1/5/2025

Principles of Marketing: An Asian

Perspective
Fourth Edition

Chapter 13
Retailing and
Wholesaling

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Learning Objectives
13.1 Explain the role of retailers in the distribution
channel and describe the major types of retailers.
13.2 Describe the major retailer marketing
decisions.
13.3 Discuss the major trends and developments
in retailing.
13.4 Explain the major types of wholesalers and
their marketing decisions.

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Learning Objective 13.1 (1 of 2)

• Explain the role of retailers in the distribution
channel and describe the major types of retailers.

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Retailing (1 of 4)
Retailing includes all the activities in selling goods or
services directly to final consumers for their personal,
nonbusiness use.
• Retailers
• Shopper Marketing

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Retailing (2 of 4)
“First Moment of Truth”—the critical three to seven
seconds that a shopper considers a product on a store
shelf.

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Retailing (3 of 4)
Types of Retailers
• Classification Characteristics:
– Amount of service
– Product lines
– Relative prices
– Organization
• Amount of Service Classifications
– Self-service
– Limited service
– Full service
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Types of Retailers (1 of 9)
• Product Line Classifications
– Specialty stores
– Department stores
– Convenience stores
– Superstores
– Category killers

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Types of Retailers (2 of 9)
• Relative Price Classifications
– Discount stores
– Off-price retailers
– Factory outlets
– Warehouse clubs

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Types of Retailers (3 of 9)
• Relative Price Classifications
– Discount stores
– Off-price retailers
 Independents
 Factory outlets
 Warehouse clubs

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Major Store Retailer Types (1 of 2)

Table 13.1 Major Store Retailer Types
Type Description Examples
Specialty store A store that carries a narrow product line with a deep Giordano (single-line
assortment, such as apparel stores, sporting-goods store), Giordano Ladies
stores, furniture stores, florists, and bookstores. (limited-line store).
Department store A store that carries several product lines—typically Sogo, Siam Paragon,
clothing, home furnishings, and household goods—with Tangs, Metrojaya.
each line operated as a separate department managed
by specialist buyers or merchandisers.
Supermarket A relatively large, low-cost, low-margin, high-volume, Safeway, Wellcome,
self-service operation designed to serve the consumer’s RTMart, Hua Lien,
total needs for grocery and household products. Kimisawa Supermarket,
Giant.
Convenience store A relatively small store located near residential areas, 7-Eleven, FamilyMart,
open long hours seven days a week, and carrying a Lawson, Circle K, Shell
limited line of high-turnover convenience products at Select.
slightly higher prices.

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Major Store Retailer Types (2 of 2)

Table 13.1 [continued]
Type Description Examples
Discount store A store that carries standard merchandise sold at lower Walmart, Carrefour, The
prices with lower margins and higher volumes. Store, Daiso.

Off-price retailer A store that sells merchandise bought at less-than- Esprit Outlet, Dickson
regular wholesale prices and sold at less than retail. Warehouse (factory
These include factory outlets owned and operated by outlets); Sogo Club
manufacturers; independent off-price retailers owned (independent off-price
and run by entrepreneurs or by divisions of larger retail retailer); GrandMart,
corporations; and warehouse (or wholesale) clubs Metro Asia (warehouse
selling a limited selection of goods at deep discounts to clubs).
consumers who pay membership fees.
Superstore A very large store that meets consumers’ total needs for Tokyu, eBay (category
routinely purchased food and nonfood items. This killers); Jual Murah, Big
includes supercenters, combined supermarket and C (supercenters);
discount stores, and category killers, which carry a Carrefour, Pyrca, Giant
deep assortment in a particular category. (hypermarkets).

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Types of Retailers (4 of 9)
• Organizational Approach
– Corporate chains
– Voluntary chains
– Retailer cooperatives
– Franchise organizations

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Types of Retailers (5 of 9)
• Organizational Approach
Table 13.2 Major Types of Retail Organizations
Type Description Examples
Corporate chain Two or more outlets that are commonly owned PARKnSHOP (grocery stores),
and controlled Corporate chains appear in all Watsons, Cosmed (Health care
types of retailing but they are strongest in stores), Chow Tai Fook (Jewellery),
department stores, discount stores, food stores, Shell Select
drugstores, and restaurants.
Voluntary chain Wholesaler-sponsored group of independent Independent Grocers Alliance (IGA),
retailers engaged in group buying and Do-It Best (hardware), Luk Fook
merchandising. Jewellery
Retailer Group of independent retailers who jointly Associated Grocers (groceries),
cooperative establish a central buying organization and Mitre 10 (hardware)
conduct joint promotion efforts.
Franchise Contractual association between a franchisor (a McDonald’s, Pizza Hut, Luk Fook
organization manufacturer, wholesaler, or service organization) Jewellery, Circle K, 7-Eleven
and franchisees (independent businesspeople
who buy the right to own and operate one or more
units in the franchise system).

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Types of Retailers (6 of 9)
Organizational Approach
Corporate chains are two or more outlets that are commonly
owned and controlled.
• Size allows them to buy in large quantities at lower prices
and gain promotional economies.
Voluntary chains are wholesale-sponsored groups of
independent retailers that engage in group buying and
common merchandising.

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Types of Retailers (8 of 9)
Organizational Approach
• Retailer cooperatives are a group of independent retailers
that band together to set up a joint-owned, central
wholesale operation and conduct joint merchandising and
promotion efforts.
• Franchises are contractual associations between a
manufacturer, wholesaler, or service organization (a
franchisor) and independent businesspeople (franchisees)
who buy the right to own and operate one or more units in
the franchise system.

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Marketing Channels
Learning Objective 13.2 (1 of 2)
• Describe the major retailer marketing decisions.

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Retailer Marketing Decisions (1 of 6)

Figure 13.1 Retailer Marketing Strategies

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Retailer Marketing Decisions (2 of 6)

• Target Market and Positioning Decisions
involve the definition and profile of the market so
the other retail marketing decisions can be
made.

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Retailer Marketing Decisions (3 of 6)

• Product Assortment and
Services Decisions include:
– Product assortment
– Services mix
– Store atmosphere

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Retailer Marketing Decisions (4 of 6)

Price Decision
• Price policy must fit the target market and positioning,
product and service assortment, competition, and
economic factors.
‒ High markup on lower volume
‒ Low markup on higher volume

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Retailer Marketing Decisions (5 of 6)

Promotion Decision
• Advertising
• Personal selling
• Sales promotion
• Public relations
• Direct marketing

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Retailer Marketing Decisions (6 of 6)

Price Decision
• Central business districts are located in cities and
include department and specialty stores, banks, and
movie theaters.
• A shopping center is a group of retail businesses
planned, developed, owned, and managed as a unit.

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Marketing Channels
Learning Objective 13.3 (1 of 2)
• Discuss the major trends and developments in retailing.

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Retailing Trends and

Developments (1 of 6)
New Retail Forms, Shortening Retail Life Cycles, and
Retail convergence
• Retail convergence involves the merging of consumers,
producers, prices, and retailers, creating greater competition
for retailers and greater difficulty differentiating offerings.

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Retailing Trends and

Developments (2 of 6)
• The rise of megaretailers involves the rise of mass
merchandisers and specialty superstores, the formation
of vertical marketing systems, and a rash of retail
mergers and acquisitions.
– Superior information systems
– Buying power
– Large selection

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Retailing Trends and

Developments (3 of 6)
Growth of Non-store Retailing
• Direct
• Online
• Mobile
• Social Media

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Retailing Trends and

Developments (4 of 6)
The growing importance of retail technology provides
better forecasts, inventory control, electronic ordering,
transfer of information, scanning, online transaction
processing, improved merchandise handling systems,
and the ability to connect with customers.

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Retailing Trends and

Developments (5 of 6)
Global Expansion of Major Retailers
• Retailers with unique formats and strong brands in other
countries
• Asian and European companies ahead of the U.S. in global
expansion
• Challenges in meeting needs of local markets

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Retailing Trends and

Developments (6 of 6)
Green Retailing
• Environmentally sustainable practices
– Store design, construction, operations
– Product assortment
– Recycling made easier
– Package and distribution

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Marketing Channels
Learning Objective 13.4 (1 of 2)
• Explain the major types of wholesalers and their
marketing decisions.

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Wholesaling (1 of 15)
• Wholesaling includes all activities involved in selling
goods and services to those buying for resale or
business use.
– Selling and promoting
– Buying and assortment building
– Bulk breaking
– Warehousing
– Transportation

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Wholesaling (2 of 15)
• Wholesaling includes all activities involved in selling
goods and services to those buying for resale or
business use.
– Financing
– Risk bearing
– Market information
– Management services and advice

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Wholesaling (3 of 15)
• Selling and promoting involves the wholesaler’s
sales force helping the manufacturer reach many small
customers at a low cost.
• Buying and assortment building involves the
selection of items and building of assortments needed
by customers, saving the customers work.
• Bulk breaking involves the wholesaler buying in large
quantities and breaking into smaller lots for customers.

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Wholesaling (5 of 15)
• Warehousing involves the wholesaler holding
inventory, reducing its customers’ inventory cost and
risk.
• Transportation involves the wholesaler providing
quick delivery due to its proximity to the buyer.
• Financing involves the wholesaler providing credit and
financing suppliers by ordering early and paying on
time.

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Wholesaling (6 of 15)
• Risk bearing involves the wholesaler absorbing risk
by taking title and bearing the cost of theft, damage,
spoilage, and obsolescence.
• Market information involves the wholesaler providing
information to suppliers and customers about
competitors, new products, and price developments.
• Management services and advice involves
wholesalers helping retailers train their sales clerks,
improve store layouts, and set up accounting and
inventory control systems.

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Wholesaling (8 of 15)
Types of Wholesalers
• Merchant wholesalers
• Brokers and agents
• Manufacturers’ and retailers’ branches and offices

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Major Types of Wholesalers (1 of 4)

Table 13.3 Major Types of Wholesalers
Type Description
Merchant Independently owned businesses that take title to all merchandise handled. There are
wholesalers full-service wholesalers and limited-service wholesalers.
Full-service Provide a full line of services: carrying stock, maintaining a sales force, offering credit,
wholesalers making deliveries, and providing management assistance. Full-service wholesalers
include wholesale merchants and industrial distributors.
Wholesale merchants Sell primarily to retailers and provide a full range of services. General merchandise
wholesalers carry several merchandise lines, whereas general line wholesalers carry
one or two lines in great depth. Specialty wholesalers specialize in carrying only part of
a line.
Industrial distributors Sell to manufacturers rather than to retailers. Provide several services, such as
carrying stock, offering credit, and providing delivery. May carry a broad range of
merchandise, a general line, or a specialty line.
Limited-service Offer fewer services than full-service wholesalers. Limited-service wholesalers are of
wholesalers several types:
Cash-and-carry Carry a limited line of fast-moving goods and sell to small retailers for cash. Normally
wholesalers do not deliver.

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Major Types of Wholesalers (2 of 4)

Table 13.3 [continued]
Type Description
Truck wholesalers (or Perform primarily a selling and delivery function. Carry a limited line of semiperishable
truck jobbers) merchandise (such as milk, bread, snack foods), which is sold for cash as deliveries
are made to supermarkets, small groceries, hospitals, restaurants, factory cafeterias,
and hotels.
Drop shippers Do not carry inventory or handle the product. On receiving an order, drop shippers
select a manufacturer, who then ships the merchandise directly to the customer. Drop
shippers operate in bulk industries, such as coal, lumber, and heavy equipment.
Rack jobbers Serve grocery and drug retailers, mostly in nonfood items. Rack jobbers send delivery
trucks to stores, where the delivery people set up toys, paperbacks, hardware items,
health and beauty aids, or other items. Rack jobbers price the goods, keep them fresh,
set up point-of-purchase displays, and keep inventory records.
Producers’ Farmer-owned members that assemble farm produce for sale in local markets.
cooperatives Producers’ cooperatives often attempt to improve product quality and promote a co-op
brand name, such as Sun-Maid raisins, Sunkist oranges, or Diamond nuts.
Mail-order or Web Send catalogs to or maintain Web sites for retail, industrial, and institutional customers
wholesalers featuring jewelry, cosmetics, specialty foods, and other small items. Its primary
customers are businesses in small outlying areas.

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Major Types of Wholesalers (3 of 4)

Table 13.3 [continued]
Type Description
Brokers and agents Do not take title to goods. The main function is to facilitate buying and selling, for which
they earn a commission on the selling price. Generally specialize by product line or
customer type.
Brokers Bring buyers and sellers together and assist in negotiation. Brokers are paid by the
party who hired the broker and do not carry inventory, get involved in financing, or
assume risk. Examples include food brokers, real estate brokers, insurance brokers,
and security brokers.
Agents Represent either buyers or sellers on a more permanent basis than brokers do. There
are four types:
Manufacturers’ agents Represent two or more manufacturers of complementary lines. Often used in such
lines as apparel, furniture, and electrical goods. A manufacturer’s agent is hired by
small manufacturers who cannot afford their own field sales forces and by large
manufacturers who use agents to open new territories or cover territories that cannot
support full-time salespeople.
Selling agents Have contractual authority to sell a manufacturer’s entire output. The selling agent
serves as a sales department and has significant influence over prices, terms, and
conditions of sale. Found in product areas such as textiles, industrial machinery and
equipment, coal and coke, chemicals, and metals.

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Major Types of Wholesalers (4 of 4)

Table 13.3 [continued]
Type Description
Purchasing agents Generally have a long-term relationship with buyers and make purchases for them,
often receiving, inspecting, warehousing, and shipping the merchandise to buyers.
Purchasing agents help clients obtain the best goods and prices available.
Commission Take physical possession of products and negotiate sales. Used most often in
merchants agricultural marketing by farmers who do not want to sell their own output. Take a
truckload of commodities to a central market, sell it for the best price, deduct a
commission and expenses, and remit the balance to the producers.
Manufacturers’ and Wholesaling operations conducted by sellers or buyers themselves rather than
retailers’ branches operating through independent wholesalers. Separate branches and offices can be
and offices dedicated to either sales or purchasing.
Sales branches and Set up by manufacturers to improve inventory control, selling, and promotion. Sales
offices branches carry inventory and are found in industries such as lumber and automotive
equipment and parts. Sales offices do not carry inventory and are most prominent in
the dry goods and notions industries.

Purchasing offices Perform a role similar to that of brokers or agents but are part of the buyer’s
organization. Many retailers set up purchasing offices in major market centers, such as
New York and Chicago.

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Wholesaling (9 of 15)
Types of Wholesalers
• Merchant wholesalers are the largest group of
wholesalers and include:
– Full-service wholesalers that provide a full set of services
– Limited service wholesalers that provide few services and
specialized functions

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Wholesaling (10 of 15)

Types of Wholesalers
• Brokers and agents do not take title, perform a few
functions, and specialize by product line or customer type.
– Brokers bring buyers and sellers together and assist in
negotiations.
– Agents represent buyers or sellers.
• Manufacturers’ and retailers’ branches and offices are
a form of wholesaling by sellers or buyers themselves,
rather than through independent wholesalers.

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Wholesaling (12 of 15)

Figure 13.2 Wholesaler Marketing Decisions

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Wholesaling (13 of 15)

Target Market and Positioning Decision
• Segmentation, targeting, differentiation, positioning
decisions:
• Size of customer
• Type of customer
• Need for service

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Wholesaling (14 of 15)

Wholesaler Marketing Decisions
• Marketing mix decisions
• Product
• Price
• Promotion
• Place

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Wholesaling (15 of 15)

Trends in Wholesaling
• Need for greater efficiency
• Value-adding customer relationships
• Increase in customer demand for services
• Increase in use of technology to boost productivity

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