Retailing and Wholesaling
Retailing and Wholesaling
Previewing the Concepts: Chapter Objectives
1. Explain the role of retailers and wholesalers in the distribution channel.
2. Describe the major types of retailers and give examples of each.
3. Identify the major types of wholesalers and give examples of each.
4. Explain the marketing decisions facing retailers and wholesalers.
Just the Basics
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.
It begins with a discussion of retailers and the challenges they face. There are many types of retailers. These retailers can be classified according to several characteristics, includ-ing the amount of service they offer, the breadth and depth of their product lines, the relative prices they charge, and how they are organized.
Retailers are always searching for new strategies to attract and retain customers. The major decisions retailers need to make are centered around their target market and positioning, their product assortment and services, their price, their promotion strategies, and where they are located.
Retailing is facing many challenges, including new retail forms, such as warehouse stores. 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 service. In turn, their costs increase, and eventually they become like the conventional retailers they replaced. The cycle begins again.
Wholesalers buy mostly from producers and sell mostly to retailers, industrial customers, and other wholesalers. As a result, many of this country’s largest and most important wholesalers are largely unknown to final consumers. Wholesalers provide important services, however, and they add value through performing one or more of several functions.
There are many types of wholesalers, including merchant wholesalers, agents and brokers, and manufacturers’ sales branches and offices. They face many of the same decisions as retailers, including the choice of target market, positioning, and the marketing mix.
The distinction between large retailers and large wholesalers continues to blur. Many retailers now operate formats such as wholesale clubs and hypermarkets that perform many wholesale functions. In return, many large wholesalers are setting up their own retailing operations.
Chapter Outline
1. Introduction
a. Wal-Mart is the ultimate retailer. Its phenomenal success has resulted from an unrelenting focus on bringing value to its customers. Wal-Mart is passionately dedicated to its value proposition of “Always Low Prices, Always.”
b. Wal-Mart knows its customers well and takes good care of them. It delivers what customers want: a broad selection of carefully selected goods at unbeatable prices.
c. This chapter looks at the nature and importance of retailing, major types of store and nonstore retailers, the decisions retailers make, and the future of retailing, as well as the same topics as they relate to wholesaling.
2. Retailing
a. Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use.
b. Retailers are businesses whose sales come primarily from retailing.
c. Nonstore retailing has been growing much faster than has store retailing. Nonstore retailing includes selling to final consumers through direct mail, catalogs, telephone, the Internet, TV home shopping shows, home and office parties, door-to-door contact, vending machines, and other direct selling approaches.
Use Key Terms Retailing, Retailer here.
Use Chapter Objectives 1 here.
Use Discussing the Issues 3 here.
Types of Retailers
d. Table 11-1 shows the most important types of retail stores.
Use Table 11-1 here.
1. Retailers can be differentiated on amount of service.
i. Self-service retailers serve customers who are willing to perform their own “locate-compare-select” process to save money. Self-service is the basis of all discount operations and is typically used by sellers of convenience goods and nationally branded, fast-moving shopping goods.
ii. Limited-service retailers provide more sales assistance because they carry more shopping goods about which customers need information.
iii. Full-service retailers, such as specialty stores and first-class department stores, offer salespeople who assist customers in every phase of the shopping process.
Let’s Discuss This
What type of service strategy is implemented at a 7 Eleven? At J.C. Penney? At Neiman Marcus?
2. Retailers can also be classified according to the length and breadth of their product assortments.
i. Specialty stores carry narrow product lines with deep assortments within those lines.
ii. Department stores carry a wide variety of product lines. Service remains the key differentiating factor.
iii. Supermarkets are the most frequently shopped type of retail store.
iv. Convenience stores are small stores that carry a limited line of high-turnover convenience goods.
v. Superstores are much larger than regular supermarkets and offer a large assortment of routinely purchased food prod-ucts, nonfood items, and services.
a. Wal-Mart, Kmart, Target, and others offer super-centers, combination food and discount stores that emphasize cross-merchandising.
vi. Category killers feature stores the size of airplane hangars that carry a very deep assortment of a particular line with a knowledgeable staff.
vii. Hypermarkets are huge superstores. Hypermarkets have been very successful in Europe and other world markets, but they have met with little success in the United States.
Use Key Terms Specialty Store, Department Store, Supermarket, Convenience Store, Superstore, and Category Killer here.
Use Discussing the Issues 1 here.
Use Focus on Ethics here.
3. Retailers can be classified according to the prices they charge.
i. A discount store sells standard merchandise at lower prices by accepting lower margins and selling higher volume.
ii. An off-price retailer buys at less-than-regular wholesale prices and charges consumers less than retail.
a. Independent off-price retailers either are owned and run by entrepreneurs or are divisions of larger retail operations.
b. Most large off-price retailer operations are owned by bigger retail chains.
iii. Factory outlets sometimes group together in factory outlet malls and value-retail centers, where dozens of outlet stores offer prices as low as 50% below retail on a wide range of items.
iv. Warehouse clubs (or wholesale clubs or membership warehouses) operate in huge, drafty, warehouselike facilities and offer few frills.
Use Key Terms Discount Store, Off-Price Retailer, Independent Off-Price Retailer, Factory Outlet, and Warehouse Club here.
Use Chapter Objectives 2 here.
4. The major types of retail organizations are described in Table 11-2.
i. Chain stores are two or more outlets that are commonly owned and controlled.
a. A voluntary chain is a wholesaler-sponsored group of independent retailers that engages in group buy-ing and common merchandising.
b. A retailer cooperative is a group of independent retailers that bands together to set up a jointly owned, central wholesale operation and conducts joint merchandising and promotion efforts.
ii. Franchise systems are normally based on some unique product or service; on a method of doing business; or on the trade name, goodwill, or patent that the franchiser has developed.
iii. Merchandising conglomerates are corporations that com-bine several different retailing forms under central owner-ship.
Use Key Terms Chain Store, Franchise here.
Use Table 11-2 here.
Use Application Questions 1 here.
Use Speed Bump: Linking the Concepts here.
Retailer Marketing Decisions
e. Retailers are always searching for new marketing strategies to attract and hold customers.
f. Figure 11-1 shows the major marketing decisions retailers face.
Use Figure 11-1 here.
1. Retailers must first define their target markets and then decide how they will position themselves in these markets.
i. Too many retailers fail to define their target markets and positions clearly. They try to have “something for every-one” and end up satisfying no market well.
Use Marketing at Work 11-1 here.
2. Retailers must decide on three major product variables.
i. The retailer’s product assortment should differentiate the retailer while matching target shoppers’ expectations.
ii. The services mix can also help set one retailer apart from another.
iii. The store’s atmosphere is another element in the reseller’s product arsenal.
Applying the Concept
You want to open a store that caters to the local college population. You will sell T-shirts, sweatshirts, and other casual clothing favored by college students. How will you differ-entiate your product assortment from the school’s bookstore? What type of service will you offer (keeping in mind the needs of the college students who are your target)? What kind of store atmosphere will you provide?
3. A retailer’s price policy must fit its target market and positioning, product and service assortment, and competition.
i. Most retailers seek either high markups on lower volume or low markups on higher volume.
4. Retailers use any or all of the promotion tools—advertising, personal selling, sales promotion, public relations, and direct marketing—to reach consumers.
5. Retailers often point to three critical factors in retailing success—location, location, and location.
i. It is very important that retailers select locations that are accessible to the target market in areas that are consistent with the retailer’s positioning.
ii. Central business districts were the main form of retail cluster until the 1950s.
iii. A shopping center is a group of retail businesses planned, developed, owned, and managed as a unit.
a. A regional shopping center, or regional shopping mall, the largest and most dramatic shopping center, contains from 40 to more than 200 stores.
b. A community shopping center contains between 15 and 40 retail stores.
c. Most shopping centers are neighborhood shopping centers or strip malls that generally contain between 5 and 15 stores.
d. A recent addition to the shopping center scene is the so-called power center. These huge unenclosed shopping centers consist of a long strip of retail stores, each with its own entrance with parking directly in front.
Use Key Term Shopping Center here.
Use Application Questions 2 here.
The Future of Retailing
g. Retailers operate in a harsh and fast-changing environment, which offers threats as well as opportunities.
1. New retail forms continue to emerge to meet new situations and consumer needs, but the life cycle of new retail forms is getting shorter.
2. The wheel of retailing concept says that many new types of retailing forms begin as low-margin, low-price, low-status oper-ations. They challenge established retailers that have become “fat” by letting their costs and margins increase. The new retailers’ success leads them to upgrade their facilities and offer more services. In turn, their costs increase, forcing them to increase their prices. Eventually, the new retailers become like the conventional retailers they replaced. The cycle begins again.
Use Key Term Wheel of Retailing Concept here.
Use Marketing at Work 11-2 here.
Use Discussing the Issues 2 here.
Use Application Questions 3 here.
Use Under the Hood/Focus on Technology here.
3. Americans are increasingly avoiding the hassles and crowds at malls by doing more of their shopping by phone or online.
4. Today’s retailers are increasingly selling the same products at the same price to the same consumers in competition with a wider variety of other retailers.
i. This merging of consumers, products, prices, and retailers is called retail convergence.
ii. This convergence means greater competition for retailers and greater difficulty in differentiating offerings.
Let’s Discuss This
Do you avoid the crowds at malls? Do your parents? Do you think that there could be a backlash against the ever-larger malls and stores? Use the wheel of retailing concept to think about consumers’ reactions to crowds, the same merchandise everywhere, and the difficulty retailers have in differentiating themselves.
5. The rise of huge mass merchandisers and specialty superstores, the formation of vertical marketing systems and buying alliances, and a rash of retail mergers and acquisitions have created a core of superpower megaretailers. They are shifting the balance of power between retailers and producers.
6. Retail technologies are becoming critically important as compet-itive tools.
i. Progressive retailers are using advanced information tech-nology and software systems to produce better forecasts, control inventory costs, order electronically from suppliers, send email between stores, and even sell to customers within stores.
7. Retailers with unique formats and strong brand positioning are increasingly moving into other countries.
i. U.S. retailers are still significantly behind Europe and Asia when it comes to global expansion.
8. There has been a resurgence of establishments that, regardless of the product or service they offer, also provide a place for people to get together.
Use Speed Bump: Linking the Concepts here.
Use Discussing the Issues 4 here.
3. Wholesaling
a. Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.
b. Wholesalers are firms engaged primarily in wholesaling activity.
Use Key Terms Wholesaling, Wholesaler here.
Use Chapter Objectives 3 here.
Use Marketing at Work 11-3 here.
c. Wholesalers buy mostly from producers and sell mostly to retailers, industrial consumers, and other wholesalers.
d. Wholesalers add value by performing one or more of the following channel functions:
1. Selling and promoting
2. Buying and assortment building
3. Bulk breaking
4. Warehousing
5. Transportation
6. Financing
7. Risk bearing
8. Market information
9. Management services and advice
Use Discussing the Issues 5 here.
Types of Wholesalers
e. Wholesalers fall into three major groups as shown in Table 11-3.
Use Table 11-3 here.
1. Merchant wholesalers are the largest single group of wholesalers, accounting for roughly 50% of all wholesaling.
i. Full-service wholesalers provide a full set of services.
ii. Limited-service wholesalers offer fewer services to their suppliers and customers.
2. Brokers and agents do not take title to goods, and they perform only a few functions. They generally specialize by product line or customer type.
i. A broker brings buyers and sellers together and assists in negotiations.
ii. Agents represent buyers or sellers on a more permanent basis.
a. Manufacturers’ agents are the most common type of agent wholesaler.
iii. Manufacturers’ sales branches and offices are the third major type of wholesaler.
Use Key Terms Merchant Wholesaler, broker, Agent, and Manufacturers’ Sales Branches and Office here.
Wholesaler Marketing Decisions
f. As with retailers, wholesaler marketing decisions include choices of target markets, positioning, and the marketing mix. See Figure 11-2.
1. Wholesalers must define their target markets and position themselves effectively. They can choose a target group by size of customer, type of customer, need for service, or other factors.
2. Wholesalers must decide on product assortment and services, prices, promotion, and place.
i. The wholesaler’s “product” is the assortment of products and services that it offers.
ii. Price is an important decision. Wholesalers usually mark up the cost of goods by a standard percentage, say 20%.
iii. Most wholesalers are not promotion minded.
iv. Place is important—wholesalers must choose their loca-tions, facilities, and Web locations carefully.
Use Chapter Objectives 4 here.
Use Figure 11-2 here.
Trends in Wholesaling
g. As the wholesaling industry moves into the 21st century, it faces considerable challenges.
h. The industry remains vulnerable to one of the most enduring trends of the last decade—fierce resistance to price increases and the winnowing out of suppliers who are not adding value based on cost and quality.
i. The distinction between large retailers and large wholesalers continues to blur.
1. Many retailers now operate formats such as wholesale clubs and hypermarkets that perform many wholesale functions.
2. In return, many large wholesalers are setting up their own retailing operations.
j. Wholesalers will continue to increase the services they provide to retailers.
k. Many large wholesalers are now going global.
Travel Log
Discussing the Issues
1. Distinguish between the following types of retail forms: specialty stores, department stores, supermarkets, convenience stores, superstores, and category killers.
Specialty stores carry narrow product lines with deep assortments within those lines. In contrast, department stores carry a wide variety of product lines. Supermarkets primarily carry grocery items and are the most frequently shopped type of retail store. Convenience stores are small stores that carry a limited line of high‑turnover convenience goods. Superstores are much larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services.
2. Identify a retailer in your town that has gone out of business in the past few years. What factors do you think led to this store’s downfall?
Student response will vary. Instructors may wish to have students focus on the role that competition (Internet, big box retailers, etc.) may have played in the store’s downturn.
3. As the chapter indicates, the popularity of nonstore retailing continues to grow. From a consumer’s perspective, what are some of the advantages and disad-vantages of shopping through mail-order catalogs, television shopping networks, and online?
Students might discuss the convenience of shopping from home, the ability to easily compare products from different sources, and the perception of cost savings from nonstore retailers due to a lack of overhead.
4. Discuss the concept of retail convergence as it applies to wristwatches. How can smaller retailers compete in such an environment?
Today’s retailers are increasingly selling the same products at the same prices to the same consumers in competition with a wider variety of other retailers. This merging of consumers, products, prices, and retailers is called retail conver-gence. Such convergence means greater competition for retailers and greater difficulty in differentiating offerings. Despite this, many small, independent retailers are thriving. They are finding that sheer size and marketing muscle are often no match for the personal touch small stores can provide or the specialty niches that small stores fill for a devoted customer base.
5. Describe the functions that wholesalers have traditionally performed. Which ones appear to be the most likely candidates for either large producers or large retailers to take over? Explain your response.
Selling and promoting: Wholesalers’ sales forces help manufacturers reach many small customers at a low cost. The wholesaler has more contacts and is often more trusted by the buyer than the distant manufacturer.
Buying and assortment building: Wholesalers can select items and build assortments needed by their customers, thereby saving the consumers much work.
Bulk‑breaking: Wholesalers save their customers money by buying in carload lots and breaking bulk (breaking large lots into small quantities).
Warehousing: Wholesalers hold inventories, thereby reducing the inventory costs and risks of suppliers and customers.
Transportation: Wholesalers can provide quicker delivery to buyers because they are closer than the producers.
Financing: Wholesalers finance their customers by giving credit, and they finance their suppliers by ordering early and paying bills on time.
Risk-bearing: Wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.
Market information: Wholesalers give information to suppliers and customers about competitors, new products, and price developments.
Management services and advice: Wholesalers often help retailers train their salesclerks, improve store layouts and displays, and set up accounting and inventory control systems.
Financing and Bulk-breaking would appear to be good candidates for large retailers to perform due to the number of outlets they have and their financial resources.
Application Questions
1. Develop a table with the retail characteristics of amount of service, product line length and breadth, relative prices, and organizational structure as the rows of the table. Place the following retailers at the top of each column in the table: Best Buy, Sears, Sam’s Club, The Gap, Wal-Mart, and a local convenience store. Complete the cells in the table by describing each of the retailers on each of the characteristics. What implications can you draw from this table?
Instructors can use this question to emphasize how different types of retailers are differentiated on service level, product assortment, price, and structure. Implications with regard to positioning of retailers can be drawn based upon the ratings given to the specific retail chains. Students might be asked to identify unfilled needs that appear to exist given their table, by assuming that these were the only outlets available for a particular product type.
2. Pick one of these national retail chains (The Gap, Barnes & Noble, Foot Locker, or Walgreens) and a local retail firm that sells the same type and quality of merchandise. Compare and contrast the two retailers on their target market, prod-uct and service assortment, store atmosphere, prices, promotion tools, and loca-tion. Why would a shopper pick one of these retailers over the other when shopping for products they both carry?
Student responses will vary for this question. Instructors may want to focus on the types of differences between the two retailers, how much customers are concerned about those differences, and how sustainable those differences are?
3. Visit a store in your community that also has an e-commerce website (e.g., Kroger, K-mart, Target, or Sears). After visiting both the store and the website, consider the following questions. Do the two retail shopping alternatives attract the same type of customer? Describe the customer who would shop at the bricks-and-mortar store location and the customer who would shop on the store’s website. How are the store and website positioned differently? If they are not positioned differently, should they be and how could this be accomplished? Are there any potential disadvantages for the store in having these two distribution channels?
Student responses will vary based on the store selected and the particular merchandise/services considered. Students might be asked if rather than competing against each other, these two store channels provide some synergies for each other.
Under the Hood/Focus on Technology
New technology may be coming to a grocery store near you. Shopping Buddy, currently in a test market in Massachusetts, is a small cart-mounted computer monitor and barcode reader. To begin using the cart, customers scan their customer card on the cart and their shopping history with the store is automatically downloaded to the cart. Customers can then scan items as they pull them off the shelf and place them directly in to bags in the cart. When it is time to check out, they simply scan their card again and pay. No more waiting in lines as the cashier scans all your items.
But Shopping Buddy does more than just speed the checkout process. Because it knows your shopping history, it can remind you when you have not purchased an item in a while, it can tell you where in the store to find particular items you are looking for and how far away from them you are, it will alert you to any sale items that day, and you can even place your order at the Deli counter from the cart and it will alert you when it is ready to be picked up.
1. What is your initial reaction to this type of technology? Would you want to shop this way?
Student responses will vary. Instructors may wish to probe deeper into what might keep some shoppers away from this technology.
2. What advantages and disadvantages are there for stores implementing this technology?
The following should be considered when assessing the advantages and disadvantages: cost of the technology, employee training, maintenance time, customer training time, informational benefits to the company, does the device increase sales, does it increase store loyalty?
3. What privacy concerns might shoppers have and how could a store minimize those concerns?
Customers may be concerned that their shopping habits will be revealed to third parties who will use the information in some harmful manner (e.g., solicit them with unwanted products; provide eating habit information to their health insurer, etc). Stores should have clearly stated privacy policies that explain that no individual-level data will be revealed.
Focus on Ethics
Some individuals complain that big retailers like Wal-Mart, Home Depot, and Best Buy are hurting communities by driving smaller “mom and pop” operations out of business. These critics complain that the loss of these smaller retailers means that profits leave the community, service levels get reduced, and retail locations sit empty. On the other hand, proponents of large retailers suggest that these “big box” retailers offer consumer convenience, lower prices, and many employment opportunities for citizens.
1. What, if anything, should city governments do to protect local retailers from the threat of large retailers?
Student opinion will be mixed on this subject. Zoning restrictions and economic incentives are two things that governments could implement to either help or harm big box retailers if they wanted to do so.
2. What are some alternative strategies smaller retailers can use to compete against large retailers, rather than going head to head with them on the basis of large selection and low prices?
Students will likely mention more personalized service as an effective strategy. Another strategy would be to specialize in a smaller niche that may be unprofitable for a large firm.
3. Divide into teams of three to five students and have each team take one side of this issue: Do large retailers like Wal-Mart, Home Depot, and Best Buy ultimately help or harm the communities they enter?
Students should be asked to switch sides of the argument about halfway through the debate and then debate against a different group. This should show that there are no black-and-white answers to this issue.
Great Ideas
Barriers to Effective Learning
1. Retailing is generally not a difficult concept for students, however the different types of retailers should be thoroughly explained to the students to ensure their understanding. Table 11-1 is an excellent resource in this regard. The differing types of retail organizations are also critical to understand; again, Table 11-2 helps here.
2. The decisions retailers need to make will be easily understood with a review of Figure 11-1. It is very clear in this figure that the marketing mix elements studied earlier in the text are being applied in a retail environment. Explain carefully how the type of retail organization chosen affects the marketing mix, and vice versa.
3. The wheel of retailing concept can be difficult to understand without a proper explanation. Drawing the parallel to the product life-cycle concept is an aid in this. Also, discuss with the students how retailing has changed from “Main Street,” to the mall, to megastores like Wal-Mart Supercenters, horizontal marketing systems, and such.
4. Nonstore retailing should be familiar to students, but perhaps not by this name. Many students may not realize that they are visiting a retailer when they buy books or CDs from Amazon.com, or select an item from a catalog and order it over the phone. Explain that this is an extension of the “place” variable of the marketing mix, but it is still selling to ultimate consumers, so it is indeed a retailing outlet.
5. Wholesaling, by contrast, could be a difficult subject for many students. Although the concept was introduced in an earlier chapter, there is more detail here, and there are many more terms for the students to learn. A careful review of the introduction to this section, with a description of the various channel functions wholesalers perform, will set the stage for the students’ ability to learn these concepts.
6. The description of the types of wholesalers is brief but important. Examples will help tremendously, even though most wholesalers, by their nature and as discussed in the text, are virtually unknown to consumers. Some students, however, might be familiar with distributors who service grocery stores and other retail outlets from summer jobs or those held by family members. You can also draw the parallel between stockbrokers and product brokers, because the function is virtually the same, although the item being brokered is very different. A stockbroker never takes ownership of the stock, however, just as a product broker does not. A celebrity or sports agent can be the parallel descriptor for manufac-turers’ agents. Table 11-3 will be very helpful in this discussion.
7. As with retailers, the decisions wholesalers make revolve around the marketing mix components. This concept should be easily grasped by students at this point.
Student Projects
1. How do retailers identify target markets? Explain the major strategies by which retailers reach their target markets.
2. Cite several examples (not from the textbook) in each of the following categories: department store, specialty store, convenience store, discount store, off-price retailer.
3. Show how the elements of the marketing mix apply to retailers. Apply these elements to the decision process for a major chain of convenience stores to open an outlet on your college campus.
4. Select two stores that you shop in frequently. What sort of atmosphere do these stores have? Does it aid in your shopping experience, detract from it, or not affect it at all?
Classroom Exercise/Homework Assignment
C&S Wholesale Grocers is New England’s largest food wholesaler and the second largest in the United States. It distributes more than 53,000 items, including groceries, produce, and nonfood items. They have more than 36 facilities in the United States and serve grocery stores on the East Coast, West Coast, and Hawaii. Visit their website at www.cswg.com.
1. C&S is largely a wholesaler, but in looking at its press releases, you see that it joined IGA, a retail outlet organized as a volunteer chain. Why would a wholesaler join a retailer chain?
Student responses to this will vary, but C&S saw an opportunity. Fleming Foods has been in bankruptcy and has dropped out of the IGA family. C&S took its place to solidify its place as the second largest wholesaler in the nation. It also wanted to further expand its market. Finally, it is one of many firms joining the conver-gence of retailing and wholesaling, as large retailers become wholesalers and large wholesalers become retailers.
2. C&S distributes to both independent grocery stores and chains. With its long list of customers, how might C&S develop its marketing strategy? Discuss all four elements of the marketing mix: product, price, place, and promotion.
Again, student responses will vary. However, C&S will need to ensure that it has a thorough product mix to serve the needs of its various customers. Because these customers are located in many regions of the country, there will need to be some variety in the products it carries; in Vermont, for instance, they probably don’t sell any Taro chips, which are a very big product in Hawaii.
As mentioned in the text, margins are very thin in the grocery business, at both the retail and wholesale level. So C&S probably does not hold a lot of pricing power and must constantly keep in mind the profit needs of its customers.
Place is critical for wholesalers: They need a lot of space to take large shipments in from producers, and then break bulk and ship the new assortment out to the local grocery retail outlets. Therefore, they need to be outside major city centers, but close enough to their retail customers to keep transportation costs down.
Finally, their promotional efforts may vary between the large chains and small independents, but they must ensure that they do not break any laws that govern pricing and its promotional aspects (this was covered in Chapter 10).
Classroom Management Strategies
This chapter can easily be covered in one standard class period. Although the terminology will be new to students, particularly the types of retailers and wholesalers, the material itself is easily understood as a general rule, and students will tend to be pretty familiar with retailing in particular.
1. The majority of the class, perhaps 40 minutes in a 60-minute class, should be spent on retailing. This can be broken down further, with 15 minutes on the Types of Retailers, 15 minutes on Retailer Marketing Decisions, and 10 minutes on the Future of Retailing. You can liberally use examples and the various questions from the chapter in going through this material.
2. The remaining 20 minutes of the class will be spent on the Wholesaling section. Here, it is very important that time be spent on discussing the various types of wholesalers and what kinds of functions they perform. Students will be less familiar with this type of business, so several examples should be gathered to discuss in class. The Classroom Exercise/Homework Assignment provided previously can be very useful.
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