Core Concepts of Marketing

CHANNEL INSTITUTIONS:CAPABILITIESANDLIMITATIONS 263

Severalmajorcorporationshavealsoacquiredordevelopedmail-orderdivisionsviacata-
logs.Usingcatalogs,Avor;sellswomen'sapparel,W.l-Z.Graceseilscheese, andGeneral
Millssellssportshirts.
Somecompanieshavedesigned"customer-orderplacingmachines," i.e.,kiosks(in
contrasttovend:ngmachines,whichdispenseactualproduc~s),andplacedtheminstores,
airports,andotherlocations.Forexample,theFlorsneimShoeCompanyincludesa machine
inseveralofitsstoresinwhichthecustomerindicatesthetypeofshoehewants(e.g., dress,
sport),andthecolorandsize.PicturesofFlorsheimshoesthatmeethiscriteriaappearon
thescreen.

Wholesaling

Anotherimportantchannelmemberinmanydishbutionsystemsisthewholesaler.Whole-

salingincludesallactivitiesrequiredtomarketgoodsandservicestobusinesses,institu-

tions,orindustrialuserswhoaremotivatedtobuyforresaleortoproduceandmarketother

productsandservices.Wh~nab8nkbuysa newcomputerfordataprocessing,a schoolbuys

audio-visualequipment(orclassroomuse,ora dressshopbuysdressesforresale,a whole-

saletransactionhastakenplace.

Thevastmajorityofallgoodsproducedinanadvancedeconomyhavewholesaling

involvedintheirmarketing.Thisincludesmanufacturers. whooperatesalesofficestoper-

formwholesalefunctions,andretailers,whooperatewarehousesorotherwiseengagein

wholesaleactivities.Eventhecentrallyp~annedsocialisteconomyneedsa structuretohan-

dlethemovementofgoodsfromthepointofp 'oductiontootherproductactivities orto

retailerswhodistributetoultimateccnsumers.Nct'::thatmanyestablishme~tsthatpelfonn

wholesalefunctionsalsoengageinmanufactwingorretailing.Thismakesit verydifficult

toproduceaccuratemeasuresoftheextentofwholesaleactivity.Forpurposesofkeeping

statistics,theBureauoftheCensusoftheUnitedStatesDepartmentofCommercedefines

wholesalingintermsoftilepercentofbusinessdonebyestablishmentswhoareprimary

wholesalers. It is estimatedthatonlyabout60%ofallwholesaleactivityisaccountedfor

inthisway.

Todaythereareapproximately600,000who~esaleestablishmentsintheUnitedStates,

comparedto just fewerthan3 millionretailers. These600,000wholesalersgeneratea total

volumeofover1.3 trilliondollars annually; thisisapproximately75%greater thanthetotal

volumeofall retailers.Wholesalevolumeisgreaterbecauseit includessalestoindustrial

usersaswellasmerchandisesoldtoretailersforresale.

FunctionsoftheWholesaler

Wholesalersperforrna numberofl.sefulfunctionswithinthechannelofdistributions.;::1ese
mayincludeallorsomecombinationofthefollowing:

1. Warehousing-thereceiving,storage,packaging,andthelikenecessarytomain-
   tainastockofgoodsforthecustomerstheyservice.


2. Inventorycontrolandorderprocessing-keepingtrackofthephysicalinv~n­
   tory,managingitscompositionandlevel, andprocessingtransactionstoinsure
   a smoothflowofmerchandisefromproducerstobuyersandpaymentbackto
   theproducers.


3. Transportation-arrangingthephysicalmovementofmerchandise.


4. Information-supplyinginformation::tboutm<l.rketstoproducersandinformation
   aboutproductsandsupplierstobuyers.


5. Selling-personalcontactwithbuyerstosellproductsandservice.