Chapter 10 - Distribution Strategy
channel cooperation and avoid channel conflict.
Wholesalers are merchants that are primarily engaged in buying, taking title to, usually storing and
physically handling goods in large quantities, and reselling the goods (usually in smaller
quantities) to retailers or to industrial or business users.
Wholesalers are also called distributors in some industries, particularly when they have exclusive
distribution rights, such as in the beer industry.
Wholesalers create value for suppliers, retailers, and users of goods by performing distribution
functions efficiently and effectively.
Producers use wholesalers to reach large markets and extend geographic coverage for their goods.
Wholesalers may lower the costs for other channel members by efficiently carrying out such
activities as physically moving goods to convenient locations, assuming the risk of managing large
inventories of diverse products, and delivering products as needed to replenish retail shelves.
While producers may actively seek out wholesalers for their goods, wholesalers also try to attract
producers to use their services.
Wholesalers with excellent track records that do not carry directly competing products and brands
that have appropriate locations and facilities, and that have relationships with major retail
customers can more easily attract manufacturers of successful products.
Wholesalers that serve large markets may be more attractive since producers may be able to
reduce the number of wholesalers they deal with and thereby lower their costs.
Wholesalers need to attract retailers and organizational customers to buy from them.
For new or small market share products and brands, particularly for those of less well known
manufacturers, wholesalers may have to do considerable marketing to get retailers to stock them.
While there are still many successful wholesalers, the share of products they sell is likely to
continue to decrease.
The survival of wholesalers depends on their ability to meet the needs of both manufacturers and
retailers by performing distribution functions more effectively and efficiently than a channel
designed without them.
Marketing insight 10-3 presents some benefits of wholesalers for various channel members.
VII. Store and Nonstore Retailing
Marketers have a number of decisions to make to determine the best way to retail their products.
Decisions have to be made about whether to sell through nonstore methods, such as the Internet,
and if so, which methods of nonstore retailing should be used.
A. Store Retailing
Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.