Wholesaling

Identify the functions performed by wholesaling intermediaries.

      Wholesaling intermediaries provide time, place, and ownership utilities. They do this by performing the basic marketing functions of buying, selling,  storing, transporting, risk taking, financing, and supplying market information.

Explain how wholesaling intermediaries improve channel efficiency.

      Wholesaling intermediaries improve channel efficiency by cutting the number of buyer&-seller transactions required. For example, if 4 manufacturers marketed their output to 4 different retail outlets, a total of 16 transactions would be needed. Using a wholesaling intermediary, however, would reduce the total number of transactions to eight.

Explain the channel options available to a manufacturer that desires to bypass independent wholesaling intermediaries.

      The most commonly used approach to bypassing independent wholesaling intermediaries is to establish a salesforce to call on retail customers and industrial purchasers. This may involve the establishment of regional sales branches from which orders are filled from inventory carried in stock at the branch. Other approaches include the establishment of sales offices, the use of permanent exhibits of company products in merchandise marts, or the periodic display of the manufacturer's offerings in trade fairs.

Identify the conditions under which a manufacturer is likely to assume wholesaling functions rather than use independent wholesaling intermediaries.

      Products are marketed directly by manufacturers through company&-owned wholesaling facilities for a variety of reasons. Some products are perishable, either in terms of physical perishability or a limited life due to rapid fashion changes. Some products require complex installation or servicing; others require aggressive promotion; still others are high&-unit&-value goods that the manufacturer can sell profitably to the ultimate

purchaser.

Distinguish between merchant wholesalers and agents and brokers.

      Merchant wholesalers take title to the goods they handle. Agents and brokers may take possession of the goods, but they do not take title.

Identify the major types of merchant wholesalers and the situations in which each might be used.

      The two major categories of merchant wholesalers are full&-function merchant wholesalers, such as rack jobbers, and limited&-function merchant wholesalers, including cash&-and&-carry wholesalers, truck wholesalers, drop shippers, and mail&-order wholesalers. Full&-function wholesalers are common in the drug, grocery, and hardware industries. Limited&-function wholesalers are sometimes used in the food, coal, lumber, cosmetics, jewelry, sporting goods, and general&-merchandise industries.

Describe the major types of agents and brokers and the situations in which each might be used.

      Commission merchants, auction houses, brokers, selling agents, and manufacturers' agents are classified as agent wholesaling intermediaries because they do not take title to the products they sell. Commission merchants are common in the marketing of agricultural products. Auction houses are used to sell tobacco, used cars, art, livestock, furs, and fruit. Brokers are prevalent in the real estate, frozen foods, and used machinery industries. Selling agents are used in the coal, lumber, and textile industries. Finally, manufacturers' agents are used by companies to develop new sales territories, firms with unrelated lines, and smaller firms.

Outline how a wholesaling strategy is developed.

            Like other marketing strategies, a wholesaling strategy starts with determining the target market, which can be defined in terms of product line, customer size, customer needs, and promotional strategy employed. After the target market is set, a marketing mix is developed. The wholesaling intermediary's product strategy is primarily a matter of the width, length, and depth of its inventory assortment. Wholesaling pricing strategy depends on the extent of the services offered. Distribution strategies employed vary among wholesaler intermediaries. Finally, promotional strategy basically emphasizes personal selling.