Foundation of Marketing
(2022-2023)
Course Code: MKT121
Dr. Mayar Farrag
mfarrag@[Link]
Dr. Perihan Salah
sperihan@[Link]
Group TA Email
Group (A) Muhammad Alaa maamin@[Link]
Group (B) Nourhan Ali nali@[Link]
Group (C) Nada El-Mahdy nmelmahdy@[Link]
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Chapter 13
Retailing and wholesaling
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.
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.
The major decisions retailers make are centered on their target market and positioning, their
product assortment and services, their price, their promotion strategies, and where they are
located.
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.
There are many types of wholesalers, including merchant wholesalers, agents and brokers, and
manufacturers’ sales branches and offices.
Chapter objectives
1. Explain the role of retailers in the distribution channel and describe the major types of
retailers.
2. Describe the major retailer marketing decisions.
3. Discuss the future of retailing.
4. Explain the major types of wholesalers and their marketing objectives.
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Chapter outline
Retailing
Retailing includes all the activities involved in selling
products or services directly to final consumers for their
personal, nonbusiness use.
Retailers: Businesses whose sales come primarily from
retailing.
Many marketers are now embracing the concept of shopper
marketing, the idea that the retail store itself is an
important marketing medium.
In recent years nonstore retailing has been growing much
faster than has store retailing.
Product Line
Specialty stores carry narrow product lines with deep
assortments within those lines.
Department stores carry a wide variety of product lines.
In recent years, department stores have been squeezed
between more focused and flexible specialty stores on the
one hand, and more efficient, lower-priced discounters on
the other.
Supermarkets are the most frequently shopped type of
retail store.
Supermarkets also have been hit hard by the rapid growth of
out-of-home eating.
Supermarkets’ share of the groceries and consumables
market plunged from 89 percent in 1988 to 50 percent in
2008.
Convenience stores are small stores that carry a limited
line of high-turnover convenience goods.
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Superstores are much larger than regular supermarkets and
offer a large assortment of routinely purchased food
products, nonfood items, and services.
Supercenters (called hypermarkets in some countries) are
very large combination food and discount stores.
Category killers are superstores that are actually giant
specialty stores. (Best Buy and Circuit City are examples.)
Service retailers include hotels and motels, banks, airlines,
colleges, hospitals, movie theaters, tennis clubs, bowling
alleys, restaurants, repair services, hair salons, and dry
cleaners.
Service retailers in the United States are growing faster than
product retailers.
Hypermarkets
Relative Prices
Discount stores sells standard merchandise at lower prices
by accepting lower margins and selling higher volume.
Off-price retailers offer products to fill the ultralow-price,
high-volume gap by pricing lower than discount stores.
The three main types of off-price retailers are:
1. Independent off-price retailers either are
independently owned and run or are divisions of
larger retail corporations.
2. Factory outlets—manufacturer-owned and operated
stores—sometimes group together in factory outlet
malls and value-retail centers.
3. Warehouse clubs (or wholesale clubs or
membership warehouses), operate in huge, drafty,
warehouse-like facilities and offer few frills.
Wholesaling
Wholesaling includes all activities involved in selling
goods and services to those buying for resale or business
use.
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Wholesalers are those firms engaged primarily in
wholesaling activities.
Types of Wholesalers
Wholesalers fall into three major groups
1. Merchant wholesalers are the largest single group
of wholesalers, accounting for roughly 50 percent of
all wholesaling. Merchant wholesalers include two
broad types:
a. Full-service wholesalers provide a full set
of services.
b. Limited-service wholesalers offer fewer
services to their suppliers and customers.
The different types of limited-service wholesalers perform
varied specialized functions:
2. Brokers and agents differ from merchant
wholesalers in two ways:
a. They do not take title to goods.
b. They perform only a few functions.
A broker brings buyers and sellers together and
assists in negotiation.
Agents represent buyers or sellers on a more
permanent basis. Manufacturers’ agents (also called
manufacturers’ representatives) are the most common type
of agent wholesaler.
3. Manufacturers’ sales branches and offices are
wholesaling by sellers or buyers themselves rather
than through independent wholesalers.
Market Coverage
Intensive Distribution
– Place a product in as many outlets as possible
Selective Distribution
– Limited number of carefully chosen outlets to distribute
products
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Exclusive Distribution
– Gives intermediaries exclusive rights to sell a product in
a specific geographic area