Chapter 2 Flashcards
Major Participants in Marketing Channels
- Commercial Channels*
- Producers & Manufacturers
- Intermediaries
- -Wholesaler Intermediaries
- -Retailer Intermediaries
- Target Markets*
- Final End Users
- -Consumers
- -Industries
Why reduce Producers & Manufacturers distribution tasks?
-Lack expertise
• Lack economies of scale
Why increase Intermediaries distribution tasks?
-Spread high fixed costs over large quantities of diverse products
• Achieve economies of scope and economies of scale
Types of wholesalers
Independent Middle Men & Manufacturer Owned Wholesalers (sales branches & offices)
Types of independent middle men
Merchant wholesaler, agents, brokers, and commission merchants
Merchant Wholesalers
BUY, TAKE TITLE, HOLD INVENTORY, AND HANDLE.:
large quantities and sell them to retailers, industrial, commercial, and institutional concerns, or other wholesalers.
Agents, Brokers, & Commission Merchants
Involved in buying & selling while acting on behalf of clients. Receive commission on sales/purchases.
Manufacturers’ Sales Branches & Offices
- Separated from manufacturing plants
- Owned & operated by manufacturers
- Distribute manufacturer’s products at wholesale
- Some wholesale allied & supplementary products purchased from other manufacturers.
Size of wholesaler
Majority are small businesses
Sales volume
Nearly 45% of all firms have annual sales of less than $1 million
Number of employees per firm
About 50% of firms had fewer than 5 employees
Economic concentration in terms of % of total sales
50 largest manufacturers’ sales branches & offices garnered nearly 63% of sales for this type
6 tasks that Merchant Wholesalers Specialize in:
- Provide market coverage
- Make sales contacts
- Hold inventory
- Process orders
- Gather market information
- Offer customer support
Which lead to:
-Operating at high levels of effectiveness and efficiency
-Average cost curves lower than those for their suppliers
Manufacturers’ Agents offer
Market coverage
Sales contacts
Selling agents & Brokers offer
- Market coverage
- Sales contacts
- Order processing
- Marketing Information
- Product availability
- Customer services
