wk4 wholesaling

7/27/2019 Wk4 Wholesaling

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Channel Institutions: Wholesaling

Archel Philippe S. Ferrer

BSBA Marketing Management


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Wholesalers buy and resell merchandise

to retailers and other merchants and to

industrial, institutional and commercial users,

but do not sell in significant amounts to

ultimate consumers

- Cundiff & Still

Wholesaling Defined:


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Functions:

Sales and promotion of chosen company products Breaking bulk to suit customer requirements

Storage and protection of the goods till they are

sold out

Grading and Packing of goods till they sold out

Transportation of the goods to the customers

Risk Bearing

Collecting and Disseminating market information

to suppliers and customers


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Classification:

Full Service stocking, selling, offering credit,delivery and any business assistance are all

provided.

Limited Service the name indicates that the

range of services are limited. (Cash and Carry)

Merchant Wholesalers independent businesses

which include distributors, jobbers, etc.

Brokers and agents bring buyers and sellers

together, handle the goods, and gets commission.

Miscellaneous agricultural produce business,petroleum bulk handlers and auction companies.


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Key Tasks:

Assembling or Aggregating the Goods

A Wholesaler should:

a. Know the type, quality, and quantity of the goods his customers

needs

b. Know the market coverage plan advised by the company

(principal)

c. Have past history of the buying pattern of the regular

customers and able to place accurate orders

Distributors orders from the principal


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Key Tasks:

Warehousing of the Goods

A Wholesaler must:

a. Protect the goods as his own responsibility

b. Adequate and safe storage place

c. Warehouse may be rented or owned

d. Insurance of the goods

Transfer of Title or Ownership of Product


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Key Tasks:

Order Booking and Execution

A Wholesaler should:

a. Book orders on a regular schedule to his customers to sell the

purchased goods.

b. In case of wholesaler operating out of a shop in the market

- customers come to the shop for purchase and set

revenue target to be achieved every day, week, or month.

c. In case of company distributor

- sales staff has to visit each customer and book orders

that can be delivered with ready stocks or as scheduled.

Selling of Purchased Goods to Retailers, Institutions, etc


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Key Tasks:

Transportation of the Goods

A Distributor should:

a. Know the type, quality, and quantity of the goods his customers

needs

b. Know the market coverage plan advised by the company

(principal)

c. Have past history of the buying pattern of the regular

customers and able to place accurate orders

Distributors orders from the principal


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Key Tasks:

Financing of the Business


a. Provide finance for buying the goods he wants to sell.

b. Have extension of credit on purchased goods (Freelance

Wholesaler)

c. Expect to extend credit to his customers.

Trading Terms and availability of funds to cover purchases


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Key Tasks:

Risk Bearing


a. Be Responsible for safe-keeping of purchased goods.

b. Be Responsible for any losses incurred on the stocks while in

possession

Responsibility and Ownership


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Key Tasks:

Grading and Packing


a. Break bulk and sell to customers in small lot sizes.

b. Repacking and extra care for certain goods and pricing it

differently (Agricultural Products)

Providing the goods by breaking the bulk for its customers


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Key Tasks:

Providing Market Information


a. Inform retail customers about types of goods available,

competition, promotions in force and etc.

b. Inform suppliers information gathered from retailers about

consumer reaction.

Provides intelligence for market strategies and trends


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Limitations of Wholesalers

a. May not give accurate information to the manufacturer or the

retailers/institutional customers due to product shortages or

may not ensure equitable distribution of goods.

b. Additional channel network adds to company costs which

affects the end consumer.

c. Consumers have no say on pricing and quality in a wholesalerdominated system


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Strategic Issues in Wholesaling

a. Whom to sell to?b. How to sell to them?

Selecting Target Markets:

a. Location of the wholesaler

b. Size and composition of the markets

c. The trading are which the wholesaler can look at

d. Purchasing habits of likely customers (is it credit driven?)

e. Nature of competition from other similar wholesalers

Marketing Mix

a. Product What product categories to handle? Is it profitable?

b. Price Working on thin margins (1%-2%). Will it sustain the company?

c. Promotion Best promotion is to give the best prices.

d. Place Who can we service? Can we effectively reach them?


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Strategic Issues in Wholesaling

Major Wholesaling Decisions such as:

a. Which Markets to Operate in? getting the good distributors. Distributor Margins

are also defined by the industry and competition.

b. Manpower placing key personnel for specific functions (frontline staffs)

c. What Product to Sell? Selling of products can be either by width or depth. Who

you cater affects what you sell also.

d. Promotional Support passing on the price benefits to customers.

e. Credit and Collections necessary for retention of customers.

f. Image and Customer Perception importance of best and low prices together withquality.

g. Warehouse Location and Design storage places according to goods and passes on

the standard design of warehousing.

h. Inventory Control Optimal level of stocks and getting the benefits of quantity

purchases.


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Distributor/Dealers/ Stockists

Distributor wholesaler nominated by a company to re-distribute company products to

all retailers and institution in a designated territory.

Dealers similar role as to distributor but differs as:

a. may not have a clearly defines territory and sells both in the market and

from his shop.b. may deal with competitive products also

Stockists may be working for one company and may have a pre-designated territory

but he does not re-distribute stocks.


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Need for a Distributor

a. Entering a new townb. Additional coverage in the same town

c. For replacing existing distributor.

Managing damaged stocks

In spite of best handling of the company products and proper stacking, some

stocks may get damaged.

Occasionally the distributor may have taken back damaged stocks from

influential retailers in the market. Also instances of consumer complaint stocks

sent back.

Effect damaged stocks are a cost to the company and have to be carefully

handled by the distributor to reduce losses. Either to destroy or to dispose off at

reduced prices after getting the permission of the sales personnel of the

company. Then, there will be claim reimbursement of the loss.


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Addressing Customer Complaints

In case of customer complaints to the retailer, the retailer will:

a. Judge the genuineness of the complaint

b. Ask for a letter of complaint from the customer with address and give a

fresh pack

c. Address it to the Distributor

The Distributor will:

a. Visit retailer and get the written complaint and offending pack (must be

immediate).

b. Give a fresh pack to replace what has given to the customer.

c. Pass the letter of complaint to the company sales person (principal) and

claim for the value of the free packs in normal course.

wk4 wholesaling

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