Page 430 - Foundations of Marketing

Retailing, Direct Marketing, and Wholesaling | Chapter 14 397

Retailers like the grocery market and restaurant complex Eataly are the most visible and
accessible marketing channel members to consumers. They represent an important link in
the marketing channel because they are both marketers for and customers of producers and
wholesalers. They perform many supply-chain functions, such as buying, selling, grading, risk
taking, and developing and maintaining information databases about customers. Retailers are
in a strategic position to develop relationships with consumers and partnerships with produc-
ers and intermediaries in the marketing channel.
In this chapter, we examine the nature of retailing, direct marketing, and wholesaling
and their roles in supplying consumers with goods and services. First, we explore the major
types of retail stores and consider strategic issues in retailing: location, retail positioning,
store image, and category management. Next, we discuss direct marketing, including catalog
marketing, direct-response marketing, telemarketing, television home shopping, and online
retailing. We also explore direct selling and vending. Then we look at the strengths and weak-
nesses of franchising, a popular form of retailing. Finally, we examine the importance of
wholesalers in marketing channels, including their functions and classifi cations.

RETAILING LO 1 . Understand the purpose
and function of retailers in the
marketing channel.
Retailing includes all transactions in which the buyer is the ultimate consumer and intends to
consume the product for personal, family, or household use. A retailer is an organization that
purchases products for the purpose of reselling them to ultimate consumers. Although most
retailers’ sales are made directly to the consumer, nonretail transactions occur occasionally,
when retailers sell products to other businesses.
Retailing is important to the national U.S. economy. There are more than 1 million retail-
2
ers operating in the United States that employ nearly 15 million people. Retailers contribute a
3
great deal to the U.S. economy, generating more than $ 384 billion in annual sales.
Retailers add value for customers by providing services and assisting in making product
selections. They can also enhance consumers’ perception of the value of products by making
buyers’ shopping experiences easier or more convenient, such as providing free delivery or
offering an online shopping option. Retailers can facilitate comparison shopping to allow cus-
tomers to evaluate different options. For example, car dealerships often cluster in the same gen-
eral vicinity, as do furniture stores. Product value is also enhanced when retailers offer services,
such as technical advice, delivery, credit, and repair. Finally, retail sales personnel are trained
to be able to demonstrate to customers how products can satisfy their needs or solve problems.
Retailers can add significant value to the supply chain, representing a critical link between
producers and ultimate consumers by providing the environment in which exchanges occur.
Retailers play a major role in creating time, place, and possession utility and, in some cases,
form utility. Retailers perform marketing functions that benefit ultimate consumers by making
available broad arrays of products that can satisfy their needs.
Historically, leading retailers like Walmart, Home Depot, Macy’s, Staples, and Best Buy
have offered consumers a physical place to browse and compare merchandise in order to find
what they need. However, traditional retailing faces challenges from direct marketing channels
that provide home shopping through catalogs, television, and the Internet. Brick-and-mortar
retailers have responded to changes in the retail environment in various ways. Many retailers
retailing All transactions in
now utilize multiple distribution channels and complement their brick-and-mortar stores with
which the buyer intends to
websites where consumers can shop online. Many offer online-only sales and merchandise that
consume the product
encourage consumers to frequent their sites and their stores. Partnerships among noncompet- through personal, family, or
ing retailers and other marketing channel members acknowledge the competitive marketing household use
environment and provide additional opportunities for retailers to satisfy the needs of customers retailer An organization that
and encourage loyalty. For instance, major retailers, such as Walmart and Target, partner with purchases products for the
chains, such as McDonald’s, KFC, and Starbucks, to feature in-store dining. Airports feature purpose of reselling them to
many different retailers and service outlets to improve the experience for travelers. ultimate consumers

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