wk4 wholesaling
TRANSCRIPT
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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 Distributor should:
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 Distributor should:
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 Distributor should:
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 Distributor should:
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.