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marketing chapter 25 - Chapter 11 Retailing and Wholesaling...

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Chapter 11 Retailing and Wholesaling Previewing the Concepts: Chapter Objectives 1. Explain the role of retailers and wholesalers in the distribution channel. 2. Describe the major types of retailers and give examples of each. 3. Identify the major types of wholesalers and give examples of each. 4. Explain the marketing decisions facing retailers and wholesalers. J UST THE B ASICS Chapter Overview This chapter is a continuation of the prior chapter on marketing channels; it provides more detail on retailing and wholesaling, two very important concepts in the value delivery network. It begins with a discussion of retailers and the challenges they face. There are many types of retailers. These retailers can be classified according to several characteristics, including the amount of service they offer, the breadth and depth of their product lines, the relative prices they charge, and how they are organized. Retailers are always searching for new strategies to attract and retain customers. The major decisions retailers need to make are centered around their target market and positioning, their product assortment and services, their price, their promotion strategies, and where they are located. Retailing is facing many challenges, including new retail forms, such as warehouse stores. The wheel of retailing concept says that many new retailing forms begin as low- margin, low-price, low-status operations. They challenge established retailers, and then the new retailers’ success leads them to upgrade their facilities and offer more services. In turn, their costs increase, and eventually they become like the conventional retailers they replaced. The cycle begins again. Wholesalers buy mostly from producers and sell mostly to retailers, industrial customers, and other wholesalers. As a result, many of this country’s largest and most important wholesalers are largely unknown to final consumers. Wholesalers provide important services, however, and they add value through performing one or more of several functions. There are many types of wholesalers, including merchant wholesalers, agents and brokers, and manufacturers’ sales branches and offices. They face many of the same 251
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decisions as retailers, including the choice of target market, positioning, and the marketing mix. The distinction between large retailers and large wholesalers continues to blur. Many retailers now operate formats such as wholesale clubs and hypermarkets that perform many wholesale functions. In return, many large wholesalers are setting up their own retailing operations. Chapter Outline 1. Introduction a. Few retailers can compete directly with Wal-Mart. Yet, little Whole Foods is thriving in the shadow of the giant. b. Whole Foods succeeds through careful positioning—specifically, by positioning itself away from Wal-Mart. It targets customers that Wal-Mart can’t serve, offering them value that Wal-Mart can’t deliver.
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