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CHAPTER 10

CHANNEL CONCEPTS: DISTRIBUTING THE PRODUCT

In addition, the wholesaler must perform

the activities necessary fo r the operation of

any other

such as planning, financing, and developing a

The five

functions listed previously emphasize the nature of wholesaling as a link between the pro-

ducer and the organizational buyer.

By providing this linkage,

assist both the producer and the buyer. From

the buyer's perspective, the wholesaler typically brings together a wide assortment of prod-

ucts and lessens the need to deal directly with a large number

producers.

makes the

buying task much more convenient. A hardware store with thousands of items from

dreds of different producers may find it more efficient to deal with a

number of

wholesalers. The wholesaler may also have an inventory in the local market,

ing delivery and improving

The wholesaler assists the producer by

prod-

ucts more accessible to buyers. They provide the producer with wide market coverage

information about local market trends in an efficient manner.

may also help

with the promotion of a producer's products to a local or

market

advertising

or a sales force to call on

buyers.

Types of Wholesalers

There are many different types of wholesalers. Some

others are part of a

vertical marketing system. Some provide a full range of

others offer very specialized

services.

and needs on the part of both buyers and producers have led to a

wide

wholesalers. Table 10. 1 provides a summary of general types. Whole-

saling activities

eliminated, but they can be assumed by manJfacturers and retail-

ers.

merchant wholesalers who have remained viable have done so by providing

improved service to suppliers and buyers. To do this at low cost, modem technologies must

be increasingly

into the wholesale operation.

Physical Distribution

In a society such as ours, the task of

moving , handling and storing products has

become the responsibility of marketing. In fact, to an individual firm

in a high-

levei economy, these logistical activities are critical. They often represent the only cost-

saving area open to the firm . Likewise, in markets where product distinctiveness has been

the ability to excel in physical distri bution activities may provide a true

competitive advantage. Ultimately, physical distribution activities provide the bridge between the production activities and the markets that are spatially and temporally

Physical distribution management may be defined as the process of strategically

aging the movement and storage of materials, parts, and finished inventory from suppliers ,

between enterprise facilities, and to customers. Physical distri bution activities include those undertaken to move finished products from the end of the production line to the final consumer. They also include the movement of raw materials from a source of supply to the

beginni ng of the production line, and the

of parts, etc., to maintain the existing

product. Finally, it may include a network for

the product back to the producer or

reseller, as in the case of recalls or repair.

Before discussing physical distribution, it is important to recognize that physical dis-

tribution and the channel of distribution are not independent decision areas.

must be

considered together in order to achieve the organization's goal of satisfied customers. Sev-

eral relationships exist between physical distribution and channels, including the following:

1. Defining the physical distribution standards that

members want.