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Principles of Marketing - Philip Kotler

Chapter 13. Methods of distribution of goods: retail and wholesale

goals

After reading this chapter, you should be able to:

1. Describe the role of retailers and wholesalers in the process of product distribution.

2. List the five types of retail trade enterprises and provide examples.

3. List the four types of wholesale trade enterprises and provide examples.

4. Tell about the marketing decisions that have to make retailers and wholesalers.

Retail sales at reduced prices is gaining momentum

Customers shop discounters "char", located in Massachusetts, no wonder none of the goods that they can be seen in its walls. Here the consumer in one day can be purchased at the lowest retail prices of computers, cocoa powder "Nestle" poison for rats, golf balls, oriental carpets, engine oil and metal bed with brass knobs. The next day, none of this can not be, but it will be very different products.

The principle of the success of the "char" is that the store buys goods in bulk at prices below wholesale and sells them to customers with a very small margin. The key to profitability is the high volume of sales. Some days this earthly paradise for bargains visit to 10 th. Clients.

The store occupies three large adjacent building. Goods are located in it wherever possible without any apparent system: slides lie on the floor, hang from the ceiling. Carts folding shopping in the store does not hold, because his owner Anthony Borgatti Jr., nicknamed Spaghetti, from which originates the abbreviation "char", he believes that they take up too much valuable space. Borgatti prefers to occupy every square centimeter of the area by the inexpensive goods that it offers. At the same time he likes when the product leaves the store as soon as possible to make room for new arrivals. "Inventory turnover - it's all", - said Borgatti. For decades, the existence of the store through it, probably, have been a huge amount of goods, since he is, according to many, did Borgatti millionaire.

"Char" - one of the shops adhering gaining strength in retail trade trends at prices below the usual retail. Its commercial strategy is the purchase of goods at reduced prices and the transfer of all of this monetary saving to the consumer. Over the past five years thanks to trade at discounted prices store turnover has doubled. According to the forecast of one of the experts on the study of retailers over the next few years, the volume of activity of this type of retail enterprises will grow by 15% annually. Retailers that sell products at discounted prices, usually struggling to reduce their overhead costs by renting its stores to cheaper premises, hiring a minimum number of vendors and trading is only for cash.

A large group of retailers reduced prices specializes in the clothing trade. These merchants are often lured consumers by offering a trendy product of individual development at prices below the price of department stores. "The meaning of the enterprise, - said one of the experts - is to achieve a sharp reduction of price as offered for sale products that do not match the season, accumulated in excess, with deviations from the standard." Sometimes this retailer may be able to buy on the cheap party dresses fashion personal development within a few weeks after their appearance in stores.

The first store with prices below the usual retail was "Lehmann" opened in Brooklyn in 1920, and trading in women's clothing. Department stores such as "Saks Fifth Avenue", "Best" and "Lord Taylor End", traded the same clothes at higher prices, were outraged by the low prices, "Lehmann". Under pressure from these powerful retailers producers persuaded the owners "Lehmann" remove labels from the clothes before feeding it to the sales floor. This practice is still preserved in all stores "Lehmann" network.

Another successful trader at prices below the normal retail company is "The Sims", a chain of stores which covers all the country's East Coast. In the stores, "Sims" do not remove labels. On the contrary, as the company in its advertising on television and radio, "if product does not have a recognizable label, it is not worth buying." Aldo Papon, vice-president of "Dayton Hudson", which belongs to the ever expanding chain of stores in the Midwestern part of the country, expressed this same idea in a different way: "People do not want a cheap steak, they need a cheap steak."

Network located mostly in California, "Peak-en-save game" brand offers at prices below the normal retail a large range of very different things. Founder and Chairman of the Board William Zimmerman firm finds goods, the failed test on markets, products have survived the peak of its fashion products, accumulated in large quantities. One of the methods that Zimmerman enjoys in the search for articles to fill 78 company stores, a visit to the specialized trade fairs. Rather than seek out new items, Zimmerman asks manufacturers of products that have recently failed, he would have to buy on the cheap. company "Peak-en-save game" Among the latest bargains - buy half-price party green mouthrinse "Sepakol '(marketing experiment failed - the elixir is usually yellow), purchase party sunglass" Kool-ray "at a time when firma- the manufacturer decided to stop production at all of sunglasses, acquisition party T-shirts "Yoda" when the craze began to other T-shirts vida1.

This chapter is mainly devoted to acquaintance with the companies belonging to the retail and wholesale trade in the framework of the country's economy. In the first part, dedicated to retail trade, we ask the following questions: 1) what is the nature and value of retail trade? 2) what are the main types of retailers? 3) which marketing decisions are made by retailers? In the second part of the chapter we will look at the same issues in relation to the wholesale trade enterprises.