Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Retailers, Wholesalers
and Their Strategy
Planning
Text © The McGraw−Hill
Companies, 2002376 Chapter 13
Producing profits, not
chasing orders
It’s hard to define what a wholesaler is because there are so many different whole-
salers doing different jobs. Some of their activities may even seem like
manufacturing. As a result, some wholesalers describe themselves as “manufacturer
and dealer.” Some like to identify themselves with such general terms as merchant,
jobber, dealer,or distributor.And others just take the name commonly used in their
trade—without really thinking about what it means.
To avoid a long technical discussion on the nature of wholesaling, we’ll use the
U.S. Bureau of the Census definition:
Wholesalingis concerned with the activitiesof those persons or establishments
that sell to retailers and other merchants, and/or to industrial, institutional, and
commercial users, but that do not sell in large amounts to final consumers.
So wholesalersare firms whose main function is providing wholesaling activi-
ties. Wholesalers sell to all of the different types of organizational customers shown
in Exhibit 7-1.
Wholesaling activities are just variations of the basic marketing functions—gath-
ering and providing information, buying and selling, grading, storing, transporting,
financing, and risk taking—we discussed in Chapter 1. You can understand whole-
salers’ strategies better if you look at them as members of channels. They add value
by doing jobs for their customers and for their suppliers. In Chapter 11, we consid-
ered some of the ways they provide value when we discussed why a producer might
want to use indirect distribution and include an intermediary in the channel. Now
we’ll develop these ideas in more detail.Wholesaling Is Changing with the Times
A hundred years ago wholesalers dominated distribution channels in the United
States and most other countries. The many small producers and small retailers
needed their services. This situation still exists in many countries, especially those
with less-developed economies. However, in the developed nations, as producers
became larger many bypassed the wholesalers. Similarly, large retail chains often
take control of functions that had been handled by wholesalers. Now e-commerce
is making it easier for producers and consumers to “connect” without having a
wholesaler in the middle of the exchange. In light of these changes, many people
have predicted a gloomy future for wholesalers.
There certainly is reason to expect the worst for some types of wholesalers. With
all the changes taking place, one could assume that wholesaling won’t adapt fast
enough. In the 1970s and 1980s that seemed to be the pattern. Now, however, rapid
changes are underway. Even big changes are not always visible to consumers because
they’re hidden in the channel. But many wholesalers are adapting rapidly and find-
ing new ways to add value in the channel. For example, some of the biggest B2B
e-commerce sites on the Internet are wholesaler operations.Partly due to new management and new strategies, many wholesalers are
enjoying significant growth. You saw a good example of this in the opening caseWhat Is a Wholesaler?
Retailing may not have moved as fast in other parts of the world as it has in the
U.S., but change is coming. And in these other countries, retailers who cannot
adapt with new strategies will be passed over by those who do.^27