Page 456 - Foundations of Marketing

Retailing, Direct Marketing, and Wholesaling | Chapter 14 423

lifestyle shopping telemarketing 411 general-merchandise truck wholesalers 418
center 406 television home shopping wholesalers 417 drop shippers 418
power shopping center 407 411 limited-line wholesalers mail-order wholesalers 418
retail positioning 407 online retailing 411 417 agents 419
atmospherics 408 direct selling 412 specialty-line wholesalers brokers 419
category management 409 automatic vending 413 417 manufacturers’ agents 419
direct marketing 409 franchising 414 rack jobbers 417 selling agents 419
nonstore retailing 409 wholesaling 416 limited-service wholesalers commission merchants
catalog marketing 410 wholesaler 416 418 420
direct-response marketing merchant wholesalers 417 cash-and-carry wholesalers sales branches 420
410 full-service wholesalers 417 418 sales offices 420

Issues for Discussion and Review

1. What value is added to a product by retailers? What 8. If you were opening a retail business, would you prefer
value is added by retailers for producers and ultimate to open an independent store or own a store under a
consumers? franchise arrangement? Explain your preference.
2. What are the major differences between discount stores 9. What services do wholesalers provide to producers and
and department stores? retailers?
3. In what ways are traditional specialty stores and off- 10. What is the difference between a full-service merchant
price retailers similar? How do they differ? wholesaler and a limited-service merchant wholesaler?
4. What major issues should be considered when determin- 11. Drop shippers take title to products but do not accept
ing a retail site location? physical possession of them, whereas commission
5. Describe the three major types of traditional shopping merchants take physical possession of products but do
centers. Give an example of each type in your area. not accept title. Defend the logic of classifying drop
6. Discuss the major factors that help to determine a retail shippers as merchant wholesalers and commission
store’s image. How does atmosphere add value to prod- merchants as agents.
ucts sold in a store? 12. Why are manufacturers’ sales offices and branches
7. How is door-to-door selling a form of retailing? Some classified as wholesalers? Which independent whole-
consumers believe that direct-response orders bypass the salers are replaced by manufacturers’ sales branches?
retailer. Is this true? By sales offices?

Marketing Applications

1. Five Guys Burgers and Fries is one of the fastest grow- devices. A great advantage to online retailing is the ability
ing fast-food franchises in the United States. Started as a to track online traffic behaviors. In the real world, many
single burger joint by Jerry Murrell and his four sons—the consulting companies specialize in measuring pedestrian
“five guys”—in Alexandria, Virginia, the company now and vehicular traffic. Most commercial real estate agents
has more than 1,000 franchised outlets around the nation. and property developers/managers use traffic data.
Start-up costs for a Five Guys store range from about If you were considering becoming a Five Guys fran-
$ 150,000 to $ 300,000 . A $ 25,000 franchising fee must also chisee in your region, what would be the best location?
be paid, and ongoing royalties stand at 6 percent of sales. What are the major factors affecting your decision?
Making a fast-food restaurant successful means select- 2. Juanita wants to open a small retail store that specializes
ing the right location. Indeed, to recover start-up costs and, in high-quality, high-priced children’s clothing. What
of course, generate a profit, getting people through the types of competitors should she be concerned about in
door is paramount. Franchises like Five Guys, traditional this competitive retail environment? Why?
and online retailers, and other types of channel members 3. Location of retail outlets is an issue in strategic plan-
are all concerned with this idea of traffic. Once conducted ning. What initial steps would you recommend to Juanita
almost exclusively by hand using “clickers,” traffic is now (see Application Question 2) when she considers a loca-
measured using a variety of electronic and mechanical tion for her store?

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