(a). State five functions of a wholesaler
(b). Outline five factors that would influence the choice of a distribution channel by a producer
Explanation
(a). - Wholesalers purchase goods in large quantities from manufacturers or producers. They buy goods in bulk at discounted prices, leveraging their buying power to negotiate favourable terms and conditions.
- wholesalers maintain an inventory of goods to ensure a steady supply to retailers. They forecast demand, monitor trends, and stock a wide range of products to meet the varied needs of retailers.
- Wholesalers provide warehousing facilities to store and protect goods. They handle logistics, including receiving, storing, and organizing inventory eficiently.
- Wholesalers may inspect, sort, and grade the products they receive from manufacturers. This ensures that the products meet certain quality standards and are appropriately categorized before being distributed to retailers.
- Wholesalers repackage products to make them suitable for retail sale. They may remove bulk packaging and repackaging products into smaller units or create customized packaging solutions as per the requirements of retailers.
- Wholesalers arrange for the transportation of goods from the manufacturer's location to their own warehouse and subsequently to retailers. They coordinates with shipping companies, freight forwarders, and other logistics providers to ensure timely delivery.
- Wholesalers may offer credit facilities to retailers, allowing them to purchase goods on credit terms and pay later. This helps retailers manage their cash flow and inventory levels.
(b). - Nature of product: the nature of the product has a bearing on the choice of distribution channel. The durability of the product, unit cost of product, type of product must be considered while determining the distribution channel.
- Nature of market: the geographical width of the market, number of potential buyer, nature of competition has a bearing on selection of distribution channel.
- Size of business: the size of the business, financial strength of the concern determines the channel of distribution. A small producer may sell his distribution. A small producer may sell his product directly, while a large producer may use a longer distribution channel.
- Cost of channel: distribution process involves cost of transportation, warehousing, storage insurance, material handling, distribution personnel's compensation and interest on inventory carried at different selling points. Higher cost of distribution will result in the increased cost of product.
- Nature of middlemen: the producer must select those middlemen who provide the best marketing services like storage, transportation, credit and packing etc. At the same time the middlemen should ensure various services to customers.