Page 232 - DMGT408DMGT203_Marketing Management

Unit 9: Managing Marketing Channels

of wholesalers as a part of marketing channel, especially in developing countries contributes Notes
directly to the economic potential and growth by providing links to an extended market base. It
is common perception that goods move from producer to a wholesaler, then to retailers where
consumers buy them. The process is more complicated in reality. Products can move through
the hands of several manufacturers and wholesalers and may never end up at a retail store
because the end user may be in a business and not a consumer.

Table 9.2: Wholesaler Functions of Producers and Customers

Functions for Producers Functions for Customers
Market Coverage Product Availability
Sales Contacts Assortment Convenience
Inventory Holding Bulk-breaking
Order Processing Credit Facility and Finance
Market Information Customer Service
Customer Support Technical Support

As producers are becoming larger, many of them bypass the wholesalers. Producers’ sales force
is believed to be more effective at selling, but the costs of maintaining a sales force and performing
functions normally handled by wholesalers are sometimes higher than benefits derived from
firm’s own sales staff. Wholesalers often handle many product lines from different producers
and are able to spread sales costs over more products than most producers. Wholesalers also
help retail dealers to select the inventory. They often understand market conditions better and
experts are at negotiating. They generally offer a wider range of products from different producers
to retailers while most producers’ salesperson offer only a few products. As mentioned in
previous unit, wholesalers buy large quantities and deliver to customers in smaller lots, and
undertake physical distribution activities such as transportation, materials handling, inventory
planning, warehousing, and communication.
Large retail chains very often take up functions handled by wholesalers. The growing trend of
e-commerce is making things easier for consumers and producers as increasingly many businesses
in developed and fast developing countries are moving toward this new-age marketing mantra.

Self Assessment

Fill in the Blanks:
19. Wholesaling …………………… those engaged in production, farmers growing agricultural
products, and retailers.

20. …………………… has partnered with Bharti to open wholesale stores in India.
9.8 Summary

Companies do not sell all their products directly to consumers. There are two ways of
marketing products viz. direct marketing without using the channel and indirect marketing
though a set of intermediaries.
The intermediaries who provide a link between the manufacturers and the ultimate
consumers or users are known as middlemen.

Intermediaries help in different kinds of flows in the market between the producer and
the end consumer. They help in physical flow, title flow, information flow and cash flow.

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