Justifications for marketing intemediaries

SUPPLEMENTARY READING

SPEECH PRACTICE

1. Look at the chart below and speak on the types of wholesalers working on the commission basis and their functions.

2. Use the text, assignments 5 and 13 to speak on:

a) full-service and limited-service wholesalers, their types and functions;

b) manufacturer’s sales branches and offices.

Consumers feel strongly that the distribution channel should be made as short as possible. They assume that the fewer the middlemen, the lower the price.

Those who believe that the elimination of wholesalers would bring about lower prices, however, do not recognize that the services wholesalers perform would still be needed. Those services would simply be provided by other means, and consumers would still bear the costs. Moreover, all manufacturers would have to keep extensive records and employ enough personnel to deal with a multitude of retailers individually. Even with direct distribution, products might be considerably more expensive because prices would reflect the costs of producers’ inefficiency. Twenty-five contacts could result from the efforts of five buyers and five producers – even if they were all in the same city. With the assistance of an intermediary, only ten contacts would be necessary.

To illustrate further the useful role of wholesalers in the marketing system, assume that all wholesalers in the candy industry were abolished. With more than 2.8 million retail businesses to contact, candy manufacturers could be making as many as a million sales calls or more just to maintain the present level of product visibility. Hershey, for example, would have to set up warehouses all over the country, organize a fleet of trucks, purchase and maintain thousands of vending machines, and deliver all of its own candy. Sales and distribution costs for candy would soar. Candy producers would be contacting and shipping products to thousands of small businesses, instead of to a few food brokers, large retailers, and merchant wholesalers. The high costs of this inefficiency would be passed on to consumers. Candy bars would be more expensive and perhaps in short supply.

Wholesalers are more efficient and economical not only for manufacturers, but also for consumers. Because their elimination is proposed from both ends of the marketing channel, however, wholesalers should take care to perform only those functions that are genuinely in demand. Wholesalers will have to be more productive and provide better services than other channel members could to stay in business.

Дата добавления: 2014-11-29