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MKTG Management Chapter 16 (FINAL)

Terms in this set (147)

Answer: Although the overwhelming bulk of goods and services are sold through stores, nonstore retailing has been growing much faster than store retailing. Nonstore retailing falls into four major categories:
Direct selling, also called multilevel selling and network marketing, is a multibillion-dollar industry, with hundreds of companies selling door-to-door or at home sales parties. A salesperson goes to the home of a host who has invited friends; the salesperson demonstrates the products and takes orders. Pioneered by Amway, the multilevel (network) marketing sales system works by recruiting independent businesspeople who act as distributors. The distributor's compensation includes a percentage of sales made by those he or she recruits, as well as earnings on direct sales to customers. These direct-selling firms, now finding fewer consumers at home, are developing multidistribution strategies.
Direct marketing has roots in direct-mail and catalog marketing. It includes telemarketing, television direct-response marketing, and electronic shopping. As people become more accustomed to shopping on the Internet, they are ordering a greater variety of goods and services from a wider range of web sites.
Automatic vending offers a variety of merchandise, including impulse goods such as soft drinks, coffee, candy, newspapers, magazines, and other products such as hosiery, cosmetics, hot food, and paperbacks. Vending machines are found in factories, offices, large retail stores, gasoline stations, hotels, restaurants, and many other places. They offer 24-hour selling, self-service, and merchandise that is stocked to be fresh.
Buying service is a storeless retailer serving a specific clientele, usually employees of large
organizations, who are entitled to buy from a list of retailers that have agreed to give discounts
in return for membership.
Answer: In general, retailers prefer to deal with wholesalers rather than directly with manufacturers (and vice versa) as wholesalers are better at performing the following functions:
Selling and promoting: Wholesalers' sales forces help manufacturers reach many small business customers at a relatively low cost. They have more contacts, and buyers often trust them more than they trust a distant manufacturer.
Buying and assortment building: Wholesalers are able to select items and build the assortments their customers need, saving them considerable work.
Bulk breaking: Wholesalers achieve savings for their customers by buying large carload lots and breaking the bulk into smaller units.
Warehousing: Wholesalers hold inventories, thereby reducing inventory costs and risks to suppliers and customers.
Transportation: Wholesalers can often provide quicker delivery to buyers because they are closer to the buyers.
Financing: Wholesalers finance customers by granting credit, and finance suppliers by ordering early and paying bills on time.
Risk bearing: Wholesalers absorb some risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.
Market information: Wholesalers supply information to suppliers and customers regarding competitors' activities, new products, price developments, and so on.
Management services and counseling: Wholesalers often help retailers improve their operations
by training sales clerks, helping with store layouts and displays, and setting up accounting
and inventory-control systems. They may help industrial customers by offering training and technical services.