Channel Participants

1
Channel Participants
2
Classification of Channel Participants
All channel participants
Do they perform negotiatory functions?
Member participants
Nonmember participants
Yes
No
3
Yes
Do they perform negotiatory functions?
No
4
Three Major Types of Wholesalers
5
Three Major Types of Wholesalers

• Merchant wholesalers firms engaged in buying,
  taking title, usually storing, and physically
  handling products in relatively large quantities
  and then reselling the products in smaller
  quantities to retailers to industrial,
  commercial, or institutional concerns and to
  other wholesalers.
• They can be named wholesaler, jobber,
  distributor, industrial distributor, supply
  house, assembler, importer, exporter, and etc.

6
Three Major Types of Wholesalers

• Agents, brokers, and commission merchants
  independent middlemen who do not take title to
  the goods in which they deal, but are actively
  involved in negotiatory functions of buying and
  selling while acting on behalf of their clients.
  They are usually compensated in the form of
  commissions on sales or purchases.
• Common type are known as manufacturers agents,
  commission merchants, brokers, selling agents,
  and import export agents.

7
Three Major Types of Wholesalers

1. Manufacturers sales branches and offices are
   owned and operated by manufacturers but are
   physically separated from manufacturing plants.
   They are used for the purpose of distributing the
   manufacturers own products at wholesale.

8
Merchant wholesalers Distribution Tasks
Performed for Manufacturers
9
Merchant wholesalers Distribution Tasks
Performed for Customers
10

• When merchant wholesalers perform all of the
  distribution tasks, it will results on more
  effective and efficient marketing channels
  (reflected in margins earned by wholesalers).

11
Distribution Tasks Performed by Agent Wholesalers

• Manufacturing agents (manufacturers
  representatives or reps) specialize in
  performing market coverage and sales contact
  distribution tasks for manufacturers.
• Selling agents perform more distribution tasks
  such as providing market coverage, sales contact,
  order processing, marketing info., product
  availability, and customer services.
• Brokers are parties who bring buyers and sellers
  together so that transaction can be consummated.
  They perform only 1 distribution task providing
  market info. (in practice, they may perform many
  more tasks i.e. food brokers).
• Commission merchant (mainly in agricultural
  markets) perform wide range of distribution
  tasks physically holding inventory, providing
  market coverage, sales contact, breaking bulk,
  credit, and order processing.

12
Retail Intermediaries

• Retailers consist of business firms engaged
  primarily in selling merchandise for personal or
  household consumption and rending services
  incidental to the sale of goods.
• They range in size from mom-and-pop neighborhood
  stores to giant mass merchandise chains such as
  Wal-Mart.
• (see Table 2.5 for the alternative bases for
  classifying retailers)

13
Growing Power of Retailers

• Three major developments
• Increase in size and buying power
• Application of advanced technologies
• Use of modern marketing strategies

14
Distribution Tasks Performed by Retailer

1. Offering manpower and physical facilities that
   enable producers/manufacturers and wholesalers to
   have many points of contact with customers close
   to their places of residence
2. Providing personal selling, advertising, and
   display to aid in selling suppliers products
3. Interpreting consumer demand and relaying this
   info. back through the channel

15
Distribution Tasks Performed by Retailer

1. Dividing large quantities into consumer-sized
   lots, thereby providing economies for suppliers
   (by accepting relatively large shipments) and
   convenience for consumers
2. Offering storage, so that suppliers can have
   widely dispersed inventories of their products at
   low cost and enabling consumers to have close
   access to the products of producers/manufacturers
   and wholesalers
3. Removing substantial risk from the
   producer/manufacturer (or wholesaler) by ordering
   and accepting delivery in advance of the season

16
Facilitating Agencies

• Facilitating agencies are business firms that
  assist in the performance of distribution tasks
  other than buying, selling, and transferring
  title.
• They may be viewed as subcontractors to whom
  various distribution tasks can be farmed out
  based on the principle of specialization and
  division of labor.

17
Common Types of Facilitating
Agencies

• Transportation agencies all firms offering
  transportation service on a public basis, such as
  United Parcel Service (UPS) and Federal Express.

18
Common Types of Facilitating
Agencies

• Storage agencies consist mainly of public
  warehouses that specialize in the storage of
  goods on a fee basis.

19
Common Types of Facilitating
Agencies

• Order processing agencies are firms that
  specialize in order fulfillment tasks. They
  relieve manufacturers, wholesalers, or retailers
  from some or all of the task of processing orders
  for shipment to customers.

20
Common Types of Facilitating
Agencies

• Advertising agencies offer the channel member
  expertise in developing promotion strategy.
• This can range from providing a small amount of
  assistance in writing an ad to complete design
  and execution of the advertising campaign.

21
Common Types of Facilitating
Agencies

• Financial agencies consists of firms such as
  banks, finance companies, and factors that
  specialize in discounting account receivable.
  Common to all of these firms is that they possess
  the financial resources and expertise that the
  channel manager often lacks.

22
Common Types of Facilitating
Agencies

• Insurance companies provide the channel manager
  with a means for shifting some of the risks
  inherent in any business venture, such as fire
  and theft losses, damage in transit of goods, and
  in some cases even inclement weather.

23
Common Types of Facilitating
Agencies

• Marketing research firms The channel manager can
  call on these firms to provide info. when his/her
  own firm lacks the necessary skills to obtain
  marketing information relevant to distribution.