Basic Marketing: A Global Managerial Approach

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

13. Retailers, Wholesalers
    and Their Strategy
    Planning

Text © The McGraw−Hill

Companies, 2002

Retailers, Wholesalers, and Their Strategy Planning 379

Manufacturers’ sales

branches are

considered wholesalers

Merchant Wholesalers Are the Most Numerous

To answer these questions, we must understand what these wholesalers do and don’t

do. Exhibit 13-7 gives a big-picture view of the major types of wholesalers we’ll be dis-

cussing. There are lots more specialized types, but our discussion will give you a sense

of the diversity. Note that a major difference between merchant and agent wholesalers

is whether they ownthe products they sell. Before discussing these wholesalers, we’ll

briefly consider producers who handle their own wholesaling activities.

Manufacturers who just take over some wholesaling activities are not considered

wholesalers. However, when they set up manufacturers’ sales branches—warehouses

that producers set up at separate locations away from their factories—these estab-

lishments basically operate as wholesalers. In fact, they’re classified as wholesalers by

the U.S. Census Bureau and by government agencies in many other countries.

In the United States, these manufacturer-owned branch operations account for

about 6.5 percent of wholesale facilities—but they handle 31 percent of total whole-

sale sales. One reason sales per branch are so high is that the branches are usually

placed in the best market areas. This also helps explain why their operating costs,

as a percent of sales, are often lower. Another reason is that coordination is easier

within a single firm. Manufacturers can more quickly set up efficient network sys-

tems for sharing information and logistics functions with their own branch

operations than with independent wholesalers.^30

Yes (merchant wholesalers)

All the functions

Some functions

No (agent middlemen)

Agent middlemen

Auction companies

Brokers

Manufacturers’ agents

Selling agents

Limited-function merchant

wholesaler

Cash-and-carry wholesalers

Drop-shippers

Truck wholesalers

Rack jobbers

Catalog wholesalers

Service merchant wholesaler

General merchandise wholesalers

(or mill supply houses)

Single-line or general-line wholesalers

Specialty wholesalers

How many functions does

the wholesaler provide?

Does wholesaler own

the products?

Exhibit 13-7 Types of Wholesalers

Merchant wholesalersown (take title to) the products they sell. They often

specialize by certain types of products or customers. For example, Fastenal is a whole-

saler that specializes in distributing threaded fasteners used by a variety of

manufacturers. It owns (takes title to) the fasteners for some period before selling to