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Companies are looking forward to moving away from the conventional supply chain and moving towards value network.
In a value network traditional supplier-wholesaler-retailer are considered as partners rather than as a customer. Companies designing marketing channel under the value network principle need to understand the players, role and their importance.
The act through which goods and services reach the end customer for individual or business usage is known as retailing. The players involved in this act are known as retailers. Retailers can be manufactures, distributors or wholesalers. They can reach the end customer through the internet or physical stores.
Retail organizations are divided into three categories:
Store retailing, the best example is the department store like Macy or Sears. Store retailers are further divided on the service level with self service, self selection, limited service and full service stores. Store retailing comprises over 90% in way products reach the end customer.
Over the years non-store retailing has garnered a market share. Non-store retailing includes direct selling, direct marketing, automatic vending and buying service. Avon is an example of direct selling. Internet retail giant Amzon.com is an example of direct marketing. Soft drink vending machines are a form of automatic vending.
Retail organizations are retailing stores under direct ownership of corporate. Customer satisfaction and brand management becomes easier through retail organizations. Corporate chain store like Old Navy and Franchises like McDonald’s are good examples of retail organizations.
Every retailer needs to have a business or marketing strategy for success. Retailer needs to analyze its target market and customers for an in-store promotion and product assortment. Services form a big part of retailing business, so retailers have to finalize level of service. Services include pre-purchase, post purchase and supporting services.
With the advent of technology and unprecedented economic growth, retailing has its own share of change in business ways.
The act of purchasing goods for consumer and industry for further resale is referred to as wholesaling. Here, manufactures and farmers are not considered as wholesalers.
Wholesaler is an important part of the marketing channel. Wholesaler increase reach of the company products and the risk of selling to the customers. Wholesaler can store inventory of various assortment of product thus helping cost for company and time for customers. Wholesaler can serve as ears and eyes for the company in understanding competition and customer.
The supply chain management is essential for companies to improve productivity and reduce costs. The purpose of marketing logistic is to design and implement infrastructure, which will deliver goods from the point of origin to point of sell in an effective and least cost manner. This objective mix of high customer satisfaction and lowest cost possible are asymmetrical. The major decision involved with marketing logistic relate to order processing, warehousing, inventory and transportation.
Companies look forward to shortening order to payment cycle. A long cycle will lead to decrease in customer satisfaction and company’s profit. Companies have to set benchmarks at each level from sales people receiving orders to receiving payment from creditors.
Warehousing for finished goods is another important hub for companies. There has to be a right balance between sales order and quantity of finished goods. Warehousing at strategic locations increases timely delivery of goods and reducing in inventory. Technology has helped in improving warehousing standards.
Piled up inventory is not a good sign for the company. Inventory management involves making decision with time and quantity of raw materials for matching customer requirements. Management principle like Just In Time (JIT) are used for better inventory management. In JIT focus is to develop well time flow of raw materials and finished goods.
Transportation and freight cost plays an important role in final pricing, delivery and condition of raw materials as well as finished products. Here companies need to make the decision, whether to use a private carrier (company ownership), contractual (Outside agency) or common carrier (service shared at standard rates).
Retailing, wholesaling and logistic decision are very important to deliver value to end customers.
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