Channel Participants PDF

**Chapter Four** **Channel Participants** **4.1. An overview of the channel participants** **Classification of Channel Participants** a\. Producers and manufacturers b\. Intermediaries - Wholesale intermediaries - Retail intermediaries c. Final users - Consumers - Industries **Fa...

**Chapter Four** **Channel Participants** **4.1. An overview of the channel participants** **Classification of Channel Participants** a\. Producers and manufacturers b\. Intermediaries - Wholesale intermediaries - Retail intermediaries c. Final users - Consumers - Industries **Facilitating agencies** - Transportation firms - Storage firms - Advertising agencies - Financial firms - Insurance firms - Marketing research firm **Three Major Types of Wholesalers** A\) Merchant wholesalers B\) Agents, brokers, and commission merchants (Independent middlemen) C\) Manufacturers‟ sales branches and offices (Manufacturer owned) A. **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. B. **Agents, brokers, and commission merchants:** independent middlemen who do not take title to the goods in which they deal, but are actively involved in negotiation 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. C. **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 manufacturer's own products at wholesale. 1. **Merchant wholesalers' Distribution Tasks Performed for Manufacturers** **Inventory holding:** Merchant wholesalers take title to, and usually stock, the products of the manufacturers whom they represent and this can reduce some of manufacturers‟ risk associated with holding large inventories. **Market coverage:** Manufacturers often rely on merchant wholesalers to secure the necessary market coverage at reasonable cost. **Order processing:** Wholesalers are specifically geared to handle small orders from many customers and this can save more costs on order processing for manufacturers. **Market information:** Wholesalers can passed on info about customers‟ product and service requirements to manufacturers. **Customer support:** Wholesalers assist customers in providing services on behalf of manufacturers: exchange, return, setup, adjustment, repair, or technical assistance. **Product availability and Customer service:** By stocking and providing ready availability for many of the items needed by their customers. **Credit and financial assistance:** By extending open account credit to customers on product sold, so wholesalers allow customers to use products in their business before pay them. **Assortment convenience:** Wholesalers‟ ability to bring together from a variety of manufacturers an assortment of products, simplifying customers‟ ordering tasks. **Breaking bulk:** By buying large quantities from manufacturers and breaking down these „bulk‟ orders into smaller quantities, customers can buy only quantity they need. **Advice and technical support:** Wholesalers assist customers in providing services to customers: advice and assistance for proper use or technical assistance. 2. **Distribution Tasks Performed by Agent Wholesalers** **Manufacturing agents (manufacturers' representatives):** 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. **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. Three major developments: - Increase in size and buying power - Application of advanced technologies - Use of modern marketing strategies **Distribution Tasks Performed by Retailer** - 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 - Providing personal selling, advertising, and display to aid in selling suppliers‟ products - Interpreting consumer demand and relaying this info. back through the channel - Dividing large quantities into consumer-sized lots, thereby providing economies for suppliers (by accepting relatively large shipments) and convenience for consumers - 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 - Removing substantial risk from the producer/manufacturer (or wholesaler) by ordering and accepting delivery in advance of the season **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. **Common Types of Facilitating Agencies** **Transportation agencies**: all firms offering transportation service on a public basis **Storage agencies** consist mainly of public warehouses that specialize in the storage of goods on a fee basis. **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. **Advertising agencies** offer the channel member expertise in developing promotion strategy. This can range from providing a small amount of assistance in writing an advertisement to complete design and execution of the advertising campaign. **Financial agencies** consists of firms such as banks, finance companies, and factors that specialize in discounting account receivable. **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. **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.