goods and services to those buying for
resale or business use.

• Wholesaler - those firms engaged

primarily in wholesaling activity.
Why are Wholesalers Used?
Wholesalers are Often Better at Performing One
or More of the Following Channel Functions:

Management
Management Selling
Sellingand
and
Services
Services&&Advice
Advice Promoting
Promoting

Market
Market Buying
Buyingand
and
Information
Information
Wholesaler Assortment
AssortmentBuilding
Building

Risk
RiskBearing
Bearing Functions Bulk
BulkBreaking
Breaking

Financing
Financing Warehousing
Warehousing

Transporting
Transporting
Types
Types of
of Wholesalers
Wholesalers

Merchant
Merchant
Wholesaler Brokers/
Brokers/Agents
Agents
Wholesaler
They
TheyDon’t
Don’tTake
TakeTitle
Titleto
to
Independently
IndependentlyOwned
Owned the
theGoods,
Goods,and
andThey
They
Business
BusinessthatthatTakes
Takes Perform
PerformOnly
OnlyaaFew
Few
Title
Titleto
tothe
the Functions.
Functions.
Merchandise
Merchandise
ititHandles.
Handles.
Manufacturers’
Manufacturers’
Sales
Sales Branches
Branches
and
and Offices
Offices
Wholesaling
Wholesalingby
bySellers
Sellers
or
orBuyers
BuyersThemselves
Themselves
Rather
RatherThan
ThanThrough
Through
Independent
Independent
Wholesalers.
Wholesalers.
Wholesaler
Wholesaler Marketing
Marketing Decisions
Decisions

Wholesaler
Wholesaler Marketing
Marketing
Mix
Mix
Wholesaler
WholesalerStrategy
Strategy
Product and
Service
Target Market
Assortment

Retail Store
Prices
Positioning

Promotion

Place (Location)
Trends
Trends in
in Wholesaling
Wholesaling
Wholesaling Developments to Consider
Must
MustLearn
LearntotoCompete
Compete Effectively
EffectivelyOver
Over
Wider
Wider and
and More
More Diverse
DiverseAreas
Areas
Increasing
IncreasingConsolidations
ConsolidationsWill
Will Reduce
Reduce
Number
Number of
of Wholesalers
Wholesalers

Surviving
Surviving Wholesalers
Wholesalers Will
Will Grow
Grow Larger
Larger
Through
ThroughAcquisitions
Acquisitions and
and Mergers
Mergers

Vertical
Vertical Integration
Integration Will
Will Remain
RemainStrong
Strong

Global
Global Expansion
Expansion