Page 454 - Foundations of Marketing

Retailing, Direct Marketing, and Wholesaling | Chapter 14 421

Manufacturers may set up these branches or offices to reach their customers more effec-
tively by performing wholesaling functions themselves. A manufacturer also might set up
such a facility when specialized wholesaling services are not available through existing inter-
mediaries. Performing wholesaling and physical distribution activities through a manufactur-
er’s sales branch or office can strengthen supply-chain efficiency. In some situations, though,
a manufacturer may bypass its sales office or branches entirely—for example, if the producer
decides to serve large retailer customers directly.

Chapter Review

1. Understand the purpose and function of 3. Explore strategic issues in retailing.
retailers in the marketing channel. To increase sales and store patronage, retailers must consider
Retailing includes all transactions in which buyers are ulti- a number of key strategic issues. Location determines the area
mate consumers who intend to consume products for per- from which a store draws its customers. It is the least flex-
sonal, family, or household use. Retailers, organizations that ible ingredient in the marketing mix and should be consid-
sell products primarily to ultimate consumers, are important ered carefully. When evaluating potential sites, retailers take
links in the marketing channel, because they are both market- into account a variety of factors, including the location of the
ers for and customers of wholesalers and producers. Retailers firm’s target market within the trading area, kinds of products
add value, provide services, and assist in making product sold, availability of public transportation, customer charac-
selections. teristics, and competitors’ locations. Retailers can choose
among several types of locations, including freestanding
2. Identify the major types of retailers. structures, traditional business districts, traditional planned
Retail stores can be classified according to the breadth of shopping centers (neighborhood, community, regional, and
products offered. Two broad categories are general merchan- superregional), or nontraditional shopping centers (lifestyle,
dise retailers and specialty retailers. There are eight primary power, and outlet). Retail positioning involves identifying
types of general merchandise retailers. Department stores an unserved or underserved market segment and reaching it
are large retail organizations organized by departments and through a strategy that distinguishes the retailer from the com-
characterized by wide product mixes in considerable depth. petition. Store image, which is a subjective element, derives
Discount stores are self-service, low-price, general merchan- from atmospherics, location, products offered, customer ser-
dise outlets. Convenience stores are small, self-service stores vices, prices, promotion, and the store’s overall reputation.
that are open long hours and carry a narrow assortment of Atmospherics refers to the physical and sensory elements of
products, usually convenience items. Supermarkets are large, a store’s design that can be adjusted to appeal to consumers’
self-service food stores that carry some nonfood products. emotions and thus induce them to buy. Category management
Superstores are giant retail outlets that carry all the prod- is a retail strategy of managing groups of similar, often sub-
ucts found in supermarkets and most consumer products stitutable products produced by different manufacturers.
purchased on a routine basis. Hypermarkets combine aspects 4. Recognize the various forms of direct
of supermarket and discount store shopping in one location.
Warehouse clubs are large-scale, members-only discount marketing, direct selling, and vending.
operations. Finally, warehouse and catalog showrooms are Direct marketing is the use of the telephone, Internet, and non-
low-cost operations characterized by industrial methods of personal media to communicate product and organizational
materials handling and display, large inventories, and mini- information to customers, who can then purchase products via
mal services. mail, telephone, or online. Direct marketing is a type of nonstore
Specialty retailers offer substantial assortments in a few retailing, the selling of goods or services outside the confines of
product lines. They carry narrow product mixes with deep pro- a retail facility. Direct marketing may occur through a catalog
duct lines. Category killers are large specialty stores that con- (catalog marketing), advertising (direct response marketing),
centrate on a major product category and compete on the basis telephone (telemarketing), television (television home shop-
of low prices and enormous product availability. Off-price ping), or through online retailing. Two other types of nonstore
retailers sell brand-name manufacturers’ seconds and product retailing are direct selling and automatic vending. Direct sell-
overruns at deep discounts. ing is the marketing of products to ultimate consumers through

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