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Wholesaling Channels of disributio.Wholesalers trade in a variety of different markets, handling either raw materials or finished goods. They provide a range of services to both their suppliers and customers with consumer goods, these services are both benefited for the manufacturers and retailers.The wholesaler s services for manufacturer.Bulk buying is easier and cheaper for the manufacturer to deal with a few large orders rather than with many small orders, which can equate to higher prices.
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Storage. This manufacturer s own warehousing costs are reduced.Promotion. The wholesaler promotes the product and advertises for the manufacturer.Advice. The wholesaler gives feedback on the success of the goods, to the manufacturer.Risk-bearing. The wholesaler acts as the manufacturer market, therefore taking the risk of not being able to sell the goods.The wholesaler s services for retailer.Breaking Bulk. The wholesaler buys in large quantities but sells to the retailer in smaller amounts, which saves the retailer the costs of holding larger amounts of stock.Selection. The wholesaler typically has a range of manufacturers goods from which the retailer can choose.Credit. By granting credit, the wholesaler helps the retailer to finance the purchase of goods. Some wholesalers operate as Cash and Carry outlets, where retailers gain lower prices if they pay cash for, and collect, their purchases.Information. The wholesaler can provide information about new products that the manufacturer has made so awareness can get across.Delivery. Many wholesalers are prepared to deliver goods to the retailer so an influx of awareness of dependability is there.The survival of the wholesale.The growth of large-scale retail outlets has led these organisations to carry out the traditional functions of the wholesaler such as bulk breaking and warehousing, so eliminating the need for a separate wholesaler. More and more manufacturers are also carrying out some of the wholesalers, traditional functions.Wholesalers have adapted to cope with such changing condition. To make the shops more competitive, voluntary chains such as Spar and VG have been set up; wholesalers run the voluntary chain, supplying a large number of independent retailers with their goods. National Advertising, cheaper prices through bulk buying, and own brand goods are examples of the benefits available to retailers in these chains.By proving Cash and Carry services, wholesalers have helped both themselves and small independent retailers to survive.The Method s of Distributio.Roa.Road haulage is the most frequently used form of inland transport in the UK. It s cheap and fast compared to rail; it can also deliver door to door and is more flexible because it s not under strict timetables, unless making a delivery less than 4 hours or having a timed delivery.Some firms employ specialist local or national haulage companies to shift their products. Other companies may employ their own transport fleet. For example, a bakery may deliver its own products to grocers. Large organisations may deploy there own fleet of haulages for delivery to retail outlets or to customers.By running its own transport, a company can take advantage of the free advertising of their vehicles and delivery is quicker and cheaper than using a specialist road hauler. The firm will have to ensure that staff and vehicles are fully utilised to gain from its own transport.Railway.The railway method of transport remains the road haulage s major inland rival. Its strength is in moving bulky goods over long distances; it s also used in transporting urgently required or dangerous substances such as nuclear waste, often with high security. This could be a method of transporting fabrics to one part of a country to another.Air and Sea Transpor.Both of these forms of freight transport are largely (but not exclusively) used for international trade. Air transport of freight, though expensive, is extremely fast in worldwide coverage. It tends to be used for items are urgently required, highly expensive or perishable goods e.g. food stuffs, cars.Many forms of sea transport exist, including cargo liners, tankers and container ships. Although slow than most transports, these ships can move bulky items more cheaply. Cars are a great example, as the car may cost a lot, using air transport would be efficient but expensive. However, using sea transport it takes a load off the price tag but with the sacrifice of time. However, remember Patience is a virtue. The discovery and exploitation of North Sea oil, for example, led to an explosion of the usage of sea transport around ports. In addition, many firms use the sea method in advance when transporting materials such as denim.Transport developments.The use of containers has grown in the last thirty years. The container is a fixed-size, large box, which has its contents sealed inside it can be moved by crane from one method of transport to another (e.g. from a container ship to a container lorry), or a roll on roll off system can be used e.g. on cross Channel ferries. Containerisation leads to better security and quicker delivery since the goods are sealed in containers. Although this method isn t very much liked by speed demanding organisations, due to the start- stop feature its very much beginning to become a standard.Pipelines are another important development. This is used to carry liquids and gases from oilrigs to refineries. This is very much a governmental method of transportation.Channels of distributio.Manufacturers must be able to sell their goods to customers in order to make the real aim of a business Profit . This is achieved by sending their goods through various channels of distribution. The diagram below shows the methods of how a product gets from manufacturer to consumer.Each channel includes the same activities as well as the act of buying and selling, the product will be promoted at various stages of distribution, stored then transported down to the next stage.A manufacturer may sell direct to the customer, as shown in channel A (diagram), and exclude both wholesaler and retailer. Some manufacturers - for example, many china producers - run factory shops from which their products can be bought. Variations on the manufacturer-direct-to-customer channel include the door-to-door selling of products (Avon cosmetics and Betterware are well-known examples) and mail order selling through agents (who carry out some of the retailers duties).In channel B, the retailer is excluded, the wholesaler receiving the goods from the manufacturer and then selling them direct to the final consumer. These wholesalers are usually based in densely populated areas and often sell consumer goods at low prices.Channel C shows the traditional pattern. The manufacturer sells in bulk to wholesalers, who then resell in smaller quantities to retailers the retailers sell single items to consumers. Many foodstuffs and finished goods are still sold through this channel.The wholesaler may be omitted by a manufacturer, then sells direct to large retailers (channel D). These retailers, because of their size, can also carry out the function of a wholesaler, e.g. by being able to store large quantities of the goods. One popular development related to this channel is where manufacturers set up their own retail outlets through vertical forwards integration (merging with another company e.g. producer takes over retailer). The franchising of retail outlet illustrates another important variation of this channel.Selecting the channe.The choice of channel is largely determined by the product to be distributed. Consumer goods use the channels above. The channels cost and the amount of control the manufacturer wants over, distribution are two important influences in deciding which channel will be used. The influences of cost and control also affect the choice of channel for raw materials and foodstuffs. Raw materials are often distributed through a number of commodity exchanges an example is The London Metal Exchange, which grades and sells a range of metals. Some foodstuffs are also sold either through a commodity exchange such as The Baltic Exchange. Through wholesale markets for fresh produce such as Smithfield (meat) and Billingsgate (fish), or through specialist marketing and distribution boards such as Milk Marque.A number of different channels are also used to sell industrial goods. There may be direct selling to the final user; wholesalers or manufacturers agents may also be used to distribute items, such as farm machinery and steel (e.g. through steel stockholders).Another new alternative, which Live and Kicking could use, which has been taking the world by storm, is online shopping on the Internet. This method can be enjoyable and practical for the consumer as, he/she can enjoy shopping in the comfort of their office or home. This method, offers an online gallery where consumers can choose their product and make adjustments for more comfort and satisfaction when buying jeans. I feel this method will do extremely well if good awareness of it is given.Method of Transport Advantage Disadvantag.Road Ø FastØ EfficientØ CheapØ FlexibleØ Can deliver door-door Ø TrafficØ Set a number of hours if contracte.Rail Ø Efficient for long distancesØ Fast Ø Can t deliver door-to doorØ Safety concerns due to recent crashes.Air Ø Fast Ø ExpensiveØ Suited for perishable good.Sea Ø CheapØ Idyllic for bulky goods Ø Slo.Channel of distribution Advantage Disadvantag.Manufacturer to Consumer Ø Saves money not going through the other channelsØ Consumer gets a more personal serviceØ Cheap to distribute Ø Small number of consumers attracted.Ø Lack of awarenessØ Impractical if selling consumable.Manufacturer - Wholesaler - Consumer Ø Warehouse stores productØ Cheaper Ø Awareness of the product suffers.Ø Suited for foodstuffsØ Cash & Carry statusØ Suited for densely populated area.Manufacturer - Wholesaler - Retailer - Consumer Ø Maximum awareness of the product is raisedØ Traditional method Ø Costs manufacturer more to go through these channelsØ Price of product may rise.Manufacturer - Retailer - Consumer Ø Raises awareness of productØ If promoted in way, that this shop sells this product than both can benefit.Ø Retailer takes role of wholesaler.Ø Manufacturer has a chance to deploy vertical forwards integration. Ø Suited for large retail outletsØ Disputes may occur of how many products are to be stored.From these summarisations, would recommend that Live and Kicking should choose the third option for distributing the product. This method has been chosen to distribute the jeans as we are importing fabrics from the Far East and raising maximum awareness of the product will be achieved through this method. This will be an expensive option but is very just when importing products from the Far East. Another option is to set up an exporting branch abroad to ensure safe transportation of the fabric, or a company abroad as it would be much cheaper to set up and manufacture of the jeans will be very cheap. However, transportation to the UK will be expensive. By using all the channels of distribution in option three, Live and Kicking Jeans will have the bet chance to make it into the jeans market, may that chance be minute or not..
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