Wholesaling Overview and Roles
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Questions and Answers

What is the primary role of a wholesaler?

  • Financing producers and manufacturers
  • Retailing products to consumers
  • Manufacturing products
  • Efficiency and distribution (correct)

Wholesalers are primarily responsible for selling goods directly to end consumers.

False (B)

What are two types of merchant wholesalers?

Full-service wholesalers and limited-service wholesalers

The wholesaler provides finance by sending money in advance to ________.

<p>producers</p> Signup and view all the answers

Which of the following is NOT typically a service provided by full-service wholesalers?

<p>Retail sales (B)</p> Signup and view all the answers

Wholesalers can offer valuable market insights due to their direct contact with the market.

<p>True (A)</p> Signup and view all the answers

Match the type of wholesaler with its description:

<p>Full-service wholesaler = Provides a wide range of wholesale activities Limited-service wholesaler = Stocks goods but offers limited marketing services Merchant wholesaler = Buys products in large quantities and takes title of the goods Wholesaler = Acts as a financier for producers</p> Signup and view all the answers

Wholesalers help reduce the need for retailers to maintain large ________.

<p>inventories</p> Signup and view all the answers

Which of the following is NOT a type of full-service merchant wholesaler?

<p>Limited-Service Wholesalers (D)</p> Signup and view all the answers

Limited-service wholesalers do not take ownership of the goods.

<p>False (B)</p> Signup and view all the answers

What is one advantage of full-service wholesalers compared to other types?

<p>Higher earnings due to a wider range of services offered</p> Signup and view all the answers

Manufacturer's agents are considered as a separate entity from the ________.

<p>manufacturers</p> Signup and view all the answers

Which service is typically NOT provided by limited-service wholesalers?

<p>Delivery of merchandise (B)</p> Signup and view all the answers

Match the types of wholesalers with their characteristics:

<p>Industrial Distributors = Sell mainly to industrial users and provide various services Farm Product Assemblers = Gather and sell agricultural products Manufacturer's Agents = Firm owned by manufacturers but operates separately Brokers = Assist in negotiations without taking title of goods</p> Signup and view all the answers

Brokers own the goods they sell and provide full delivery services.

<p>False (B)</p> Signup and view all the answers

Name one example of a limited-service wholesaler.

<p>Pharmaceutical merchant</p> Signup and view all the answers

What is the primary function of brokers in a sales transaction?

<p>To assist in the sales process (B)</p> Signup and view all the answers

Cash-and-carry wholesalers provide credit and delivery services to their customers.

<p>False (B)</p> Signup and view all the answers

What do rack jobbers specialize in?

<p>Non-food items such as cosmetics</p> Signup and view all the answers

Truck jobbers supply to ________, grocery stores, and convenience stores.

<p>restaurants</p> Signup and view all the answers

What percentage of the deal do brokers typically earn as commission?

<p>0.05 percent (B)</p> Signup and view all the answers

Match the type of wholesaler to their primary function:

<p>Mail Order Wholesalers = Circulate catalogues or websites and dispatch goods Export Agents = Sell products to companies in different countries Auction Companies = Provide staff and facilities for auctions Selling Agents = Sell the entire output of a manufacturing company</p> Signup and view all the answers

Selling agents are appointed to sell only a portion of a manufacturing company's output.

<p>False (B)</p> Signup and view all the answers

What is one of the key roles of purchasing agents?

<p>Collect goods and send them to the factory</p> Signup and view all the answers

What is one primary characteristic that distinguishes supermarkets from department stores?

<p>Supermarkets are larger and carry a wider range of product lines. (B)</p> Signup and view all the answers

Supermarkets primarily focus on selling clothing and fashion items.

<p>False (B)</p> Signup and view all the answers

What services do larger department stores offer to attract customers?

<p>Free home delivery and loyalty schemes.</p> Signup and view all the answers

Supermarkets achieve low prices by purchasing in _____ and getting discounts from manufacturers.

<p>bulk</p> Signup and view all the answers

Which of the following is an example of a discount store?

<p>99 shops at Basantapur (B)</p> Signup and view all the answers

Off-price retailers purchase goods at retail prices and charge less than wholesale prices.

<p>False (B)</p> Signup and view all the answers

What is the typical layout feature of supermarkets?

<p>Single floor layout with different sections.</p> Signup and view all the answers

Match the following types of stores with their characteristics:

<p>Supermarket = Self-service, large variety of food and household items Discount store = Sells goods at fixed discounted prices Off-price retailer = Purchases goods at below-wholesale prices Department store = Common sales staff with various product categories</p> Signup and view all the answers

Which type of retail outlet focuses mainly on food items?

<p>Supermarket (A)</p> Signup and view all the answers

Superstores are typically located in city centers.

<p>False (B)</p> Signup and view all the answers

What distinguishes a warehouse showroom from a traditional supermarket?

<p>Warehouse showrooms offer deeper discounted prices and a no-frills shopping experience.</p> Signup and view all the answers

Direct marketing is also known as ___ response.

<p>direct</p> Signup and view all the answers

Match the retail format with its characteristic:

<p>Off-price Retailers = Carry overruns and irregulars Catalogue Showroom = Browse catalogs to place orders Superstore = Has non-food areas while selling groceries Vending Machine = Automatically sells food and drinks</p> Signup and view all the answers

What type of products do catalogue showrooms primarily deal with?

<p>Electronics and jewelry (B)</p> Signup and view all the answers

Vending machines are known for providing a wide range of fresh food items.

<p>False (B)</p> Signup and view all the answers

What is a key advantage of direct marketing?

<p>It allows organizations to communicate directly with customers.</p> Signup and view all the answers

What types of products are typically sold in cold vending machines?

<p>Juice, bottled water, and soft drinks (C)</p> Signup and view all the answers

Kiosks are only found in permanent locations and cannot be mobile.

<p>False (B)</p> Signup and view all the answers

What is the main role of agents and brokers in the marketing process?

<p>To ease buying and selling by bringing buyers and sellers together.</p> Signup and view all the answers

Manufacturers' agents usually work on a ________ basis.

<p>commission</p> Signup and view all the answers

Match the type of agent middleman with its description:

<p>Manufacturer Agent = Represents multiple manufacturers' complementary lines Sales Agent = Has authority to sell all of a manufacturer's output Brokers = Do not take title or possession of goods Commission = Compensation structure for agent middlemen</p> Signup and view all the answers

Which of the following best describes kiosks?

<p>Provide convenience goods in high traffic areas (B)</p> Signup and view all the answers

Sales agents typically do not provide market feedback to manufacturers.

<p>False (B)</p> Signup and view all the answers

Name one industry where brokers are commonly found.

<p>Food, real estate, or insurance</p> Signup and view all the answers

Flashcards

Wholesaler's role in warehousing

Wholesalers act as stock holders for retailers, reducing their inventory needs.

Wholesaler's Financing function

Wholesalers provide financial support to producers and manufacturers by pre-paying, and also extending credit to retailers.

Wholesaler's role in Market Information

Wholesalers provide valuable market insights to producers/manufacturers, gathered directly from the market.

Wholesaler's Efficiency function

Wholesalers efficiently manage distribution of goods from producer/manufacturer to smaller retailer quantities.

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Wholesaler Merchant

Wholesalers who buy goods in bulk, store them, and sell to retailers or other wholesalers.

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Full-Service Wholesaler

Wholesalers offering comprehensive marketing and distribution services, including stocking and delivery.

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Limited-Service Wholesaler

Wholesalers offering basic services like stocking, but not full marketing.

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Wholesale Market Insights

Includes seasonal demand, sales representative issues, competitor activities, brand preferences, and estimated market shares.

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Industrial Distributor

A full-service wholesaler that sells industrial materials to factories, offices, and sometimes retailers, offering services like storage, delivery, and repairs.

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Agent

An intermediary that negotiates the sale, sometimes without owning the goods.

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Manufacturer's Agent

A firm that represents a manufacturer to sell its products, often in a specific geographic region.

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Broker

An intermediary who facilitates the sale but doesn't own the goods.

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Farm Product Assembler

A full-service wholesaler that brings together farm products for distribution.

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Importer/Exporter

A full-service merchant wholesaler that specializes in international trade.

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Cash-and-Carry Wholesaler

Sells to retailers in cash, offering no credit or delivery. Focuses on buying, sorting, and maintaining inventory.

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Rack Jobber

Sets up product displays in stores (like supermarkets). Gets a percentage of sales and the wholesaler owns goods until sold.

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Truck Jobber

Combines sales and delivery of perishable items to restaurants and stores. Driver is both salesman and delivery person.

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Mail Order Wholesaler

Sells through catalogs or websites; deals made over the phone/internet, and goods shipped on COD.

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Purchasing Agent

Collects goods for businesses, especially those in remote areas, stocks, and delivers products.

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Selling Agent

Handles all sales for a company's entire output.

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Auction Company

Establishes a platform for auctioning goods, often agricultural products.

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Off-price Retailer

A retailer that sells a constantly changing selection of overruns, irregulars, and leftover goods at discounted prices.

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Superstore

A large retail store offering a wide variety of goods, including groceries, clothing, home decor, and electronics.

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Supermarket vs. Superstore

A supermarket primarily focuses on food, while a superstore offers a wider range of products, including non-food items and services.

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Warehouse Showroom

A retail store that operates out of a warehouse, offering discounted prices and a no-frills experience.

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Catalogue Showroom

A retail store where customers browse a catalogue to order items, which are then retrieved from a nearby warehouse.

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Direct Marketing

Communicating directly with customers through various media to promote products or services.

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Vending Machine

An automated machine that sells food, drinks, or other items.

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Department Store

Large retail store offering a wide range of products organized into distinct departments, typically featuring a common sales staff and check-out area.

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Non-store Retailing

Retailing that takes place without physical stores, relying on methods like direct marketing, online sales, or vending machines.

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Supermarket Feature: Self-Service

Supermarkets allow customers to browse and select their own products without needing direct assistance from sales staff.

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Supermarket Advantage: Economies of Scale

Supermarkets purchase large quantities of goods, leading to discounts from manufacturers and lower costs resulting in lower prices for customers.

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Discount Store

Retail outlet that focuses on offering goods at discounted prices, often with a fixed-price system.

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Discount Store Example: 99 Shops

A specific type of discount store found in Nepal, known for offering a wide range of goods at reduced prices.

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Off-Price vs. Discount: Difference

Off-price retailers buy goods significantly cheaper than wholesale, while discounters buy at wholesale but offer lower margins.

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Mass Merchandiser

A retail store that sells a large variety of products at relatively low prices, often focused on self-service and lower-cost operations.

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Kiosk

A temporary or permanent structure that sells convenience goods in high-traffic areas, catering to people who are in a hurry or don't want to enter a store.

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Agent Middlemen

Intermediaries who help manufacturers sell their products without taking ownership of the goods. They connect buyers and sellers and negotiate deals.

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Sales Agent

An agent middleman who has exclusive rights to sell all of a manufacturer's output, setting prices and conditions of sale.

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Why do manufacturers use agents?

Manufacturers use agents to reach more buyers without having to build their own sales force. Agents can access specific markets and negotiate deals effectively.

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What's the difference between agents and brokers?

Agents typically work continuously with manufacturers, building relationships and providing ongoing sales support. Brokers work on a case-by-case basis, facilitating individual transactions.

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What are the main functions of agent middlemen?

They connect buyers and sellers, negotiate deals, and provide market information to manufacturers, acting as a bridge between production and consumption.

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Do agents take ownership of the goods they sell?

No, unlike merchant wholesalers, agent middlemen do not take ownership or possession of the products they sell. They simply act as intermediaries.

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Study Notes

Wholesaling

  • Wholesaling encompasses all activities related to selling to retailers, merchants, or industrial/institutional/commercial users, excluding final consumers.
  • Wholesalers act as distributors or intermediaries, primarily selling to retailers and institutions.

Roles of a Wholesaler

a) Warehousing

  • Wholesalers act as a stock reservoir for retailers, reducing their inventory needs.
  • This warehousing function allows for cost-effective supply management for retailers.
  • Wholesalers provide more specialized warehousing than manufacturers or retailers.

b) Financing

  • Wholesalers provide financing by extending credit to producers and manufacturers.
  • Wholesalers also facilitate payment to producers and sell goods on credit to retailers, functioning as a financier.

c) Providing Information

  • Wholesalers frequently gather and convey crucial market insights to companies.
  • Gathering information from market trends, competitor activities, consumer preferences, and market share estimations.
  • Wholesalers provide insights into local promotional campaigns and strategies.

d) Efficiency and Distribution

  • Wholesalers enhance efficiency in product distribution by handling small product quantities.
  • Selling to retailers, ensuring goods reach the target retailers in their specific area.

Types of Wholesalers

a) Wholesaler Merchants

  • These wholesalers purchase goods in bulk and store them until sold to retailers or other wholesalers.
  • They are responsible for the title of goods until final sale to the consumer.

(1) Full-Service Wholesalers

  • Provide extensive services including product availability, assortment, and financial assistance.

(2) Limited-Service Wholesalers

  • Focus on limited activities like stocking goods but lacking in other areas.

b) Agents and Brokers

  • These agents/brokers do not take legal title of the goods, mediating the transaction.
  • Acting as intermediaries to connect buyers and sellers, focusing on the sales process.

(1) Manufacturer's Agents

  • Represent multiple manufacturers/complementary lines.
  • Operate on a commission basis.

(2) Sales Agents

  • Have considerable autonomy in setting sale terms and conditions.
  • Take full responsibility in selling the products of the manufacturer.

(3) Purchase Agents

  • Focus on receiving, inspecting, storing, and shipping goods directly to buyers.

(4) Commission Houses

  • Facilitate the buying and selling of various assets and receive commissions on transactions.

c) Cash-and-Carry Wholesalers

  • Provide goods without credit or delivery services.
  • Conduct sales on a cash basis.

d) Rack Jobbers

  • Offer retailers product display/sales counters.
  • Work on a percentage-of-sales basis, with product ownership remaining with the wholesaler.

e) Truck Jobbers

  • Combine sales and delivery services.
  • Focus on fast-moving items or perishable products.

f) Mail Order Wholesalers

  • Offer goods through catalogues or websites with cash-on-delivery (COD) arrangements.

g) Purchasing Agents

  • Act as resident buyers for companies
  • Handle quality control, inventory, and delivery for companies.

h) Selling Agents

  • Appointed to oversee the entire sales output of companies.

i) Auction Companies

  • Traditional organizations for commodity/agricultural product auctions.
  • Provide facilities for auction marketplaces.

j) Export Agents

  • Companies appoint them to help with selling goods to foreign companies and marketing in different regions.

Traditional Retailers

  • Specialty Stores: Focus on a specific product line.
  • Department Stores: Offer a wide range of products in different departments.
  • Super Stores: Large supermarkets with a wide selection of products encompassing groceries, household supplies etc.
  • Warehouse Showrooms: Offer deep discounts with no-frills experience.
  • Catalogue Showrooms: Goods are displayed, customers view and order through catalogues.

Non-Store Retailing

  • Direct Marketing: Communication directly with customers via various channels (emails, websites etc).
  • Vending Machines: Automated sale of goods/services.
  • Kiosks: Smaller, temporary structures for sales and services in high-traffic areas.

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Description

This quiz explores the key functions of wholesaling, including warehousing, financing, and information provision. It highlights how wholesalers serve as crucial intermediaries between manufacturers and retailers. Test your understanding of the critical roles that wholesalers play in the supply chain!

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