Mm unit 4point2

Logistic and Wholesaling
Course: MBA
Subject: MM II
Unit: 4

Managing Retailing ,Wholesaling and Logistics
Major retailer types are
1. Specialty store: These carry narrow product line
with deep assortment viz., apparel stores, sporting goods
stores etc. Examples can be Raymonds store or Nike store
for shoes
2. Department store: These carry several product lines like
clothing, home furnishings, household goods etc. Example
can be Local stores with variety having local consumers etc
3. Supermarket: These have relatively large, low cost, low
margin, high volume, self service operation serving total
needs for food, laundry and household maintenance products.

Managing Retailing ,Wholesaling and Logistics…
• Major retailer types are….
4 Convenience Store: These are relatively small stores located
nearby residential areas and open 7 days a week for long
hours and carry limited line of convenience products at
slightly higher prices.
5 Discount Store: These sell standard merchandise at lower
prices with lower margins and higher volumes almost
regularly. They carry mostly national brands viz., Big Bazaar,
Adani’s Hypermarket etc

Marketing Decisions in Retailing
Retailers and retailing as a whole need to take decisions in
many areas. These areas are as follows:
1. Target Market: It is important because it helps in product
assortment, store décor, advertising messages and media,
price and service levels. It needs to be regularly modified on
the basis of periodic marketing research
2. Product assortment and procurement: It should match the
target market’s shopping expectationsThe breadth and
depth of the product assortment must be properly
developed and modified at times, if required.

• Marketing Decisions in Retailing…
3. Services and Store atmosphere: Service mix consists of pre-
purchase services which draws a customer to the store.It can
be mail orders, window display etc. Post-purchase services
include shipping and delivery, gift wrapping, complaints
handling etc. Ancillary services include services which m,ake a
visitor comfortable while in store like car parking , cheque
cashing etc Store atmosphere should embody an ambience
that suits the target market and draws consumers towards
purchase.

4. Price Decision: Prices are a key positioning factor in retailing
of all types. High volumes and high margins are targeted by
retailers but every time this does not happen. Tactics on
pricing can be in the form of low prices on some items to
serve as traffic builders. Somewhere, instead of ‘sales pricing’
on some items, retailers adopt EDLP (Every day low pricing).
5. Promotion Decision: Promotion tools in large numbers are
available. These can be print ads,special sales, money-saving
coupons, frequent shopper reward programs etc.

Managing Retailing ,Wholesaling and
Logistics…
6. Place Decision: The location is a very significant decision in
retailing sector. It involves a combination of market survey or
research and also a vision for the future. It breaks down into
selecting regions of the country, then identifying cities with
regions and then particular sites within the cities. Retailers
can locate their stores in the central business district, a
regional center, a community shopping center, a shopping
lane or mall or even in a large store.

Logistics…
Retailing comprises all the activities involved in selling
goods or services directly to final consumers for personal,
non-business use. It can be done by a company directly or
indirectly through the distribution network. The company
needs to know activities related to retailing and make it
more business oriented from time to time. Retailers can
provide various levels of service to consumers on the basis
of locate-compare-select process and the degree of
involvement in it. It can be self-service, self selection,
limited service or full service.

Logistics…
• Trends in Retailing
In the recent past, various trends have emerged in retail
sector. These are as follows:
1. New retail forms and combinations: It basically consists of
store in a store concept
2. Retail store competition: Here, a particular chain’s stores
compete with one another and the company encourages it.
3.Competition as well as cooperation between Store based
and non-store based retailing: Retailers compete with online
buying-selling business as well as compliment the two
depending upon there joint utilities

Logistics…
• Trends in Retailing….
4.Growth of Giant retailers: Big players in retailing give
distinct advantages to customers like good service, immense
volumes and varieties and appealing prices. This they do due
to superior information systems, logistics quality and buying
power
5.Technological innovations: Retailers use all modern tools
and techniques through computers to do all the activities in
and out of the store to give a good experience to all its publics
viz., suppliers, customers, government etc.

Logistics…
• Trends in Retailing….
6. Retailers spreading globally: Shear scales of operations and
size have made global retail operations a reality and many
players are flourishing in it. Examples are Wal Mart, K Mart ,
Benetton, IKEA home furnishings etc.

Logistics…
• Private Labels in Retail: Retailers and wholesalers develop
their own brand which comes to be known as private label
brand.
1. Prominent names in this direction are Benetton, The Body
Shop, and Marks and Spencer.
2. Private labels can be found in many categories.
3. One a store becomes known, it tries to further distinguish
itself by coming up with its own unique brand.
4. Established manufacturers should take it as a threat or an
unavoidable reality and go ahead?

Logistics…
Wholesaling:
It includes all the activities involved in selling goods or
services to those who buy for resale ( retailers) or business
use( industrial buyers). They are also called distributors.
Wholesale transactions are usually larger than retail
transactions, and wholesalers usually cover a larger trade
area than retailers.
Wholesalers sell to retailers and every wholesaler
commands and coordinates retailers under his trade area.

Logistics…
Wholesaling….
Wholesalers usually perform one or more of the
following functions
1. Selling and promoting at the trade level to retailers in the
trade area.
2. Buying and assortment building for the convenience of the
customers( retailers) as well as consumers( end-users).
3. Bulk breaking for reducing costs to its buyers (retailers)

Logistics…
• Wholesaling….functions…..
4. Warehousing: It holds inventories and saves costs for
suppliers (manufacturers) as well as customers( retailers).
5. Transportation: Wholesalers provide quick delivery to the
buyers due to the closeness which they have with them.
6. Financing: They grant credit to their buyers and pay in time
to their suppliers after ordering early.
7. Risk bearing: This they do by taking the responsibility
through title as well unexpected activities like theft,
damage, spoilage, and obsolescence

Logistics…
• Wholesaling….functions…..
8. Market Information: Due to their expert knowledge over
time, they supply information to suppliers and customers
regarding competitor’s activities, new products, price
developments and so on.
9. Management Services and counseling: Wholesalers
provide professional guidance to retailers as well as
industrial customers in various aspects of their work.

Logistics…
The Growth and types of Wholesaling:
Wholesaling growth can be attributed to a number of
Reasons viz.,
1. Growing larger production houses at distance from
principal buyers
2. Production in advance of orders rather than in response to
specific orders
3. Increase in the levels of intermediaries
4. Increasing need for adapting products to the needs of
intermediaries and final users in terms of quantities,
packages and forms.

Logistics…
The Growth and types of Wholesaling……
The major types of wholesalers are as follows:
1. Merchant wholesalers: They are independently owned
businesses taking title to the merchandise they handle.
2. Full-service wholesalers: They are bigger version to the
above
3. Limited-service wholesalers: Cash and carry wholesalers
selling a limited line of fast moving goods to small retailers
for cash.

Logistics…
The Growth and types of Wholesaling…..
4. Brokers and agents: Brokers bring buyers and sellers together
and assist in negotiation and paid by the party hiring them.
Agents represent buyers or sellers on a more permanent
basis. They are small businesses with a few skilled people.
5 .Manufacturers and retailers branches and offices; Many
times companies set up there own wholesaling centers in
select locations and sell directly to retailers from there.
6. Specialized wholesalers: These operate in specialized
products and functions viz., agriculture assembly, petroleum
bulk plants and terminals as well as auction companies.

Logistics…
Wholesaler Marketing Decisions: Wholesaler-distributors
have to face challenge in recent times from various areas
viz., competition, demanding customers, new technologies
and more direct-buying programs by large industrial,
institutional and retail buyers etc. This has made them give
importance to certain decisions.
1. Target market: Within the market, the wholesaler can chose
a target group of customers by size or type or even need or
service required. They can give importance more to more
business generating customers and less or careful importance
to less business generating customers.

Logistics…
• Wholesaler Marketing Decisions…
2. Product assortment and services: Products and orders
carrying them are required to be stored as inventory and
moved on further to retailers for business. Wholesalers
manage this processing so that minimum inventory is
required and movement is more, besides not much storage
space is left idle also. Moreover, services provided by
wholesalers are also adjusted according to requirement from
time to time.
3. Price decision: Wholesalers earn their margin on sales to
retailers and cost to company. They at times guide price
changes to bring benefit to retailers as well as increased
volumes to companies/suppliers

Logistics…
• Wholesaler Marketing Decisions…
4. Promotion decision: Although not much direct promotion is
considered relevant to wholesalers, but they do participate in
some form of promotion. t can be developing an image on the
line of retailers, trade advertising and publicity.
5. Place decision: Progressive wholesalers have given
importance to their locations and area of operations in a big
way which was not done earlier. They are improving materials
handling procedures and costs by developing automated
warehouses and improving their supply capabilities through
advanced information systems.

Logistics…
Trends in Wholesaling: Certain complaints of
manufacturers vis-à-vis wholesalers are, non-aggressive
promotion, acting as mere order takers, reluctant to
carry. enough inventory, and improper feedback to
suppliers vis à-vis market developments.
This has made visionary wholesalers adapt and virtually
work with suppliers with the objective of overall collective
growth.

Logistics…
• Physical Distribution has now been expanded into the
broader concept of supply chain management (SCM).
• Supply Chain Management precedes physical distribution: It
involves procuring the right inputs( raw materials,
components, and capital equipment); converting them
efficiently into finished products; and dispatching them to
the final destinations.
• We can go even broader by studying as to how suppliers
obtain their inputs.
• All this study leads to improving this whole movement of
various movables leading to maximizing returns and
minimizing costs( not necessarily in monetary terms

Logistics…
• This line of thinking and working makes a company identify
superior suppliers and distributors and also helping them
improve their performance. It ultimately helps in reducing
various costs to company
Market Logistics: It is a sophisticated process which involves
infrastructure planning to meet demand, thereafter directing
and controlling physical flows of materials and finished goods
from origin points to use points and meeting customer
requirements at a profit.

Logistics…
Market Logistics…….
Steps in Market Logistics are as follows:
1. Decision on value proposition to be given to the customers;
It relates to delivery time, ordering and billing accuracy
2. Decision on best channel design and network strategy to
reach to the customers; It can be a mix or a uniform
channel structure across various markets
3. Operationalizing excellent sales forecasting, management
of warehouses, transportation and materials
4. Implementing business solutions( orders) through best
information systems, equipment, policies and procedures

Logistics…
Integrated Logistics System:
This involves many important activities and their
integration into business solution on a continuous basis.
These activities are materials management, material
flow systems, and physical distribution supported
strongly by Information Technology.
Information Systems play a crucial role in managing
market logistics effectively and in cost effective
manner. Market logistics , if managed properly can bring
down the cost incurred significantly.

Logistics…
Market-Logistics Objectives:
It is easier said than done. It involves lot of conflicting
objectives to come together which makes the task very
complex. Maximizing customer service and minimizing
distribution cost simultaneously is impossible. So,
instead of looking at these two important facets as isolated
activities, the company should look at them as parts of a
big whole and then plan. Instead of taking unavoidable
expenses as costs, company should consider them as
Investments which would any how give multiplying returns
in future.

Logistics…
Market-Logistics Objectives…
As Market Logistics activities involve trade-offs, decisions
must be taken on a total system basis. The various
service outputs expected by customers are on-time
delivery, strong willingness to meet emergency needs,
careful handling of merchandise, willingness of
supplier to take back defective goods and replenish
them with proper goods.

Logistics…
Market-Logistics Objectives…
The company must research and allocate relative
importance of each of these service outputs. Different
executives responsible for these service outputs should be
made clear of this varying degrees of importance for every
output. Sum total of these costs will indicate the total
market logistics cost for the order/s. Its minimization should
be done keeping in mind that its an investment
Cost reduction will take place by reducing cost/s of one or
more components on the basis of research and experience.
This exercise varies from company to company as nature
and product offerings also vary between them

Logistics…
Market-Logistics Decisions
Market logistics require certain decisions to be taken.
These are as follows:
1. Processing of orders in such a manner that order to
payment cycle is shortened i.e., the elapsed time between
receipt of order, delivery and payment received
2. Warehousing locations in the form of storage warehouses,
distribution warehouses and automated warehouses
besides the numbers in each category

Logistics…
Market-Logistics Decisions….
3. Inventory to be maintained by knowing how much
sales and profits would increase as a result of carrying larger
inventories and promising faster order-fulfillment times.
4. Shipping modes and processes which are going to affect
product pricing, on-time delivery performance, and the
condition of goods when they arrive, thereby impacting
customer satisfaction.

Logistics…
Market-Logistics dynamism for future:
a. Market Logistics should be given importance as a separate
function in organizations with a senior executive at Vice
President level handling it independently in coordination
with other departments.
b. At frequent and regular intervals this Senior Executive
should hold meetings with sales and operations people
reviewing inventory, operating costs, customer service and
satisfaction and make appropriate changes in production
schedules if required.
c. IT and other technological tools are making this function
dynamic day by day.

Sources:-
• Koshy and kotler, Marketing Management

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