15

Managing Retailing,
Wholesaling, and Logistics

Chapter Questions
What major types of marketing
intermediaries occupy this sector?
What marketing decisions do these
marketing intermediaries make?
What are the major trends with
marketing intermediaries?

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What is Retailing?
Retailing includes all the activities
involved in selling goods or services
directly to final consumers for personal,
nonbusiness use.

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Major Retailer Types

Specialty store : Narrow product line
Department store : Several product line
Supermarket : Large, low margin, high
volume, self service store designed to
meet total needs for food and household
products . For eg HyperCity
Convenience store: Small store in
residential area
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Examples: Specialty Store

Reliance Retail Limited (RRL) announced
the launch of a new specialty store
"Reliance TimeOut" on Cunningham
Road in Bangalore. This store houses
Books, Music, Stationery, Toys and Gifts.
Cross word
Ethnicity
Reliance Foot Prints
Retail Management

Department Stores
Department stores are large retail units
that offer wide variety and a deep
assortment of goods and services.
Organized into separate departments
Provide
a
one-stop
shopping
experience to customers.
Piramyd Megastore , Pantaloon ,
shopper's stop , Lifestyle , Westside
Retail Management

BPCL's 'In & Out'

convenience
BPCL In & Outstores
convenience stores
across India
Petrol retail outlets provide the right
framework for setting up convenience
retail chains where the consumer has the
opportunity of combining shopping with
fuelling
Air Deccan tickets available at BPCL's
'In & Out' convenience stores
Retail Management

Major Retailer Types

Drug Store : Prescription and pharmacies, health

and beauty aids, other personal care , small
durable, etc
Discount store : Standard or specialty merchandise,
low price, low margin, high volume stores
Off-price retailer:
Leftover goods, irregular
merchandise sold at less than retail. For eg.
Factory Outlets
Catalog showroom

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Nonstore Retailing
Direct
Selling
For eg. Tupperware

Automatic
vending

Direct
Marketing
Includes telemarketing, TV direct response marketing,
electronic shopping

Buying Service
Store less retailer serving a specific clientele

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Major Types of Corporate

Retail Organizations

Corporate chain store: Two or more outlets owned and

controlled, employing central buying and merchandising, and
selling similar lines of merchandise. For eg. Reliance Mart
Retailer cooperative
Consumer cooperative: A retail form owned by its customers.
Members contribute money to open their own store
Franchise organization: Contractual association between a
franchisor and franchisees For Eg McDonalds, Subway, Pizza
Hut
Merchandising conglomerate: A corporation that combines
several diversified retailing lines and forms sunder central
ownership, with some integration of distribution and
management. For eg. Future Group

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National Cooperative Consumers Federation of

India Limited (NCCF)

The consumer cooperative structure in the country has four tiers,

with the National Cooperative Consumers Federation of India
Limited (NCCF) at the national level. Thirty State Cooperative
Consumers Organisations are affiliated to the NCCF.
At the Central/Wholesale level, there are 800 Consumer
Cooperative Stores. At the primary level, there are 25,759 primary
stores. In the rural areas, there are about 44,418-village level
Primary Agricultural Credit Societies and Marketing Societies
undertaking the distribution of consumer goods along with their
normal business.
In the urban and semi-urban areas the consumer cooperative
societies are operating about 37,226 retail outlets to meet the
requirements of the consumers.
The NCCF with its Head Office at New Delhi has 32 branches/subbranches located in various parts of the country.

Retail Management

11

Procurement Procedures of the

NCCF

Groceries
The items like Toor Whole, Gram, Masoor, Jeera, Saunf, Methi, Mustard etc. are
procured from the procuring centers from the regulated mandis during the
Kharif/Rabi seasons and stored in CWC/ State Warehouses. These stocks are
offered to Co-operatives/ indenting institutions during lean season in order to
maintain the supply line and sustain the escalation of the rates in market for
benefit of consumers.
Gen. Merchandise
Stationery and office equipments for supply to the Govt. departments, iIodised
salt ,Tea and Other manufactured consumer goods.
Textiles
The textile items such as cotton cloth, carpets, bedlinens, towels, uniform cloth
etc. are purchased from the mills and their distributors by entering into specific
agreements with them for supply in bulk to user cooperatives and Government
organisations.
Levy Sugar
The Levy Sugar is procured and distributed in three districts of Delhi as per the
approved scheme of the Government of NCT Delhi.
Fertilizers
NCCF has been nominated as one of the agency for undertaking distribution of
fertilizer products of IFFCO for the benefit of the farmer community.
Retail Management

12

What is a Franchising System?

A franchising system is a system of
individual franchisees, a tightly knit
group of enterprises whose systematic
operations are planned, directed, and
controlled by the operations franchisor.

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Characteristics of Franchises
The franchisor owns a trade or service
mark and licenses it to franchisees in
return for royalty payments
The franchisee pays for the right to be
part of the system
The franchisor provides its franchisees
with a system for doing business

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McDonalds Franchisee
Development Program
Initial fee, Ongoing monthly fee based on
restaurant's sales and specified % of gross sales for
marketing efforts
Training at Hamburger University
Program includes : Restaurant orientation, Basic
Operation Course, hands on restaurant training,
Basic Management, Intermediate operation course,
Restaurant training, advanced operations

Retail Management

15

Changes in the
Retail Environment
New retail forms and combinations
Growth of intertype competition (discount stores v/s
departments stores)
Competition between store-based and non-store-based
retailing
Growth of giant retailers
Decline of middle market retailers
Growing investment in technology ( In-store programming on
TV, GPS on Shopping Carts, Electronic Shelf Labeling,
Smart Shopping Carts)
Global profile of major retailers
Growth of Shopper Marketing ( For eg. In- store advertising)
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Retailers Marketing Decisions

Target market
Product assortment
Procurement
Prices
Services
Channels
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Procurement
The use of RFIDs (radio Frequency
Identification) has been steadily
increasing
Coco Cola and Gillette use them to
monitor and track goods in real time as
they move from factories to
supermarkets to shopping baskets.

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Channels

Fab India has a dedicated institutional sales team of professionals to

handle product customization and interior consulting for heritage
hotels, resorts and business houses
It continues to export home linen as well as garments to wholesalers
and retailers in over 33 countries
During last 50 years it has expanded its product range to include
garment accessories, home furnishings, non textile products, organic
foods and personal care products; in addition to garments

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Services
Prepurchase services
Postpurchase services
Ancillary services

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Services
Pre purchase services : telephone and mail orders,
advertising, window and interior display, fitting
rooms, shopping hours, fashion shows
Post purchase services: Shipping and delivery, gift
wrapping, adjustments and returns, alterations and
tailoring, installations, engraving
Ancillary Services: General information, Parking,
Restaurants, Repairs, Interior decorating, credit, rest
rooms, baby attendant services

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Retailers Marketing Decisions

(cont.)
Store atmosphere
Store activities
Communications
Locations

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Store Atmosphere

Walls
Lighting
Signage
Product placement
Floors
Surface space
Music

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Location Decision
Central business districts
Regional shopping
centers
Community shopping
centers
Shopping strips
Location within a larger
store
Stand alone store

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Location Decision

Central business districts : Oldest and most heavily trafficked city areas.
Bangalore Central Business District (UB Tower), Connaught Place New Delhi
Regional shopping centers : Large suburban malls containing 40 to 60
stores, with a few well known chains like McD, Westside, FabIndia and number
of clothing, footwear, linen and consumer electronic stores
Community shopping centers : Smaller malls with one anchor store and 20
to 40 smaller store
Shopping strips : A cluster of stores, usually in one long building, serving a
neighborhood's needs for groceries, hardware, laundry, shoe repair , dry
cleaning
Location within a larger store: Well known retailers locate new, smaller units
as concession space within larger stores or operations such as airports,
schools, or department stores
Stand alone stores: Some retailers avoid malls and shopping centers to
locate new stores in free standing sites on streets,

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Private Label Brands

Private labels are ubiquitous
Consumers accepts private labels
Private-label buyers come from all
socioeconomic strata
Private labels are not a recessionary
phenomenon
Consumer loyalty shifts from manufacturers
to retailers

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Wholesaling Functions
Selling and
promoting
Buying and
assortment building
Bulk breaking
Warehousing

Transportation
Financing
Risk bearing
Market information
Management
services and
counseling

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Major Wholesaler Types

Merchant
Full-service
Limited-service
Brokers and agents
Manufacturers and retailers branches and offices
Specialized wholesalers
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Major Wholesaler Types

Merchant: Independently owned business that take title to
the merchandise they handle
Full-service :Carry stock, maintain a sales force, offer
credit, make deliveries, provide management assistance
Limited-service :Cash and Carry wholesalers, Truck
wholesalers, Drop shippers, Rack Jobbers, Producers
cooperatives, Mail order Wholesalers
Brokers and agents
Manufacturers and retailers branches and offices
Specialized wholesalers: Agricultural assemblers (buy the
agricultural output of many farms), petroleum bulk plants
and terminals (consolidate the output of many wells)
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What are
Integrated Logistics Systems?
An integrated logistics system (ILS)
includes materials management, material
flow systems, and physical distribution,
aided by information technology.

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Market Logistics

Johnson & Johnson switched to Forest Stewardship Council (FSC)certified paperboard for its BAND-AID brand boxes.
J& J and its operating companies are positioned to make paper and
packaging procurement decisions that could help influence
responsible forest management.

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Market Logistics
Sales forecasting
Distribution
scheduling
Production plans
Finished-goods
inventory decisions
Packaging

In-plant
warehousing
Shipping-room
processing
Outbound
transportation
Field warehousing
Customer delivery
and servicing

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Market Logistics
Xerox developed a service delivery standard
that can put a disabled machine anywhere in
the continental United States back into
operation within 3 hours after receiving the
service request.

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Market Logistics

Coca Cola wants to put Coke within an arms length of desire.

Lands End , the giant clothing retailer, aims to respond to every

phone call within 20 seconds and to ship every order within 24
hours of receipt.

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Market Logistics Decisions

1. How should orders be handled?:
Order Processing
2. Where should stock be located? :
Warehousing
3. How much stock should be held? :
Inventory
4. How should goods be shipped?:
Transportation

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Warehousing
Consumer packaged goods companies have been
reducing their number of stocking locations from 10
to 15 to about 5 to 7
Pharma and Medical distributors have cut theirs from
90 to about 45
More stocking locations mean goods can be
delivered to customers more quickly , but
warehousing and inventory costs are higher

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Inventory
Reorder Point : At what stock level to
place a new order
Order Processing Cost
Inventory Carrying Cost
Near Zero Inventory

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Near Zero Inventory

Near Zero Inventory : Build for order, not for stocks
Sony calls it SOMO Sell one, make one.
Dells inventory strategy for years has been to get
the customer to order a computer and pay for it in
advance. Then Dell uses the customers money to
pay suppliers to ship the necessary components.

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Transportation
Factors

Speed
Frequency
Dependability
Capability
Availability
Traceability
Cost

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Transportation
Containerization : Putting the goods in
boxes or trailers that are easy to
transfer between two transportation
modes.
Piggyback : Use of Rail and Trucks
Fishyback : Use of Water and Trucks
Trainship : Use of Water and Rail
Airtruck: Use of Air and truck
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Piggyback

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ZARA - CASELET

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