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TYPES OF WHOLESALE INTERMEDIARIES

Merchant Wholesalers :
Independently owned firms that take title to the goods they handle. There are two types:

Full-service wholesalers perform all distribution functions.


Limited-function wholesalers perform only selected distribution functions.

Rack Jobbers :
Furnish racks or shelves of merchandise such as music and magazines for retailers for
display and sell them on consignment.

Cash-and-Carry Wholesalers :
Serve mostly smaller retailers with a limited assortment of products.

Drop Shippers :
Take orders from retailers and other wholesalers and have the merchandise shipped from
producer to buyer.

Agents :
They generally maintain long-term relationships with the clients they represent
Manufacturers agents represent several manufacturers in a specific territory.
Sales agents represent a single client in a larger territory.

Brokers:
They usually represent clients on a temporary basis.

There are different length and structure of marketing channel that different organisation adopt
according to various factors involved in decision making .

(A) Considerations Related to Product


When a manufacturer selects some channel of distribution he/she should take care of such
factors which are related to the quality and nature of the product. They are as follows:
1. Unit Value of the Product:
When the product is very costly it is best to use small distribution channel. For example,
Industrial Machinery or Gold Ornaments are very costly products that are why for their
distribution small distribution channel is used. On the other hand, for less costly products
long distribution channel is used.
2. Standardised or Customised Product:
Standardised products are those for which are pre-determined and there has no scope for
alteration. For example: utensils of MILTON. To sell this long distribution channel is used.
On the other hand, customised products are those which are made according to the discretion
of the consumer and also there is a scope for alteration, for example; furniture. For such
products face-to-face interaction between the manufacturer and the consumer is essential. So
for these Direct Sales is a good option.
3. Perishability:
A manufacturer should choose minimum or no middlemen as channel of distribution for such
an item or product which is of highly perishable nature. On the contrary, a long distribution
channel can be selected for durable goods.
4. Technical Nature:
If a product is of a technical nature, then it is better to supply it directly to the consumer. This
will help the user to know the necessary technicalities of the product.

(B) Considerations Related to Market


Market considerations are given below:

1. Number of Buyers:
If the number of buyer is large then it is better to take the services of middlemen for the
distribution of the goods. On the contrary, the distribution should be done by the
manufacturer directly if the number of buyers is less.
2. Types of Buyers:
Buyers can be of two types: General Buyers and Industrial Buyers. If the more buyers of the
product belong to general category then there can be more middlemen. But in case of
industrial buyers there can be less middlemen.
3. Buying Habits:
A manufacturer should take the services of middlemen if his financial position does not
permit him to sell goods on credit to those consumers who are in the habit of purchasing
goods on credit.
4. Buying Quantity:
It is useful for the manufacturer to rely on the services of middlemen if the goods are bought
in smaller quantity.
5. Size of Market:
If the market area of the product is scattered fairly, then the producer must take the help of
middlemen.

(C) Considerations Related to Manufacturer/Company


Considerations related to manufacturer are given below:
1. Goodwill:
Manufacturers goodwill also affects the selection of channel of distribution. A manufacturer
enjoying good reputation need not depend on the middlemen as he can open his own
branches easily.
2. Desire to control the channel of Distribution:

A manufacturers ambition to control the channel of distribution affects its selection.


Consumers should be approached directly by such type of manufacturer. For example,
electronic goods sector with a motive to control the service levels provided to the customers
at the point of sale are resorting to company owned retail counters.
3. Financial Strength:
A company which has a strong financial base can evolve its own channels. On the other hand,
financially weak companies would have to depend upon middlemen.

Some of the factors that EXIDE industries take into consideration before
selecting their marketing channel are as follows.
Some of these factors are :
Market size
Customer proximity
Policy of the organization
Length of the marketing channel can be classified into various levels which
could be graphically be represented

Marketing Channel For Consumer Products

Zero Level

Level 1

Level 2

Level 3

PRODUCERS

AGEN
TS

WHOLESA
LER

RETAIL
ER

RETAIL
ER

CONSUMER

WHOLESA
LER

RETAIL
ER

Marketing Channel For Industrial Product

Producers Of Industrial

AGEN
T
INDUSTRI
AL
DISTRIBU

AGEN
T

INDUSTRI
AL
DISTRIBU

INDUSTRIAL USERS

INDUSTRIAL DISTRIBUTOR :
An industrial distributor performs a variety of marketing channel functions, including selling,
stocking, and delivering a full product assortment and financing. In many ways, industrial
distributors are like wholesalers in consumer channels.

Agent :
Agents do not take ownership of goods but act as a representative of the supplier. They are
also engaged by exporters of services to represent them in overseas markets.
An agent is generally paid by the exporter based on a commission of sales value generated.
The exporter receives orders for customers from the agent but then delivers goods or services
directly to customers, invoices the customers, and collects payments from the customers. The
exporter is also responsible for setting the selling price, although the agent will likely provide
input on local market conditions to help the exporter decide on pricing.
Agents are generally based in the export market and often represent several complementary
product or service lines. They may operate on an exclusive basis, as the sole agent for a
companys goods or services in a specific export market, or as one of a number of agents for
the exporter in that market that is, on a non-exclusive basis. See About Agents below for
more on roles, choosing the right one, and the pros and cons of using this representation
model.

Distributor :
A distributor buys goods that is, the distributor takes title of the goods and then resells
the goods to local end users who may be retailers or consumers. In some cases, the distributor
may sell to other wholesalers who then sell to local retailers or end users.
Distributors may carry complementary and competing lines and usually offer after-sales
service.

Distributors are paid fees by adding a margin to products, and their fees are higher than those
of agents because they usually carry inventory, extend credit for customers, and are
responsible for marketing.
Because a distributor has more responsibilities in selling your product in market than an
agent, they require a higher margin. This may impact on how you price your product; you
will probably need to absorb the distributor margin otherwise your pricing to the end
customer will be too high. Some exporters find that they are unable to use a distributor as
their profit margin is too small to provide enough margin for the distributor and a competitive
price for end users.

Electronic Marketing Channels :


Interactive electronic technology has made possible electronic marketing channels, which
employ the Internet to make goods and services available for consumption or use by
consumers or industrial buyers.
A unique feature of electronic marketing channels is that they combine electronic and
traditional intermediaries to create time, place, form, and possession utility for buyers.

Example Of Electronic Marketing Channel:


Amazon.com

BOOK
PUBLISHER

BOOK
WHOLESALER

AMAZON.com
VIRTUAL
RETAILER

CONSUMER
S

F
H
C
B
D
L
I
A
T
E
R
M
U
S
N
O
EXIDE SERVIC NETWORK

Marketing Channel Of EXIDE Industries

MANUFACTURERS
Shamnagar , Chinchwad (Pune) , Haldia
(West Bengal) , Hosur (TN ) , Taljola ,
Ahmednagar , Bawal (Haryana) , Roorkee
(Uttaraknad) , Haridwar

AGENTS

BRANCH
ES

BROKER
S
DISTRIBU
TORS

MAIN DEALERS

RETAILERS

CONSUMERS

C & F (Surat
Exide
Industry
Godown)

Jobbers
Drop
Shippers