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Wholesaling and Retailing 19 Chapter Wholesaling and Retailing 19-1 19-1 Dr S.L Gupta Wholesaling and Retailing Wholesaling is concerned with the activities of individuals and establishments that sell to retailers and other merchants, or to industrial, institutional, and commercial users, but do not sell in large amounts to ultimate consumers. 19-2 Dr S.L Gupta Wholesaling and Retailing Functions for Producers Functions for Customers Wholesaler Market Coverage. Product Availability. Functions for Producers and Sales Contacts. Assortment Convenience. Customers Inventory Holding. Bulk-breaking. Order Processing. Credit Facility and Finance. Market Information. Customer Service. Customer Support. Technical Support. 19-3 Dr S.L Gupta Wholesaling and Retailing Major Types of Wholesalers 1. merchant wholesaler, 2. agents and brokers, and 3. manufacturer’s sales branches and offices. 19-4 Dr S.L Gupta Wholesaling and Retailing Merchant Wholesalers These are independent businesses that take title to goods and assume risks associated with ownership and generally buy and resell products to industrial or retail customers. They are divided into two subtypes: full-service and limited-service wholesalers. 19-5 Dr S.L Gupta Wholesaling and Retailing Full-Service Merchant Wholesalers General merchandise wholesalers Industrial distributors Limited line-wholesalers Speciality-line wholesalers Rack jobbers 19-6 Dr S.L Gupta Wholesaling and Retailing Limited-Service Merchant Wholesalers Cash-and-carry Truck wholesalers Drop-shippers Mail-order wholesalers 19-7 Dr S.L Gupta Wholesaling and Retailing Agents and Brokers Agents and brokers form the second major category of wholesalers. They negotiate purchase and speed up sales but do not take title to merchandise. They perform fewer services for producers and work on commission, generally based on product price. Agents represent buyers or sellers on an almost permanent basis. Brokers are employed to represent buyers or sellers temporarily. Manufacturer’s Agents: A selling agent Commission merchants Export or import 19-8 Dr S.L Gupta Wholesaling and Retailing Manufacturers’ Sales Branches and Offices Manufacturers set up Sales branches and offices to improve selling, promotion, and inventory control. Sales branches carry inventory and provide support services to manufacturer’s sales force, particularly in areas with concentration of large customers and considerable demand. Sales offices do not carry inventory and operate much like agents and in addition to manufacturer’s products may sell other complimentary products produced by other firms. 19-9 Dr S.L Gupta Wholesaling and Retailing Retailing A retailer is a business and can be an individual, chain store, departmental store, supermarket, speciality store, small locality shop, paan-bidi kiosk, or a service retailer etc., who links the producers and the final consumer. 19-10 Dr S.L Gupta Wholesaling and Retailing Vulnerability phase Entry phase Top heaviness Conservatism Low price The Wheel of Declining ROI Low margin Retailing Poor facilities Becomes Low status Limited products Up-market location Trading-up phase Fashion orientation Extended assortment Becomes Higher prices Elaborate facilities Exotic services 19-11 Dr S.L Gupta Wholesaling and Retailing Functions of Retailers Arranging Assortment Breaking Bulk Holding Stock Channel of Communication Promotional Support Extending Services 19-12 Dr S.L Gupta Wholesaling and Retailing Major Types of Retail Stores Various schemes have been proposed to categorise retailers based on (a) number of outlets, (b) margin vs turnover, (c) location, and (d) size. An independent store is a single retail unit owned by an individual, partnership, or corporation. A retail chain store is a part of a multiple retail outlet business. 19-13 Dr S.L Gupta Wholesaling and Retailing 1. General Merchandise Retailers General merchandise retailers carry a variety of product lines, with considerable depth. Some major types of these stores include supermarkets and hypermarkets, discount stores, and department stores. Supermarkets: A supermarket is a large self-service retail store that carries a wide variety of consumer products under one roof, such as complete line of food products, laundry requirements, household maintenance items, and OTC or non-prescription drugs etc. Discount Store: These stores are self-service, standard general merchandise retailers regularly offering brand name and private brand items at low prices, earn lower margins, and push for high sales turnover. Department Stores: A department store is large retail store organised into several departments, offering a broad variety and depth of product lines. 19-14 Dr S.L Gupta Wholesaling and Retailing 2. Speciality Stores Speciality stores carry a narrow product mix and deep product lines. Speciality Retail Stores Off-Price Retailers Category Killers 3. Shopping Malls 4. Retail Chains 5. Non-Store Retailing 19-15 Dr S.L Gupta Wholesaling and Retailing Target Market and Store Location Identifying target market is essential to determine all other aspects of retailing decisions, such as location, merchandise mix, pricing, store atmospherics, promotional efforts, and level of service. Location decision is quite significant because it dictates the area of customer coverage and it is the least flexible strategic issue. 19-16 Dr S.L Gupta Wholesaling and Retailing Merchandise Variety and Assortment Merchandise variety generally means breadth of product lines and assortment refers to different models in the same or different brands in a category. 19-17 Dr S.L Gupta Wholesaling and Retailing Store Image and Atmospherics This would require proper location, consideration of traffic congestion, exterior storefront appearance, display windows, and entrance etc. 19-18 Dr S.L Gupta Wholesaling and Retailing Services, Price, and Promotion Service mix includes pre-purchase, and post-purchase services, such as accepting customers’ orders on telephone or by mail, advertising and promotions, helpful sales personnel, gift-wrapping, delivery, returns, installations, extending credit, and repairs etc. Price is also a critical differentiating factor and needs to be carefully determined in relation to target customers, the nature of product mix, desired level of service, and what kind of competition exists and anticipated. 19-19 Dr S.L Gupta
"Chapter 19 Wholesaling and Retailing - _Dr._ SL Gupta"