Wholesaling, Retailing, and Physical Distribution

     A marketing channel is a sequence or marketing organizations that directs a product from producer to ultimate user. The marketing channel for a particular product is concerned with the transfer of ownership of that product. Merchant middlemen (merchants) actually take title to products, whereas functional middlemen simply aid in the transfer of title.

     The channels used for consumer products include the direct channel from producer to consumer; the channel from producer to retailer to consumer; the channel from producer to wholesaler to retailer to consumer; and that from producer to agent to wholesaler to retailer to consumer. The major channels forindustrial products are producer to user, and producer to agent middleman to user. Channels and intermediaries are chosen to implement a given intensity of distribution from intensive (widest) to exclusive. A vertical marketing system (VMS) results from combining two or more channel members from different levels under one management. Administered, contractual, and corporate represent the three major types of VMSs.

     Wholesalers are intermediaries that purchase from producers or other intermediaries and sell to industrial users retailers, or other wholesalers. Wholesalers perform many functions in a channel. If they are eliminated, other channel members&-such as the producer or retailers&-must perform these functions.

      Wholesalers provide retailers with help in promoting products collecting information, and financing. They provide manufacturers with sales help, reduce their inventory costs furnish market information, and extend credit to retailers. Merchant wholesalers buy and then sell products. Commission merchants and brokers are essentially agents and do not take title to the goods. Sales branches and offices are owned by the manufacturers they represent and are like merchant wholesalers and agents, respectively.

     Retailers are intermediaries that buy from producers or wholesalers and sell to consumers. In&-store retailers include department stores, discount stores, catalog discount showrooms, specialty stores, supermarkets, superstores, convenience stores, warehousse stores, and warehouse clubs. Nonstore retailers sell door to door, by mail, or through vending machines.

     The wheel of retailing hypothesis states that retailers begin as low&-status, low&-margin, low&-priced stores and over time evolve into high&-cost, high&-priced operations.

     There are three major types of shopping centers: neighborhood, community, and regional. A center can be classified into one of these categories based on number and types of stores and the size of the geographic area served by the center. 

     Physical distribution consists of activities designed to move products to ultimate users. Its five major functions are inventory management, order processing, warehousing, materials handling, and transportation. These interrelated functions are integrated into the marketing effort.