Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Retailers, Wholesalers
and Their Strategy
Planning
Text © The McGraw−Hill
Companies, 2002386 Chapter 13
Questions and Problems- What sort of a “product” are specialty shops offer-
ing? What are the prospects for organizing a chain of
specialty shops?
2. Distinguish among discount houses, price-cutting by
conventional retailers, and mass-merchandising. Fore-
cast the future of low-price selling in food, clothing, and
appliances. How will the Internet affect that future?
ConclusionModern retailing is scrambled—and we’ll probably
see more changes in the future. In such a dynamic envi-
ronment, a producer’s marketing manager must choose
very carefully among the available kinds of retailers.
And retailers must plan their marketing mixes with their
target customers’ needs in mind—while at the same
time becoming part of an effective channel system.
We described many types of retailers—and we saw
that each has its advantages and disadvantages. We also
saw that modern retailers have discarded conventional
practices. The old “buy low and sell high” philosophy is
no longer a safe guide. Lower margins with faster
turnover is the modern philosophy as more retailers
move into mass-merchandising. But even this is no guar-
antee of success as retailers’ life cycles move on.
Growth of chains and scrambled merchandising will
continue as retailing evolves to meet changing consumer
demands. But important breakthroughs are possible—
perhaps with the Internet—and consumers probably
will continue to move away from conventional retailers.
Wholesalers can provide functions for those both
above and below them in a channel of distribution.
These services are closely related to the basic marketing
functions. There are many types of wholesalers. Some
provide all the wholesaling functions—while others
specialize in only a few. Eliminating wholesalers does not
eliminate the need for the functions they now provide,
but technology is helping firms to perform these func-
tions in more efficient ways.
Merchant wholesalers are the most numerous and
account for the majority of wholesale sales. Their distin-
guishing characteristic is that they take title to (own)
products. Agent middlemen, on the other hand, act
more like sales representatives for sellers or buyers—and
they do not take title.
Despite dire predictions, wholesalers continue to ex-
ist. The more progressive ones are adapting to a changing
environment. But some less progressive wholesalers will
fail. The Internet is already taking its toll. On the other
hand, new types of intermediaries are evolving. Some are
creating new ways of helping producers and their cus-
tomers achieve their objectives by finding new ways to
add value.If the after-purchase distribution problem is handled, who will the seller be? Will
the Internet merchants of tomorrow be an evolved form of the retailers of today?
Or will current-day wholesalers be in a better position to catch that prize? Some
wholesalers are already working with very large assortments. Or, in a world where
you can conveniently surf from one specialized seller to another, will the breadth
of assortment from any one seller be irrelevant? That could put producers in a
stronger position. Perhaps none of these traditional forms of business will lead the
way, but rather it will be a firm that is born on the Internet to meet customers’
needs in a completely new and unique way. The answers to these questions will take
time, but they are taking shape even as you read. Already new intermediaries are
coming on the scene.
Let’s admit it. You can only speculate about where e-commerce will lead. But
perhaps it’s good to speculate a little. The way markets work in the future will
depend on people like you, and the creative innovations that you speculate about,
study, analyze, and ultimately turn into profitable marketing strategies. The compe-
tition will be tough, but hopefully you’re now on your way to being up to the
challenge.