Page 450 - Foundations of Marketing

Retailing, Direct Marketing, and Wholesaling | Chapter 14 417

especially the growth of strong retail chains like Walmart, Home Depot, and Best Buy, are
altering supply-chain relationships. In many product categories, such as electronics, furniture,
and even food products, retailers have discovered that they can deal directly with producers,
performing wholesaling activities themselves at a lower cost. However, when a wholesaler is
eliminated from a marketing channel, wholesaling activities still have to be performed by a
member of the supply chain, whether a producer, retailer, or facilitating agency. Most retailers
can rely on computer technology to expedite ordering, track deliveries, and monitor handling
of goods. Thus, technology has allowed retailers to take over some wholesaling functions.

Types of Wholesalers
A wholesaler is classified according to several criteria, including: whether it is independently
owned or owned by a producer, whether it takes title to (owns) the products it handles, the
range of services provided, and according to the breadth and depth of its product lines. Using
these criteria, we discuss three general types of wholesaling establishments: merchant whole-
salers, agents and brokers, and manufacturers’ sales branches and offices.

Merchant Wholesalers
Merchant wholesalers are independently owned businesses that take title to goods, assume
risks associated with ownership, and generally buy and resell products to other wholesal-
ers, business customers, or retailers. A producer is likely to rely on merchant wholesalers
when selling directly to customers would be economically unfeasible. Merchant wholesalers
are also useful for providing market coverage, making sales contacts, storing inventory, han-
dling orders, collecting market information, and furnishing customer support. Some merchant
wholesalers are even involved in packaging and developing private brands. Merchant whole-
salers go by various names, including wholesaler, jobber, distributor, assembler, exporter, and merchant wholesalers
importer. They fall into two broad categories: full service and limited service. Independently owned
businesses that take title to
Full-Service Wholesalers Full-service wholesalers perform the widest possible range goods, assume ownership
of wholesaling functions. Customers rely on them for product availability, suitable product risks, and buy and resell
assortments, breaking large shipments into smaller ones, financial assistance, and technical products to other wholesalers,
advice and service. Full-service wholesalers handle either consumer or business products and business customers, or retailers
provide numerous marketing services to their customers. Many large grocery wholesalers help full-service wholesalers
retailers with store design, site selection, personnel training, financing, merchandising, adver- Merchant wholesalers that
tising, coupon redemption, and scanning. Macdonalds Consolidated is a full-service whole- perform the widest range of
saler of meat, dairy, and produce goods for grocery retailers in North America. Macdonalds wholesaling functions
offers such services as communications management, document management, retailer flyers, general-merchandise
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and merchandising, and it offers rebates for valued customers. Although full-service whole- wholesalers Full-service
salers often earn higher gross margins than other wholesalers, their operating expenses are wholesalers with a wide product
mix but limited depth within
also higher because they perform a wider range of functions.
product lines
Full-service wholesalers are categorized as general-merchandise, limited-line, and spe-
limited-line wholesalers Full-
cialty-line wholesalers. General-merchandise wholesalers carry a wide product mix, but
service wholesalers that carry
offer limited depth within product lines. They deal in products such as drugs, nonperishable
only a few product lines but
foods, cosmetics, detergents, and tobacco. Limited-line wholesalers carry only a few product
many products within those lines
lines, such as groceries, lighting fi xtures, or oil-well drilling equipment, but offer an extensive
specialty-line wholesalers
assortment of products within those lines. AmerisourceBergen Corporation, for example, is a
Full-service wholesalers that
limited-line wholesaler of pharmaceuticals and health and beauty aids.
carry only a single product
General-line wholesalers provide a range of services similar to those of general- line or a few items within a
merchandise wholesalers. Specialty-line wholesalers offer the narrowest range of prod- product line
ucts, usually a single product line or a few items within a product line. Rack jobbers are
rack jobbers Full-service,
full-service, specialty-line wholesalers that own and maintain display racks in supermarkets, specialty-line wholesalers that
drugstores, and discount and variety stores. They set up displays, mark merchandise, stock own and maintain display racks
shelves, and maintain billing and inventory records. Rack jobbers specialize in nonfood in stores

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