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CHAPTER 13Retailing, Wholesaling

and InteractiveMarketing

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

After reading this chapter you should be able to:

• Identify retailers in terms of the utilities they provide.

• Explain the alternative ways to classify retail outlets.

• Understand the many methods of nonstore retailing.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

After reading this chapter you should be able to:

• Develop retailing mix strategies over the life cycle of a retail store.

• Describe the types and functions of firms that perform wholesaling activities.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

After reading this chapter you should be able to:

• Understand what interactive marketing is and how it creates customer value, customer relationships, and customer experiences in the new marketspace.

• Explain why certain types of products and services are particularly suited for interactive marketing.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

After reading this chapter you should be able to:

• Describe why consumers shop and buy online and how marketers influence online purchasing behaviour.

• Distinguish between the use of multiple channels and multichannel marketing in reaching online consumers.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

After reading this chapter you should be able to:

• Recognise the different roles played by transactional websites and promotional websites in multichannel marketing.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

The Value of Retailing• Retailing is an important marketing activity. Not only

do producers and consumers meet through retailing actions, but retailing also creates customer value and has a significant impact on the economy.

• To consumers, the value of retailing is in the form of utilities provided, which were discussed in Chapter 1.

• Retailing’s economic value is represented by the people employed in retailing as well as by the total amount of money exchanged in retail sales.

• Retailing also provides many with their first step in their business careers.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Consumer Utilities Offered by Retailing

• The utilities provided by retailers create value for consumers. Time, place, possession and form utilities are offered by most retailers in varying degrees, but one utility is often emphasised more than others.

• Many retailers offer a combination of the four basic utilities.

• Some supermarkets, for example, offer convenient locations (place utility) and are open 24 hours (time utility). In addition, consumers may seek additional utilities such as entertainment, recreation or information.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Concept Check1. When Jamu makes swimsuits cut to a

customer’s exact preferences and measurements, what utility is provided?

2. What utility is offered by a 24-hour convenience store?

1. Form utility

2. Time utility

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Classifying Retail Outlets• For manufacturers, consumers, and the economy,

retailing is an important component of marketing that has several variations.

• First, form of ownership distinguishes retail outlets on the basis of whether individuals, corporate chains or contractual systems own the outlet.

• Second, level of service is used to describe the degree of service provided to the customer. Three levels of service include self-, limited- and full-service retailers.

• Finally, the type of merchandise line describes how many different types of products a store carries and in what assortment.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Form of Ownership• Independent Retailer: One of the most common forms of retail

ownership is the independent business, owned by an individual. Small retailers account for most of the retail establishments in both Australia and New Zealand.

• Corporate Chain: A second form of ownership, the corporate chain, involves multiple outlets under common ownership. If you’ve ever shopped at Coles, Bunnings, Bi-Lo, Kmart or Target, you’ve shopped at a chain outlet owned by Wesfarmers Corp.

• Contractual System: Contractual systems involve independently owned stores that band together to act like a chain. The three kinds are retailer-sponsored co-operatives, wholesaler-sponsored voluntary chains, and franchises.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Number of franchises in selected chains

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Level of Service• Most customers perceive little variation in retail

outlets by form of ownership. • Rather, differences among retailers are more obvious

in terms of level of service.• The levels of service are:

– Self-service is at the extreme end of the level-of-service continuum because the customer performs many functions and little is provided by the outlet.

– Limited-service outlets provide some services, such as credit and merchandise return, but not others, such as custom-made clothes.

– Full-service retailers, which include most speciality stores and department stores, provide many services to their customers.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Merchandise Line• Retail outlets also vary by their merchandise lines,

the key distinction being the breadth and depth of the items offered to customers (Figure 13–2).

• Depth of product line means that the store carries a large assortment of each item, such as a shoe store that offers running shoes, dress shoes and children’s shoes.

• Breadth of product line refers to the variety of different items a store carries.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Breadth versus depth of merchandise lines – fig 13.2

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Breadth versus depth of merchandise• Depth of Line: Stores that carry a large assortment (depth) of a

related line of items are limited-line stores. – For example, AMart All Sports stores carry considerable depth in

sports equipment ranging from weight-lifting accessories to running shoes.

– Stores that carry tremendous depth in one primary line of merchandise are single-line stores. Both limited- and single-line stores are often referred to as speciality outlets.

• Breadth of Line: Stores that carry a broad product line, with limited depth, are referred to as general merchandise stores.– The breadth and depth of merchandise lines are important

decisions for a retailer. Traditionally, outlets carried related lines of goods. Today, however, scrambled merchandising, offering several unrelated product lines in a single store, is common.

– there is also competition between very dissimilar types of retail outlets, or intertype competition

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Non-store Retailing• Most of the retailing examples discussed earlier in the chapter,

such as corporate chains, department stores, and limited- and single-line speciality stores, involve store retailing.

• Many retailing activities today, however, are not limited to sales in a store.

• Non-store retailing occurs outside a retail outlet through activities that involve varying levels of customer and retailer involvement.

• Six forms of non-store retailing are: 1. automatic vending. 2. direct mail and catalogues. 3. television home shopping. 4. online retailing. 5. Telemarketing.6. direct selling.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Wholesaling• Many retailers depend on intermediaries that engage

in wholesaling activities — selling products and services for the purposes of resale or business use.

• There are several types of intermediaries, including: – wholesalers and agents (described briefly in Chapter 12). – Manufacturers’ sales offices.

• These are all important to understand as part of the retailing process.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Wholesaling – Differences in Intermediaries• Merchant wholesalers are independently owned firms that take

title to—that is, they own—the merchandise they handle.• Unlike merchant wholesalers, agents and brokers do not take

title to merchandise and typically provide fewer channel functions.

• They make their profit from commissions or fees paid for their services, whereas merchant wholesalers make their profit from the sale of the merchandise they own.

• Unlike merchant wholesalers, agents and brokers, manufacturer’s branches and sales offices are wholly owned extensions of the producer that perform wholesaling activities.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Concept Check1. What is the difference between merchant

wholesalers and agents?2. How are brokers different from agents?

1. Merchant wholesalers are independently owned firms that take title to the merchandise they handle, whereas agents do not take title to merchandise and typically provide fewer channel functions.

2. Brokers, unlike agents, usually have no continuous relationship with the buyer or seller but negotiate a contract between two parties and then move on to another task.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Anytime, Anywhere, Anyway: The New Marketing Mantra• The Internet and the World Wide Web’s promise of immediacy

and interactivity have been hailed as a compelling new technology that would revolutionise marketing.

• It hasn’t gone that far but it has changed many things in marketing.

• Internet/Web technology has empowered consumers to seek information, evaluate alternatives and make purchase decisions on their own terms and conditions.

• At the same time, this technology has challenged marketers to deliver to consumers more (selection, service, quality, enjoyment, convenience, and information) for less (money, time, effort).

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Computer Processor Speeds

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Creating Customer Value, Relationships andExperiences in the New Marketspace

• Consumers and companies populate two market environments today.

• One is the traditional marketplace where buyers and sellers engage in face-to-face exchange relationships in a material environment characterised by physical facilities (stores and offices) and mostly tangible objects.

• The other is the marketspace, an Internet/Web-enabled digital environment characterised by ‘face-to-screen’ exchange relationships and electronic images and offerings.

• The existence of two market environments has benefited consumers tremendously as consumers can shop for and purchase a wide variety of products and services in either market environment.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Customer Value Creation in Marketspace• Despite the widespread interest in marketspace, its economic

significance remains small compared with the traditional marketplace.

• Marketers believe that the possibilities for customer value creation are greater in marketspace than in the traditional marketplace.

• Recall from Chapter 1 that marketing creates time, place, form and possession utilities for customers, thereby providing value.

• In marketspace, the provision of direct, on-demand information is possible from marketers anywhere to customers anywhere at any time.

• Why? Operating hours and geographical constraints do not exist in marketspace.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Interactivity, Individuality and Customer Relationships in Marketspace

• Marketers also benefit from two unique capabilities of Internet/Web technology that promote and sustain customer relationships.

• One is interactivity; the other is individuality.• Both capabilities are important building blocks for buyer–seller

relationships. • For these relationships to occur, companies need to interact

with their customers by listening and responding to their needs. • Marketers must also treat customers as individuals and

empower them to (1) influence the timing and extent of the buyer–seller interaction and (2) have a say in the kind of products and services they buy, the information they receive, and in some cases, the prices they pay.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

The Online Consumer• Online consumers differ from the general population

in one important respect. • They own or have access to a computer or an

Internet/Web-enabled device, such as a wireless cellular telephone.

• Online consumers are the subsegment of all Internet/Web users who use this technology to research products and services and make purchases.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

What Online Consumers Buy• Much still needs to be learned about online consumer

purchase behaviour. • Although research has documented the most frequently

purchased products and services bought online, marketers also need to know why these items are popular.

• There are six general product and service categories that dominate online consumer buying today and for the foreseeable future. These are:– Items for which product information is an important part of the

purchase decision but prepurchase trial is not necessarily critical.– items for which audio or video demonstration is important– items that can be delivered digitally– Unique items, such as collectibles– items that are regularly purchased and where convenience is very

important.– highly standardised products and services for which information

about price is important.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Why Consumers Shop and Buy Online

• Marketers emphasise the customer value-creation possibilities, the importance of interactivity, individuality and relationship building, and producing customer experience in the new marketspace.

• However, consumers typically refer to six reasons why they shop and buy online: – Convenience.– Choice.– Customisation.– Communication. – Cost. – Control.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Why Consumers Shop and Buy Online

• Convenience: Online shopping and buying is convenient, no need to find a park on a busy day in a shopping centre or leave your home or office.

• Choice. has two dimensions. First, choice exists in the product or service selection offered to consumers and secondly choice assistance is also important.

• Customisation. arises from Internet/Web-enabled capabilities that make possible a highly interactive and individualised information and exchange environment for shoppers and buyers.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Why Consumers Shop and Buy Online• Communication. can take three forms (1) marketer-to-consumer

e-mail notification, (2) consumer-to-marketer buying and service requests and (3) consumer-to-consumer chat rooms and instant messaging, which includes viral marketing.

• Cost. Internet/Web-enabled software permits dynamic pricing, the practice of changing prices for products and services in real time in response to supply and demand conditions.

• Control. The final reason consumers prefer to buy online is the control it gives them over their shopping and purchase decision process. Online shoppers and buyers are empowered consumers, readily using Internet/Web technology to seek information, evaluate alternatives and make purchase decisions on their own time, terms, and conditions.

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Why consumers shop and buy online

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Concept Check1. What is viral marketing?

2. What are the six reasons consumers prefer to shop and buy online?

1. Viral marketing is an Internet/Web-enabled promotional strategy that encourages individuals to forward marketer-initiated messages to others via e-mail.

2. They are: convenience, choice, customization, communication, cost, and control.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Integrating Multiple Channels with Multichannel Marketing

• Companies often employ multiple marketing channels for their products and services.

• Dual distribution is the term used to describe this practice, which focuses on reaching different consumers through different marketing channels.

• Multichannel marketing is the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining and building relationships with consumers who shop and buy in the traditional marketplace and marketspace.

• Multichannel marketing seeks to integrate a firm’s communication and delivery channels, not differentiate them.

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Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et alSlides prepared by Andrew Hughes, Australian National University

Concept Check 1. Multichannel marketing is __________________.

1. The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in the traditional marketplace and marketspace.

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Finish• Questions?

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