Page 581 - Business Principles and Management

Unit 6

part of sales for many companies because of the speed and
efficiency of this distribution method.

INDIRECT DISTRIBUTION
When producers cannot or choose not to perform all market-
ing activities, they need an indirect channel of distribution.
Manufacturers can simplify many of their marketing opera-
PHOTO: © DIGITAL VISION. because they sell to a small number of retail customers rather
tions by selling to retailers. They will need fewer salespeople,
than to a very large number of final consumers. They can
share advertising with the retailers, and the retailers will be
responsible for much of the product storage, consumer credit
management, and other activities. Retailers specialize in mar-
keting activities, and this allows producers to specialize in
manufacturing activities. As you learned in Chapter 1, spe-
cialization leads to improved efficiency, which benefits con-
What are some of the posi- sumers through lower prices and added or improved services.
tive and negative aspects of
Retailers benefit consumers in several ways. Unlike producers, retailers can
telemarketing?
be conveniently located near consumers and can provide the products of many
manufacturers in one place, thereby permitting consumers to make comparisons
among a variety of types and brands of products. Furthermore, retailers can offer
several kinds of products that consumers may need, making it possible for con-
sumers to do all their shopping at one or a few locations. Retailers offer conve-
nient shopping hours, credit terms, merchandise exchanges, and other special
services to encourage customers to shop in their businesses.
Retail businesses range from large department stores that stock a broad vari-
ety of merchandise to small retailers specializing in a limited variety. Also, there
is a growing number of nonstore retailers. They sell products to customers in a
number of ways that do not require a shopping trip to a store. Those ways in-
clude vending machines; direct marketing by retailers through telephone, cata-
log, or online ordering services; in-home parties and sales presentations; and
shopping channels on cable television.
Producers prefer to sell products to retailers that buy in large quantities, such
as department and discount stores and supermarkets. Smaller retailers are usu-
ally not able to deal directly with the manufacturer, so they must buy from other
channel members. They turn to wholesalers, who consolidate the orders of a
number of smaller businesses and then place the larger orders with manufactur-
ers. Also, many wholesalers offer credit terms to retailers and provide help in
Ethics tip planning promotions and sales strategies.
Wholesalers sell business products as well as consumer products. Many
small businesses cannot purchase in the quantities required by large manufac-
turers or meet their terms of sale. They seek the service of a wholesaler, often
Telemarketing has been a very called an industrial distributor, to purchase the products they need.
popular form of direct mar- Wholesalers are an important part of international marketing today. Those
keting, but not everyone likes that have developed international customers and distribution systems offer an
it. Many states have created effective way for companies to enter those markets. International wholesalers
no-call lists. Any telemarketer can also import products from other countries to sell to their customers.
calling a phone number on Wholesalers provide valuable services that producers may not provide. They
the list can be fined. Telemar- sell to retailers in small quantities and can usually deliver goods quickly.
keters are also not likely to
make a sale to a home that INTEGRATED MARKETING CHANNELS
wants to block calls.
Usually the businesses involved in a channel of distribution are independent
businesses. They make their own decisions and provide the activities they believe

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