Page 4:

• Retailing includes selling products or services directly to consumers for personal use.

• Retailers are businesses whose sales come primarily from retailing.

• Shopper Marketing focuses on turning shoppers into buyers at the point of sale.

Page 5:

• Omni-channel retailing creates a seamless cross-channel buying experience.

• Digital technologies have caused a shift in how and where people buy.

• Retailers must adopt omni-channel retailing to integrate in-store, online, and mobile shopping.

Page 6:

• Types of retailers include self-service, limited service, and full service.

Page 7:

• Product line classifications include specialty stores, department stores, convenience stores, superstores, and category killers.

Page 8:

• Relative price characteristics include discount stores, off-price retailers, factory outlets, and warehouse clubs.

Page 9:

• Major types of retail organizations include corporate chains, voluntary chains, retailer cooperatives, and franchise organizations.

Page 10:

• Corporate chains are commonly owned and controlled outlets that can buy in large quantities at lower prices.

• Examples include Macy's and CVS.

Page 11:

• Voluntary chains are wholesale-sponsored groups of independent retailers that engage in group buying and common merchandising.

• Examples include IGA, Western Auto, and True Value.

Page 12:

• Retailer cooperatives are a group of independent retailers that establish a joint-owned, central wholesale operation.

• Examples include Ace Hardware and Associated Grocers.

Page 13:

• Franchises are contractual associations between a franchisor and independent business people who buy the right to operate units in the franchise system.

• Examples include McDonald's, Subway, and Pizza Hut.

Page 15:

• Omni-channel retailing integrates channels for a seamless buying experience.

• CarMax is an example of a company that uses omni-channel retailing.

Page 18:

• Retail targeting and positioning involve defining and profiling the market.

• Lush Fresh Handmade Cosmetics positions itself away from larger competitors by offering premium beauty products made by hand.

Page 19:

• Major product variables include product assortment, services mix, and store atmosphere.

• Adidas's flagship store in New York City focuses on offering customer experiences.

Page 20:

• Price policy must fit the target market, competition, and economic factors.

• High markup on lower volume and low markup on higher volume are pricing strategies.

Page 21:

• Everyday low pricing (EDLP) involves charging constant, everyday low prices.

• High-low pricing involves charging higher prices with frequent sales and promotions.

Page 22:

• Promotion decisions include advertising, personal selling, sales promotion, public relations, and direct marketing.

Page 23: Retailer Marketing Decisions (7 of 7) Place Decision

• Central business districts are located in cities and include department and specialty stores, banks, and movie theaters.

• A shopping center is a group of retail businesses planned, developed, owned, and managed as a unit.

Page 24: Learning Objective 4

• Discuss the major trends and developments in retailing.

Page 25: Retailing Trends and Developments (1 of 6)

• Tighter Consumer spending

  • Changed consumer spending patterns

  • Some retailers benefit

  • Other retailers have tough times

• Value positioning: T G I Friday offers Fridays 5, a selection of delicious drinks and appetizers, all for $5 each.

Page 26: Retailing Trends and Developments (2 of 6)

• New Retail Forms, Shortening Retail Life Cycles, and Retail Convergence

• Retail convergence involves the merging of consumers, producers, prices, and retailers, creating greater competition for retailers and greater difficulty differentiating offerings.

Page 27: Retailing Trends and Developments (3 of 6)

• The Rise of Megaretailers

• The rise of megaretailers involves the rise of mass merchandisers and specialty superstores, the formation of vertical marketing systems, and a rash of retail mergers and acquisitions.

• Superior information systems

• Buying power

• Large selection

Page 28: Retailing Trends and Developments (4 of 6)

• Growing Importance of Retail Technology

• Retail technology provides better forecasts, inventory control, electronic ordering, transfer of information, scanning, online transaction processing, improved merchandise handling systems, and the ability to connect with customers.

• Retail technology: "If you want to glimpse the future of retail, check out an Amazon Go store."

Page 29: Retailing Trends and Developments (5 of 6)

• Green Retailing Environmentally Sustainable Practices

• Store design, construction, operations

• Product assortment

• Recycling made easier

• Package and distribution

Page 30: Retailing Trends and Developments (6 of 6)

• Global Expansion of Major Retailers

• Retailers with unique formats and strong brands in other countries

• U.S. behind Asian and European companies in global expansion

• Challenges in meeting needs of local markets

Page 31: Learning Objective 5

• Explain the major types of wholesalers and their marketing decisions.

Page 32: Wholesaling (1 of 15)

• Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.

• Selling and promoting

• Buying and assortment building

• Bulk breaking

• Warehousing

• Transportation

Page 33: Wholesaling (2 of 15)

• Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.

• Financing

• Risk bearing

• Market information

• Management services and advice

Page 34: Wholesaling (3 of 15)

• Selling and promoting involves the wholesaler's sales force helping the manufacturer reach many small customers at a low cost.

• Buying and assortment building involves the selection of items and building of assortments needed by customers, saving the customers work.

Page 35: Wholesaling (4 of 15)

• Bulk breaking involves the wholesaler buying in large quantities and breaking into smaller lots for customers.

• Warehousing involves the wholesaler holding inventory, reducing its customers' inventory cost and risk.

Page 36: Wholesaling (5 of 15)

• Transportation involves the wholesaler providing quick delivery due to its proximity to the buyer.

• Financing involves the wholesaler providing credit and financing suppliers by ordering early and paying on time.

Page 37: Wholesaling (6 of 15)

• Risk bearing involves the wholesaler absorbing risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.

• Market information involves the wholesaler providing information to suppliers and customers about competitors, new products, and price developments.

Page 38: Wholesaling (7 of 15)

• Management services and advice involves wholesalers helping retailers train their sales clerks, improve store layouts, and set up accounting and inventory control systems.

• Wholesaling: Many of the nation's largest and most important wholesalers—like Grainger—are largely unknown to final consumers. But they are very well known and much valued by the business customers they serve.

Page 39: Wholesaling (8 of 15)

• Types of Wholesalers

• Merchant wholesalers

• Brokers and agents

• Manufacturers' and retailers' branches and offices

Page 40: Wholesaling (9 of 15)

• Types of Wholesalers

• Merchant wholesalers are the largest group of wholesalers and include:

  • Full-service wholesalers that provide a full set of services

  • Limited service wholesalers that provide few services and specialized functions

Page 41: Wholesaling (10 of 15)

• Types of Wholesalers

• Brokers and agents do not take title, perform a few functions, and specialize by product line or customer type.

• Brokers bring buyers and sellers together and assist in negotiations.

• Agents represent buyers or sellers.

Page 42: Wholesaling (11 of 15)

• Types of Wholesalers

• Manufacturers' and retailers' branches and offices are a form of wholesaling by sellers or buyers themselves, rather than through independent wholesalers.

Page 43: Wholesaling (12 of 15)

• Figure 13.2 Wholesaler Marketing Strategies

Page 44: Wholesaling (13 of 15)

• Wholesaler Marketing Decisions

• Segmentation, targeting, differentiation, positioning decisions:

  • Size of customer

  • Type of customer

  • Need for service

Page 45: Wholesaling (14 of 15)

• Wholesaler Marketing Decisions

• Marketing mix decisions

  • Product

  • Price

  • Promotion

  • Place

Page 46: Wholesaling (15 of 15)

• Trends In Wholesaling

• Need for greater efficiency

• Value-adding customer relationships

• Increase in customer demand for services

• Increase in use of technology to boost productivity

Page 48: NETFLIX: Finding the Future by Abandoning the Past

• Netflix has innovated its way to the top in the distribution of video entertainment.

• Netflix must keep the distribution innovation pedal to the metal.

• Netflix's innovative distribution strategy: From DVDs by mail to Watch Instantly to streaming on almost any device and creating original content.

• What's next?

Page 49

• Learning Objectives:

  • Explain why companies use marketing channels and discuss the functions these channels perform.

  • Discuss how channel members interact and how they organize to perform the work of the channel.

  • Identify the major channel alternatives open to a company.

  • Explain how companies select, motivate, and evaluate channel members.

  • Discuss the nature and importance of marketing logistics and integrated supply chain management.

Page 50

• Learning Objective:

  • Explain why companies use marketing channels and discuss the functions these channels perform.

Page 51

• Supply Chains and Value Delivery Networks (1 of 3):

  • Upstream partners are firms that supply raw materials, components, parts, information, finances, and expertise needed to create a product or service.

  • Downstream partners include the marketing channels or distribution channels that look toward the customer, including retailers and wholesalers.

Page 52

• Supply Chains and Value Delivery Networks (2 of 3):

  • Supply chain "make and sell" view includes the firm's raw materials, productive inputs, and factory capacity.

  • Demand chain "sense and respond" view suggests that planning starts with the needs of the target customer.

Page 53

• Supply Chains and Value Delivery Networks (3 of 3):

  • Value delivery network is composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system.

  • Example: In making and marketing its lines of cars, Toyota manages a huge network of people within the company plus thousands of outside suppliers, dealers, and marketing service firms that work together to deliver the brand's "Let's Go Places" and "Let's Go Beyond" promises.

Page 54

• The Nature and Importance of Marketing Channels (1 of 7):

  • Marketing channel (distribution channel) is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.

Page 55

• The Nature and Importance of Marketing Channels (2 of 7):

  • How Channel Members Add Value:

    • Transform the assortment of products into assortments wanted by consumers.

    • Bridge the major time, place, and possession gaps that separate goods and services from users.

Page 56

• The Nature and Importance of Marketing Channels (3 of 7):

  • Figure 12.1 How a Distributor Reduces the Number of Channel Transactions

Page 57

• The Nature and Importance of Marketing Channels (4 of 7):

  • How Channel Members Add Value:

    • Information

    • Promotion

    • Contact

    • Matching

    • Negotiation

    • Physical distribution

    • Financing

    • Risk taking

Page 58

• The Nature and Importance of Marketing Channels (5 of 7):

  • Number of Channel Levels:

    • Channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.

    • Direct marketing channel is a marketing channel that has no intermediary levels.

    • Indirect marketing channel is a marketing channel containing one or more intermediary levels.

Page 59

• The Nature and Importance of Marketing Channels (6 of 7):

  • Figure 12.2 Consumer and Business Marketing Channels

Page 60

• The Nature and Importance of Marketing Channels (7 of 7):

  • Number of Channel Levels:

    • Channel members are connected by several types of flows:

      • Physical flow of products

      • Flow of ownership

      • Payment flow

      • Information flow

      • Promotion flow

Page 61

• Learning Objective:

  • Discuss how channel members interact and how they organize to perform the work of the channel.

Page 62

• Channel Behavior and Organization (1 of 13):

  • Channel Behavior:

    • Marketing channels consist of firms that have partnered for their common good with each member playing a specialized role.

Page 63

• Channel Behavior and Organization (2 of 13):

  • Channel Behavior:

    • Channel conflict refers to disagreement among channel members over goals, roles, and rewards.

    • Horizontal conflict

    • Vertical conflict

Page 64

• Channel Behavior and Organization (3 of 13):

  • Figure 12.3 Comparison of Conventional Distribution Channel with Vertical Marketing System

Page 65

• Channel Behavior and Organization (4 of 13):

  • Vertical Marketing Systems:

    • Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.

Page 66

• Channel Behavior and Organization (5 of 13):

  • Vertical Marketing Systems:

    • Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system.

    • Corporate marketing systems

    • Contractual marketing systems

    • Administered marketing systems

Page 67

• Channel Behavior and Organization (6 of 13):

  • Vertical Marketing Systems:

    • Corporate vertical marketing systems combine successive stages of production and distribution under single ownership.

Page 68

• Channel Behavior and Organization (7 of 13):

  • Vertical Marketing Systems:

    • Contractual vertical marketing systems consist of independent firms at different levels of production and distribution who join together through contracts.

Page 69

• Channel Behavior and Organization (8 of 13):

  • Vertical Marketing Systems:

    • Franchise organization is a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process.

    • Example: Through franchising, Sports Clips—where you can "Get your hair in the game"—has rapidly grown to more than 1,700 locations.

Page 70

• Channel Behavior and Organization (9 of 13):

  • Vertical Marketing Systems:

    • An administered vertical marketing system is a VMS that coordinates successive stages of production and distribution through the size and power of one of the parties.

Page 71

• Channel Behavior and Organization (10 of 13):

  • Horizontal Marketing Systems:

    • Horizontal marketing system is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.

    • Example: Target partners with CVS Health, who operates stores-within-stores to the benefit of all – Target, CVS, and their mutual customers.

Page 72

• Channel Behavior and Organization (11 of 13):

  • Figure 12.4 Multichannel Distribution System

Page 73

• Channel Behavior and Organization (12 of 13):

  • Multichannel Distribution Systems:

    • Multichannel distribution systems are systems in which a single firm sets up two or more marketing channels to reach one or more customer segments.

Page 74

• Channel Behavior and Organization (13 of 13):

  • Changing Channel Organization:

    • Disintermediation is the cutting out of marketing channel intermediaries by producers or the displacement of traditional resellers by new intermediaries.

    • Example: Toys"R"Us pioneered the superstore format that once made it the go-to place for buying toys. But after falling victim to shifts in toy market sales to big discounters like Walmart and online merchants like Amazon, the retail giant was forced to close down operations and shutter its stores.

Channel Design Decisions

Page 75

• Learning Objective: Identify the major channel alternatives open to a company.

Page 76

• Channel Design Decisions (1 of 8)

• Designing effective marketing channels by:

  • Analyzing customer needs

  • Setting channel objectives

  • Identifying major channel alternatives

  • Evaluating those alternatives

Page 77

• Channel Design Decisions (2 of 8)

• Steps in channel design decisions:

  • Analyzing consumer needs

  • Setting channel objectives

  • Identifying channel alternatives

  • Evaluating channel alternatives

Page 78

• Channel Design Decisions (3 of 8)

• Analyzing Consumer Needs:

  • Find out what target consumers want from the channel

  • Identify market segments

  • Determine the best channels to use

  • Minimize the cost of meeting customer service requirements

Page 79

• Channel Design Decisions (4 of 8)

• Setting Channel Objectives:

  • Determine targeted levels of customer service

  • Balance consumer needs against costs and customer price preferences

Page 80

• Channel Design Decisions (5 of 8)

• Identifying Major Alternatives:

  • Types of intermediaries refers to channel members available to carry out channel work

  • Most companies face many channel member choices

Page 81

• Channel Design Decisions (6 of 8)

• Identifying Major Alternatives:

  • Number of Marketing Intermediaries:

    • Intensive distribution

    • Exclusive distribution

    • Selective distribution

Page 82

• Channel Design Decisions (7 of 8)

• Identifying Major Alternatives:

  • Responsibilities of Channel Members:

    • A producer and the intermediaries need to agree on:

      • Price policies

      • Conditions of sale

      • Territory rights

      • Specific services

Page 83

• Channel Design Decisions (8 of 8)

• Evaluating Major Alternatives:

  • Economic criteria

  • Control issues

  • Adaptability criteria

Channel Management Decision

Page 84

• Learning Objective: Explain how companies select, motivate, and evaluate channel members.

Page 85

• Channel Management Decision:

  • Selecting channel members

  • Managing channel members

  • Motivating channel members

  • Evaluating channel members

Public Policy and Distribution Decisions

Page 86

• Exclusive distribution: producer gives only a limited number of dealers the exclusive right to distribute its products in their territories

• Exclusive dealing: seller requires that the exclusive distribution sellers not handle competitor’s products

• Exclusive territorial agreements: producer or seller limit territory

• Tying agreements: dealer must take most or all of the line

Marketing Logistics and Supply Chain Management

Page 87

• Learning Objective: Discuss the nature and importance of marketing logistics and integrated supply chain management.

Page 88

• Marketing Logistics and Supply Chain Management (1 of 5)

• Nature and Importance of Marketing Logistics:

  • Marketing logistics (physical distribution) involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet consumer requirements at a profit

  • Importance of logistics: G M has hundreds of millions of tons of finished vehicles and parts in transit, running up an annual logistics bill of about $8 billion

Page 89

• Marketing Logistics and Supply Chain Management (2 of 5)

• Figure 12.5 Supply Chain Management

Page 90

• Marketing Logistics and Supply Chain Management (3 of 5)

• Nature and Importance of Marketing Logistics:

  • Supply chain management involves managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers

  • Goal of marketing logistics should be to provide a targeted level of customer service at the least cost

Page 91

• Marketing Logistics and Supply Chain Management (4 of 5)

• Major Logistics Functions:

  • Warehousing

  • Inventory management

  • Transportation

  • Logistics information management

Page 92

• Marketing Logistics and Supply Chain Management (5 of 5)

• Integrated Logistics Management:

  • Recognition that providing customer service and trimming distribution costs requires teamwork internally and externally

  • Oracle’s supply chain management software solutions help companies to “gain sustainable advantage and drive innovation by transformi