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1、16Wholesaling and Physical DistributionObjectivesTo understand the nature of wholesaling in the marketing channelTo explain wholesalers functionsTo understand how wholesalers are classifiedTo recognize how physical distribution activities are integrated into marketing channels and overall marketing
2、strategiesObjectivesTo examine the major physical distribution functions of order processing, inventory management, materials handling, warehousing, and transportationTo discuss the strategic implications of physical distribution systemsChapter OutlineThe Nature of WholesalingTypes of WholesalersThe
3、 Nature of Physical DistributionFunctions of Physical DistributionStrategic Issues in DistributionThe Nature of WholesalingWholesalingTransactions in which products are bought for resale, for making other products, or for general business operationsWholesalerAn individual or organization that facili
4、tates and expedites wholesale transactionsHandles the physical distribution of goodsFurnishes channel information to facilitate and manage the supply channelThe Nature of Wholesaling (contd)Services Provided by WholesalersServe as an extension of the producers sales force through contact with suppli
5、ers and retailersLend financial assistance for the distribution channelTransporting and warehousing inventoriesAssuming credit risks of buyers/customersPurchasing producers entire output: converting producers output immediately to working capitalChanneling information from and to sellers and buyersT
6、he Nature of Wholesaling (contd)Advantages in Utilizing WholesalersHave closer contact with retailersAre less expensive and more efficient than maintaining an independent sales forceCan spread selling costs over more productsCan assist in selecting optimum inventoryAre experts in negotiating final p
7、urchasesAre knowledgeable about sources of supplyPerform physical distribution activities efficientlyTypes of WholesalersMerchant WholesalersIndependently owned businesses that take title to goods, assume ownership risks, and buy and resell products to other wholesalers, business customers, or retai
8、lersProvide market coverageMake sales contactsStore inventoryHandle ordersCollect market informationFurnish customer supportTypes of Merchant WholesalersFIGURE 16.1Types of Full-Service WholesalersGeneral-Merchandise WholesalersFull-service wholesalers with a wide product mix but limited depth withi
9、n product linesLimited-Line WholesalersFull-service wholesalers that carry only a few product lines but many products within those linesSpecialty-Line WholesalersFull-service wholesalers that carry only a single product line or a few items within a product lineTypes of Agents and BrokersFIGURE 16.2T
10、ypes of Wholesalers (contd)Manufacturers Sales Branches and OfficesSales branchesManufacturer-owned intermediaries that sell products and provide support services to the manufacturers sales forceSales officesManufacturer-owned operations that provide services normally associated with agentsThe Natur
11、e of Physical DistributionPhysical Distribution (Logistics)Activities used to move products from producers to consumers and other end usersOrder processingInventory managementMaterial handlingWarehousingTransportationOutsourcingContracting physical distribution tasks to third parties with specialize
12、d logistics skills who do not have managerial authority within the marketing channelProportional Cost of Each Physical Distribution Function as a Percentage of Total Distribution CostsFIGURE 16.3Source: Herbert W. Davis and Company/Establish, Inc., Fort Lee, NJ. Davis Database, June 2004, establishi
13、nc. Reprinted by permission of Herbert W. Davis and Company/Establish, Inc. Davis Database, Copyright 2004 by Herbert W. Davis and Company/Establish, Inc. The Nature of Physical Distribution (contd)Physical Distribution ObjectivesMeetings standards of customer service forTimeliness of order fulfillm
14、entAccuracy of order fulfillmentReducing total distribution costsInventory levels against warehousing costsMaterials costs versus transportation costsDistribution costs against customer service standardsOverall goal is to achieve the lowest total distribution cost compatible with the firms customer
15、service objectives.Reducing cycle (process completion) timeFaster processes for increased customer serviceFunctions of Physical DistributionOrder ProcessingThe receipt and transmission of sales order informationOrder entryOrder handlingOrder deliveryElectronic data interchangeA computerized means of
16、 integrating order processing with production, inventory, accounting, and transportationFunctions of Physical Distribution (contd)Inventory ManagementDeveloping and maintaining adequate assortments of products to meet customers needsMinimize inventory costs yet have sufficient supply of goods to sat
17、isfy customersStockoutsinventory-related shortages of productsReorder point = (Order Lead Time x Usage Rate) + Safety StockJust-in-TimeAn inventory management in which supplies arrive just when needed for production or resaleFunctions of Physical Distribution (contd)Materials HandlingThe physical ha
18、ndling of products in warehousing operations and the transportation from points of production to points of consumptionUnit loadingone or more boxes of product are placed on a pallet and handled by mechanical means (e.g., forklift)Containerizationconsolidation of many small items into a single large
19、container providing increased handling efficiency and security in shippingFunctions of Physical Distribution (contd)WarehousingThe design and operation of facilities for storing and moving goodsEnables compensation for dissimilar production and consumption ratesHelps stabilize prices and availabilit
20、y of seasonal itemsFunctionsReceiving, identifying, sorting, dispatching to storage, holding goods, recalling and assembling, and dispatching shipmentsTypes of WarehousesPrivate WarehousesCompany-operated warehouses for storing and shipping productsPublic WarehousesBusinesses that lease storage spac
21、e and related physical distribution facilities to other firmsField public warehousesBonded storageDistribution CentersLarge centralized warehouses that focus on moving rather than storing goodsFunctions of Physical Distribution (contd)TransportationThe movement of products from where they are made t
22、o where they are usedTransportation modesRailroadsheavy, bulky full carloads of freightTrucksFlexible schedules, speed and accessWaterwaysheavy, low-value nonperishablesAirwaysfast delivery, high-value or perishable goodsPipelinesbulk petroleum and chemicalsProportion of Intercity Freight Carried by
23、Various Transportation ModesFIGURE 16.4Source: Bureau of the Census, Statistical Abstract of the United States (Washington, DC: Government Printing Office, 2002), p. 658.Coordinating TransportationIntermodal TransportationTwo or more transportation modes used in combinationContainerization: piggyback, fishyback, birdyback modesFreight ForwardersOrganizations that consolidate shipments from several firms into efficient lot sizesMegacarriersFirms that provide several modes of shipmentStrategic Issues in Physical DistributionDistribution DecisionsImpact customer service and satisfactio
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