W H O L E S A L I N G

Reporter: Ruth Anne A. Valencia

14- 1
Objectives
Understand the roles wholesalers in
the marketing channel.
Know the major types of
wholesalers.
Understand the marketing decisions
facing wholesalers.
14- 2
Wholesaling
Wholesaling
Includes all activities involved in
selling goods and services to those
buying for resale
or business use.
Wholesalers
Are those firms engaged
primarily in
wholesaling activity.
14- 3
Wholesalers add value by
performing the following
functions:
Selling and promoting
wholesalers sales forces help manufacturers
reach many small customers at a low cost.
The wholesaler has more contacts and is
often more trusted by the buyer than the
distant manufacturer.
Buying & assortment building
wholesalers can select items and build
assortments needed by their customers,
thereby saving the consumers much work
Wholesaling
14- 4
Wholesalers add value by
performing the following
functions:
Bulk-breaking wholesalers save
their customers money by buying in carload
lots and breaking bulk (breaking large lots
into small quantities)
Warehousing wholesalers hold
inventories, thereby reducing the inventory
cost and risk of suppliers and customers
Transportation wholesalers can
provide quicker delivery to buyers because
they are closer than the producers
Wholesaling
14- 5
Wholesalers add
value by performing
the following
functions:
Financing wholesalers finance
their customers by giving credit and
they finance their suppliers by ordering
early and paying the bills on time
Risk bearing wholesalers
absorb risk by taking and bearing the
cost of theft, damage, spoilage, and
obsolescence.


Wholesaling
14- 6
Wholesalers add value by
performing the following
functions:
Marketing information
wholesalers give information to suppliers
and customers about competitors, new
products, and price developments.
Management services
and advice wholesalers often
help retailers train their salesclerks,
improve store layouts and displays, and
set up accounting and inventory control
systems.

Wholesaling
14- 7
Wholesaling
Full-service wholesalers
Wholesale merchants
Sell primarily to retailers and
provide a full range of services:
1. General Merchandise carry
several merchandise lines.
2. General Line Wholesalers
carry one or two lines in great
depth.
3. Specialty Wholesalers
specialize in carrying only
part of a line. e.g. seafood
wholesalers.
Industrial distributors
Sell to manufacturers rather
than to retailers. Provide several
services, such as carrying
stock, offering credit and
providing delivery. May carry a
broad range of merchandise, a
general line or a specialty line.
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 8
Wholesaling
Limited service
wholesalers
Cash-and-carry wholesalers
Carry a limited line of fast-
moving goods and sell to small
retailers for cash. Normally do
not deliver.
Truck wholesalers (jobbers)
Perform primarily a selling and
delivery function. Carry limited
line of semi perishable
merchandise (e.g. milk, bread,
snack foods), which they sell for
cash as they make their rounds
to supermarkets, small
groceries, hospitals,
restaurants, factory cafeterias,
and hotels.
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 9
Wholesaling
Limited service
wholesalers
Drop shippers
Do not carry inventory or handle
the product. On receiving an
order, they select a
manufacturer who ships the
merchandise directly to the
customer. The drop shipper
assumes title and risk from the
time the order is accepted to its
delivery to the customer. They
operate in bulk industries, such
as coal, lumber and heavy
equipment.
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 10
Wholesaling
Limited service
wholesalers
Rack jobbers
Serve grocery and drug
retailers, mostly in nonfood
items. They send deliver trucks
to stores, where the delivery
people set up toys, paperbacks,
hardware items, health and
beauty aids or other items. They
price the goods, keep them
fresh, set up point of purchase
displays and keep inventory
records. Rack jobbers retain title
to the goods and bill the
retailers only for the goods sold
to consumers.
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 11
Wholesaling
Limited service wholesalers
Producers cooperatives
Are owned by farmer members
and assemble farm produce to sell
in local markets. The co-ops
profits are distributed to members
at the end of the year. They often
attempt to improve product quality
and promote a co-op brand name,
such as Sunkist Oranges.
Mail-order wholesalers
Send catalogs to retail, industrial,
and institutional customers
featuring jewelry, cosmetics,
specialty foods and other small
items. Maintain no outside sales
force. Main customers are
businesses in small outlying
areas. Orders are gilled and sent
by mail, truck or other
transportation.
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 12
Wholesaling
Brokers
Their chief function is to bring
buyers and sellers together and
assist in negotiation. They are
paid by the party who hired them
and do not carry inventory, get
involved in financing, or assume
risk. e.g. real estate brokers, food
brokers, insurance brokers and
security brokers.
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 13
Wholesaling
Agents represent their buyers or
sellers on a more permanent bass than
brokers do.
Purchasing agents
Generally have a long term
relationship with buyers and
make purchases for them, often
receiving, inspecting,
warehousing and shipping
merchandise to the buyers. They
provide helpful market
information to clients and help
them obtain the best goods and
prices available
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 14
Wholesaling
Manufacturers agents
Represent two or more
manufacturers of complimentary
lines. A formal written agreement
with each manufacturer covers
pricing, territories, order-handling,
delivery service and warranties,
and commission rates. Often used
in such lines as apparel, furniture
and electrical goods. Most
manufacturers agents are small
businesses, with only a few skilled
salespeople as employees. They
are hired by manufacturers who
cannot afford their own field sales
forces and by large manufacturers
who use agents to open new
territories or to cover territories
that cannot support full-time
salespeople.
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 15
Wholesaling
Agents
Selling agents
Have contractual authority to
sell a manufacturers entire
output. The manufacturer either
is not interested in the selling
function or feels unqualified.
The selling agent serves as a
sales department and has
significant influence over prices,
terms, and conditions of sale.
Found in product areas such as
textiles, industrial machinery
and equipment, coal and coke,
chemicals and metals.
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 16
Wholesaling
Agents
Commission merchants
Take physical possession of
products and negotiate sales.
Normally, they are not employed
on a long term basis. Used most
often in agricultural marketing by
farmers who do not want to sell
their own output and do not
belong to producers
cooperatives. The commission
merchant takes a truckload of
commodities to a central market,
sells it for the best price, deducts
a commission and expenses, and
remits the balance to the
producers.
Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 17
Wholesaling
Sales branches and offices
are set up by manufacturers to
improve inventory control, selling and
promotion.
Sales Branches - carry
inventory and are found in
industries such as lumber, auto
equipment and parts.
Offices - do not carry inventory
and are most prominent in dry
goods and notions industries.
Purchasing officers
Perform roles similar to brokers and
agents, but are part of the buyers
organization.

Merchant
Wholesalers
Brokers and
Agents
Manufacturers
and retailers
branches and
offices

Types of
Wholesalers
14- 18
Figure 14-2:
Wholesaler Marketing Mix
Decisions
14- 19
Wholesaler Marketing Decisions
Targeting may be made on the
basis of:
Size of customer (e.g. only large retailers)
Type of customer (e.g. convenience store
only)
Need for service (e.g. customers who need
credit)
Positioning
Wholesaling
14- 20
Wholesaler Marketing Decisions
Marketing mix decisions
Product and service assortment:
Inventory, line. Wholesalers are under
great pressure to carry a full line and to
stock enough for immediate delivery.
But this practice can damage profits.
Today wholesalers are cutting down on
the number lines they carry, choosing
ony the more profitable ones.

Wholesaling
14- 21
Wholesaler Marketing Decisions
Marketing mix decisions
Pricing:
Wholesalers usually markup the COG by
20% (standard %). Expenses may run
17% of the gross margin, leaving a profit
margin of 3%. In Grocery wholesaling,
the average profit margin is often less
than 2%. Wholesalers may cut their
margin on some lines in order to win
important new customers.
Wholesaling
14- 22
Wholesaler Marketing Decisions
Marketing mix decisions
Promotion:
Can be critical to wholesaler success,
most wholesalers are not promotion
minded. Their use of trade advertising,
sales promotion, personal selling and
public relations is largely scattered and
unplanned.
Wholesaling
14- 23
Wholesaler Marketing Decisions
Marketing mix decisions
Promotion (cont):
Many are behind the times in personal
selling-they still see selling as a single
salesperson talking to a single customer
instead of as a team effort to sell, build
and service major accounts. Wholesalers
need to adopt some of the non-personal
promotion techniques used by retailers
Wholesaling
14- 24
Wholesaler Marketing Decisions
Marketing mix decisions
Promotion (cont):
and develop an overall promotion
strategy and to make greater use of
supplier promotion materials and
programs.
Wholesaling
14- 25
Wholesaler Marketing Decisions
Marketing mix decisions
Place:
Wholesalers must choose their locations,
facilities and web locations carefully.
Wholesalers typically locate in low rent
low tax areas and tend to invest little
money in their buildings, equipment and
systems. As a result, their materials-
handling and order processing systems
are often outdated.
Wholesaling
14- 26
Trends in Wholesaling
Price competition is still intense
Successful wholesalers must
add value by increasing
efficiency and effectiveness
The distinction between large
retailers and wholesalers
continues to blur

Wholesaling
14- 27
More Trends in
Wholesaling
More services will
be provided to
retailers
Many wholesalers
are going global
Wholesaling
Wholesaler McKesson offers pharmacists a
wide range of online resources
Integrated Marketing
Communication
Strategy
Reporter: Ruth Anne A. Valencia
15- 29
Objectives
Know the tools of the marketing
communications mix.
Understand the process and advantages of
Integrated Marketing Communications.
The Marketing Mix
Marketing Communications Mix also
called as promotion mix, consist of the specific blend of advertising, sales
promotion, public relations, personal selling, and direct marketing tools
that the company uses to pursue its advertising and marketing objectives
Advertising any paid form of non-personal presentation of
ideas, goods, or services by an identified sponsor. e.g. print,
broadcast, outdoor etc.
Sales Promotion short-term incentives to encourage the
purchase or sale of a product or service. e.g. point of purchase
displays, premiums, discounts, coupons, specialty advertising,
demonstrations.
Public Relations building good relations with the
companys various publics by obtaining favorable publicity, building
up a good corporate image, and handling or heading off unfavorable
rumors, stories and events. e.g. press release, special events etc.
14- 30
The Marketing Mix
Marketing Communications Mix
Personal Selling personal presentation by the firms sales
force the purpose of making sales and building customer
relationships. e.g. sales presentations, trade shows, incentive
programs etc.
Direct Marketing - direct connections with carefully targeted
individual consumers to both obtain an immediate response and
cultivate lasting customer relationships the use of telephone, mail,
fax, email, the internet, and other tools to communicate directly with
specific customers. e.g. catalogs, telephone marketing, kiosks, the
internet, etc.
14- 31
15- 32
The Tools of Marketing
Communications Mix




Advertising
Personal Selling






Any Paid Form of Nonpersonal
Presentation by an Identified
Sponsor.
Sales Promotion
Short-term Incentives to
Encourage Sales.
Public Relations
Building Good Relations with
Various Publics by Obtaining
Favorable Unpaid Publicity.
Direct Marketing
Direct Communications With
Individuals to Obtain an
Immediate Response.
Personal Presentations by a
Firms Sales Force.
Integrating Marketing
Communications
During the past several decades, companies
around the world have perfected the art of mass
marketing (selling highly standardized products
to masses of customers).

In this process, they have developed effective
mass-media advertising techniques to support
their mass marketing strategies.

However, as we move into the 21
st
century,
marketing managers face some new marketing
communications realities.
14- 33
The Changing
Communications Environment
2 Factors that are changing the face of todays
communication:
1. Markets have fragmented marketers are shifting away
from the marketing mass. They are developing focused
marketing programs designed to build closer
relationships with customers in more narrowlly defined
microfinances.
2. Vast improvements in information technology are
speeding the movement towards segmented marketing
with todays information technology are standards,
marketers can keep close track of customers needs
more information about consumers at the individual
and household levels is available than ever before.
14- 34
15- 35
The Changing Communications
Environment



Two Factors
are Changing the Face of Todays
Marketing Communications:







Improvements in
Information Technology
Has Led to
Segmented Marketing
More Narrowcasting



Marketers Have Shifted
Away From Mass
Marketing
Less Broadcasting


















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The Need for Integrated
Marketing Communications
Integrated Marketing Communications (IMC)
The concept under which a company carefully
integrates and coordinates its many communication
channels to deliver a clear, consistent and compelling
message about the organization and its products.
IMC builds a strong brand identity in the marketplace by
tying together and reinforcing of the companys images
and messages. It means that all corporate message,
positioning and images, and identity, are coordinated
across all (marketing communications) venus.

14- 36
The Changing
Communications Environment
The shift from mass marketing to segmented marketing has
had a dramatic impact on marketing communications.
Just as mass marketing gave rise to a new generation of
mass media communications, the shift toward one to one
marketing is spawning a new generation or more
specialized and highly targeted efforts.
Given this new communications environment, marketers
must rethink the roles of various media promotion mix
tools.
Mass media advertising has long dominated the
promotion mixes of consumer product companies, yet
mass media dominance and market fragmentation are
happening at the same time..
14- 37
15- 38
The Marketing Communications
Environment is Changing:
Mass markets have fragmented, causing
marketers to shift away from
mass marketing
Media fragmentation
is increasing
Improvements in
information technology
are facilitating segmentation
Integrated Marketing
Communications
15- 39
The Need for Integrated
Marketing Communications
Conflicting messages from
different sources or promotional
approaches can confuse
company or brand images

Integrated Marketing
Communications
15- 40
Integrated Marketing Communications*
Company Carefully Integrates and Coordinates
Its Many Communication Channels to Deliver a
Clear, Consistent, Compelling Message.
Advertising
Personal
Selling
Public
Relations
Sales
Promotion
Direct
Marketing
Packaging
Event
Marketing
Message
The End
Thank you for listening


14- 41