Chapter 15 Wholesaling and Physical Distribution

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Chapter 15Wholesaling and Physical Distribution
MARKETING
Text by William M. Pride O. C. Ferrell Multimedia
Slides by Milton M. Pressley Univ. of New Orleans
2000e
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Objectives

• To Understand the Nature of Wholesaling in the
  Marketing Channel
• To Learn About Wholesalers' Functions
• To Understand How Wholesalers Are Classified
• To Be Able to Recognize How Physical Distribution
  Activities Are Integrated into Marketing Channels
  and Overall Marketing Strategies
• To Examine the Major Physical Distribution
  Functions of Order Processing, Inventory
  Management, Materials Handling, Warehousing, and
  Transportation
• To Discuss the Strategic Implications of Physical
  Distribution Systems

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The Nature of Wholesaling

• Wholesaling
• Wholesaler

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The Nature of Wholesaling
Major Wholesaling Functions

• Supply Chain Management Creating long-term
  partnerships among channel members
• Promotion Providing a sales force, advertising,
  sales promotion, and publicity
• Warehousing, Shipping, Receiving, storing, and
  stockkeepingand Product Handling Packaging S
  hipping outgoing orders Materials
  handling Arranging and making local and
  long-distance shipments
• Inventory Control and Processing ordersData
  Processing Controlling physical
  inventory Recording transactions Tracking
  sales data for financial analysis
• Risk Taking Assuming responsibility for theft,
  product obsolescence, and excess
  inventories

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The Nature of Wholesaling
Major Wholesaling Functions

• Financing and Budgeting Extending
  credit Borrowing Making capital
  investments Forecasting cash flow
• Marketing Research Providing information about
  marketsand Information Systems Conducting
  research studies Managing computer networks
  to facilitate exchanges and relationships

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The Nature of Wholesaling

• Services Provided by Wholesalers

• Extension of Producers Sales Force
• Financial Assistance
• Transportation
• Warehousing and Inventory
• Credit
• Source of Working Capital
• Conduits of Information

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The Nature of Wholesaling

• Services Provided by Wholesalers

• Extension of Producers Sales Force
• Financial Assistance
• Transportation
• Warehousing and Inventory
• Credit
• Source of Working Capital
• Conduits of Information

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Types of Wholesalers

• Merchant Wholesalers
• Full-Service Wholesalers
• General-Merchandise Wholesalers
• Limited-Line Wholesalers
• Specialty-Line Wholesalers
• Rack Jobbers
• Limited-Service Wholesalers

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Types of Wholesalers

• Merchant Wholesalers
• Full-Service Wholesalers
• General-Merchandise Wholesalers
• Limited-Line Wholesalers
• Specialty-Line Wholesalers
• Rack Jobbers
• Limited-Service Wholesalers

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Types of Wholesalers
Various Services That Limited-Service Merchant
Wholesalers Provide
Cash-and- Carry
DropShipper
Mail-Order
Truck

• Physical possession of merchandise Yes Yes No
  Yes
• Personal sales calls on customers No Yes No No
• Information about market conditions No Some
  Yes Yes
• Advice to customers No Some Yes No
• Stocking and maintenance ofmerchandise in
  customers stores No No No No
• Credit to customers No No Yes Some
• Delivery of merchandise to customers No Yes No
  No

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Types of Wholesalers

• Limited Services Wholesalers
• Cash-and-Carry Wholesalers
• Truck Wholesalers
• Drop Shippers
• Mail-Order Wholesalers
• Agents and Brokers

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Types of Wholesalers
Various Services That Agents and Brokers Provide
Manufac-turersAgents
Commis-sionMerchants
SellingAgents
Brokers

• Physical possession of merchandise Some
  Some Yes No
• Long-term relationship with buyersor
  sellers Yes Yes Yes No
• Representation of competing product lines No
  No Yes Yes
• Limited geographic territory Yes No No
  No
• Credit to customers No Yes Some No
• Delivery of merchandise to customers Some
  Yes Yes No

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Types of Wholesalers

• Agents and Brokers
• Manufacturers Agents
• Selling Agents
• Commission Merchants
• Manufacturers Sales Branches and Offices

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The Nature of Physical Distribution

• Physical Distribution
• Outsourcing
• Physical Distribution Objectives
• Meeting Standards of Customer Service
• Reducing Total Distribution Costs

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The Nature of Physical Distribution

• Physical Distribution
• Outsourcing
• Physical Distribution Objectives
• Meeting Standards of Customer Service
• Reducing Total Distribution Costs

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The Nature of Physical Distribution
Source Data from 1995 Physical Distribution
Cost and Service Memorandum 4-63, Herbert W.
Davis and Company, Mar. 19, 1996, p. 2.
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The Nature of Physical Distribution

• Physical Distribution
• Outsourcing
• Physical Distribution Objectives
• Meeting Standards of Customer Service
• Reducing Total Distribution Costs
• Reducing Cycle Time

• Functions of Physical Distribution
• Order Processing
• Electronic Data Interchange (EDI)

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The Nature of Physical Distribution

• Functions of Physical Distribution
• Inventory Management
• Just-in-Time (JIT)
• Materials Handling
• Warehousing
• Private Warehouses
• Public Warehouses
• Distribution Centers

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The Nature of Physical Distribution

• Functions of Physical Distribution
• Inventory Management
• Just-in-Time (JIT)
• Materials Handling
• Warehousing
• Private Warehouses
• Public Warehouses
• Distribution Centers

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The Nature of Physical Distribution

• Functions of Physical Distribution
• Inventory Management
• Just-in-Time (JIT)
• Materials Handling
• Warehousing
• Private Warehouses
• Public Warehouses
• Distribution Centers

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The Nature of Physical Distribution

• Functions of Physical Distribution
• Transportation
• Transportation Modes

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The Nature of Physical Distribution
Proportion of Intercity Freight Carried by
Various Transportation Modes
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The Nature of Physical Distribution
Railroads Trucks Waterways
Airways Pipelines

• Coal Clothing
  Petroleum Flowers Oil
• Grain Paper goods
  Chemicals Perishable Processed Chemicals
  Computers Iron ore food coal
• Lumber Books Bauxite
  Instruments Natural gas
• Automobiles Livestock Grain Emergency
  Water
• Steel parts Chemicals Overnight
  mail

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The Nature of Physical Distribution

• Transportation

• Choosing Transportation Modes
• Coordinating Transportation
• Intermodal Transportation
• Freight Forwarders
• Megacarriers

• Transportation Modes

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The Nature of Physical Distribution

• Transportation

• Choosing Transportation Modes
• Coordinating Transportation
• Intermodal Transportation
• Freight Forwarders
• Megacarriers

• Transportation Modes

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The Nature of Physical Distribution

• Strategic Issues in Physical Distribution

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BY NOW, YOU SHOULD . . .

• Understand the Nature of Wholesaling in the
  Marketing Channel
• Know About Wholesalers' Functions
• Understand How Wholesalers Are Classified
• Be Able to Recognize How Physical Distribution
  Activities Are Integrated into Marketing Channels
  and Overall Marketing Strategies
• Have Examined the Major Physical Distribution
  Functions of Order Processing, Inventory
  Management, Materials Handling, Warehousing, and
  Transportation
• Be Able to Discuss the Strategic Implications of
  Physical Distribution Systems