Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

11. Place and Development
    of Channel Systems

Text © The McGraw−Hill

Companies, 2002

Place and Development of Channel Systems 311

Producers typically specialize by product—and therefore another discrepancy

develops. Discrepancy of assortmentmeans the difference between the lines a

typical producer makes and the assortment final consumers or users want. Most

golfers, for example, need more than golf balls. They want golf shoes, gloves, clubs,

a bag, and, of course, a golf course to play on. And they usually don’t want to shop

for each item separately. So, again, there is a need for wholesalers and retailers to

adjust these discrepancies.

In actual practice, bringing products to customers isn’t as simple as the golf exam-

ple. Specializing only in golfing products may not achieve all the economies possible

in a channel of distribution. Retailers who specialize in sports products usually carry

even wider assortments. And they buy from a variety of wholesalers who specialize

by product line. Some of these wholesalers supply other wholesalers. These com-

plications will be discussed later. The important thing to remember is that

discrepancies in quantity and assortment cause distribution problems for producers

and explain why many specialists develop.

Regrouping activities adjust the quantities and/or assortments of products han-

dled at each level in a channel of distribution.

There are four regrouping activities: accumulating, bulk-breaking, sorting, and

assorting. When one or more of these activities is needed, a marketing specialist

may develop to fill this need.

Adjusting quantity discrepancies by accumulating and bulk-breaking

Accumulating involves collecting products from many small producers. Much of

the coffee that comes from Colombia is grown on small farms in the mountains.

Accumulating the small crops into larger quantities is a way of getting the lowest

transporting rate and making it more convenient for distant food processing com-

panies to buy and handle it. Accumulating is especially important in less-developed

countries and in other situations, like agricultural markets, where there are many

small producers.

Accumulating is also important with professional services because they often

involve the combined work of a number of individuals, each of whom is a special-

ized producer. A hospital makes it easier for patients by accumulating the services

of a number of health care specialists, many of whom may not actually work for the

hospital.

Office Depot, a large office

supplies chain, accumulates

products from many producers at

its distribution center and then

breaks bulk to provide the

convenient assortments that

consumers expect to find at

individual Office Depot stores.

Channel specialists

adjust discrepancies

with regrouping

activities