Why Would a Producer Use Wholesalers Rather than Selling Directly to Retailers or Consumers - Assignment Example

BAM 306 - Principles of Marketing-unit 4 essay question # 2 Contents BAM 306 - Principles of Marketing-unit 4 essay question # 2 Contents 2 Question # 2: Why would a producer use wholesalers rather than selling directly to retailers or consumers? 3Reference 5 5Question # 2: Why would a producer use wholesalers rather than selling directly to retailers or consumers?Firms which are actively engaged in the wholesaling activities are called wholesalers. Wholesaling includes activities which are involved in selling goods and services to those who buy for resale or for business use.

The wholesaler buys products from the producers and sells it to the retailers, other wholesalers and also industrial consumers. Thus many of the biggest wholesalers are unknown to the final consumers. Wholesalers act behind the scenes and sells only to other form of businesses. Thus wholesalers are important to sellers; they add value by performing the different channel functions. Therefore a produces tend to use a wholesalers rather than selling it directly to the retailers because of the functions performed by the wholesalers, which are mentioned below:Selling and promoting: The sales force of the wholesalers helps the manufacturers to reach a wide range of customers including many small customers at a low price or cost.

This is because the wholesales have more contacts and are trusted by the buyers than the manufacturers. Bulk breaking: Wholesalers buys products in carload lots which helps the customers to save their money and in return bulk break which means breaking of large lots into smaller quantities and finally selling it to the retailers. Buying and Assortment: Wholesalers have the power to select the items needed by the customers and build assortment over the preferred items, saving consumers work. Warehousing: Wholesalers usually holds inventories which in turn reduce the inventory cost as well as the risk of both the suppliers and customers.

Transportation: The wholesalers being closer to the buyers provide a much more efficient and quick delivery of items than the producers. Thus producers usually prefer the channel of distribution which involves the wholesalers. Financing: The wholesalers provides its customers as well as suppliers with an advantage of financing as they provide credit to the customers and for the suppliers, they finance them by ordering at an earlier date but paying the bill on time. This is one of the strong reasons why the producer prefers wholesalers rather than selling items directly to the retailers.

Risk Bearing: The wholesalers are responsible for any theft, damage, obsolesce and spoilage of the product. The wholesalers absorb the risk by taking the title of all the uncertainty that might occur during the course of action. Market information: Since the wholesalers are aware of the market situation, they provide information to the customers and suppliers about competition, price developments and introduction of any new products. Management services and advice: The wholesalers provides management services and also incurs training for the sales people, helps in renovating the store layouts and displays and also sets inventory and accounting control systems (Kotler, 2008, p. 360). Therefore a produces often uses four channel of distribution which involves manufacturer to wholesalers to retailers to consumers.

Thus because of the various reasons cited above, makes the wholesalers an important part in the distribution channel and thus producers should make the optimum use of the wholesaler and sell its items through them rather than selling it directly to the retailers. ReferenceKotler, P. (2008). Principles of Marketing, 12/e. Pearson Education India.