264 CHAPTER 10 CHANNELCONCEPTS:DISTRIBUTINGTHEPRODUCT
Inaddition,thewholesalermustperformailtheactivitiesnecessaryfor theoperationof
anyotherbus;nesssuchasplanning,financing,anddevelopingasarketingmix.Thefive
functionslistedpreviouslyemphasizethenatureofwholesalingasa linkbetweenthepro-
ducerandtheorganizationalbuyer.
Byproviding thislinkage,wholesalecassistboththeproducerandthe buyer.From
thebuyer'sperspective,thewholesalertypicallybringstogethera wideassortmentofprod-
uctsandlessenstheneedtodealdirectlywitha largenumber(;[producers.Thi~makesthe
buyingtaskmuchmoreconvenient.Ahardwarestorewiththousandsofitemsfromhun-
dredsofdifferent producersmayfindit moreefficientto dealwithasmallernumberof
wholesalers.Thewholesalermayalsohaveaninventoryinthelocalmarket,thu"speed-
ingdeliveryandimprovingst"vice.Thewholesalerassiststheproducerbymakingprod-
uctsmoreaccessibletobuyers.Theyprovidetheproducerwithwidemarketcoverage
informationaboutlocalmarkettrendsinanefficientmanner.Wholesalersmayalsohelp
withthepromotionofa producer'sproductstoa localorr~gionalmarketviaadvertising
ora salesforcetocallonorganiL.ationalbuyers.
TypesofWholesalers
Therearemanydifferenttypesofwholesalers.Somearehdependent;othersarepartofa
verticalmarketingsystem.Someprovidea fullrangeofse:"Vices;othersofferveryspecialized
services.Dir:erentwant;andneedsonthepartofbothbuyersandproducershaveledtoa
widevarietyofmode;nwholesalers.Table10. 1 providesa summaryofgeneraltypes.Whole-
salingactivitiesS2r.r..ot0eeliminated, buttheycanbeassumedbymanJfacturersandretail-
ers.Thosemerchantwholesalerswhohaveremainedviablehavedonesobyproviding
improvedservicetosuppliersandbuyers.Todothisat lowcost,modemtechnologiesmust
beincreasinglyintegrz.tedintothewholesaleoperation.
PhysicalDistribution
Ina societysuchasours, thetaskofphysicallymoving, handlingandstoringproductshas
becometheresponsibilityofmarketing.Infact,toanindividualfirmoperatingina high-
leveieconomy,theselogisticalactivitiesarecritical.Theyoftenrepresenttheonlycost-
savingareaopentothefirm. Likewise,inmarketswhereproductdistinctivenesshasbeen
reduceqgO'eatly,theab ili ty toexcel inphysicaldistributionactivitiesmayprovidea true
competitiveadvantage. Ultimately,physicaldistributionactivitiesprovidethebridgebetween
theproductionactivities andthemarkets that arespatiallyandtemporallyseparated.
Physicaldistributionmanagementmaybedefinedastheprocessofstrategicallyman-
agingthe movementandstorageofmaterials , parts,andfinishedinventoryfromsuppliers,
betweenenterprise facilities,andtocu stomers.Physicaldistributionactivitiesincludethose
undertakentomovefinishedproductsfromtheendoftheproductionlinetothefinalcon-
sumer. Theyalsoincludethemovementof rawmaterialsfroma sourceofsupplytothe
beginningoftheproductionline,andthemovemntofparts,etc.,tomaintaintheexisting
product.Finally, it mayincludea networkformovi:1gtheproductbacktotheproduceror
reseller,asin thecaseofrecallsorrepair.
Beforediscussingphysicaldistribution,it is importanttorecognizethat physicaldis-
tributionandthechannelofdistributionarenotindependentdecisionareas.Th~ymustbe
consideredtogether inordertoachieve theorganization's goalofsatisfiedcustomers.Sev-
eralrelationshipsexistbetweenphysicaldistributionand channels,includingthefollowing:
- Definingthephysicaldistribution standards thatchamelmembers want.
- Makingsuretheproposedphysicaldis tributionprogramdesignedbyanorgani-
zationmeetsthestandardsofchannelmembers.
