Please scroll down to get to the study materials.
Channel members are those persons or individual who involves in the buying and selling of goods and services in the market.There are three types of channel members. They are:
Agents can be defined as an individuals or business organization that negotiates purchases or sales or both of their clients. They do not take title to the goods or maintain any inventory and therefore they don’t bear any risk. Agents are representatives of their clients, sellers or buyers, and work on a more permanent basis. They generally get commission or fee for the services rendered. They include brokers, stock brokers, real estate agents, insurance agents, selling agents, manufacturers’ agents, purchasing agents, commission agents.
A commission agent is on the behalf of some other persons for agreed commission. He undertakes to sell the goods in the name and on the sole risk of principal. An agent may also be employed for the purchase of goods on behalf of the principal. A selling commission agent takes possession of the goods, makes necessary storage arrangements and passes title to the goods to the buyers and gets commission at a fixed percentage of sales.
A manufacture agent is that type of agent who keeps the goods of others for sale. He can sell goods in his own name, pledge goods in his possession and do all such acts as can be done by the principal. He receives the commission at a fixed percentage of sales from his principal. He has a general line of the goods of the principal for the amount due to him as an agent.
An auctioneer is a mercantile agent who sells the goods on behalf of his principal by undertaking auction of goods. He takes possession of the goods, displays them to the intending purchasers and receives offers for sales from the intending purchasers. He sells the goods to the highest bidder and transfers the ownership of goods to him. He receives a certain percentage of the sales proceeds of goods or products.
A broker is a mercantile agent who negotiates or sell goods on behalf of other parties. He is called selling agent if he is engaged by the seller and buying agent if engaged by the buyer. They get remuneration in the form of brokerage which is a certain percentage of the value of transaction involved. Brokers are specialized in bringing the buyers and sellers in close contact to facilitate trading in commodities.
Wholesaler can be defined as business organizations or individuals that buy goods and services in large quantities for resale in large quantities , mostly to retailers and other traders, industries and commercial enterprises for their business use. They exclude retailers- manufacturers, farmers and other engaged in primary production. Generally, they take title to the goods and sell it. Wholesaler buy and resale the merchandise to retailers and other merchants and to industrial, institutional and commercial users but do not sell in significant amounts to ultimate consumers.
The retailer can be defined as one whose business is to sell to consumers a wide variety of goods which are assembled at his premises as per the needs of final users. The term ‘retail’ implies sale for final consumption rather than for resale’s or for further processing. A retailer is the last link between the final user and the wholesaler or the manufacturers. Thus retailer is that merchant intermediary who buys goods from preceding channel members in small assorted lots and sells them in the lot requirements of final users. Retailers are generally located near the thickly populated residential areas.
Wholesaling activities are just variations of the basic marketing functions- gathering and providing information, buying and selling, grading, storing, transporting, financing and risk taking. They add value by doing jobs for their suppliers. For example, wholesalers add value in channels by resolving discrepancies, regrouping, accumulating, bulk- breaking, sorting and asserting.
According to W.J. Stanton, “Wholesaling is the sale, and all activities directly related to the sale of goods and services to businesses and other organizations for resale, use in producing other goods or services, or operating an organization.”
Wholesaling is not necessarily the work of wholesale middlemen alone. The manufacturers who sell directly to retailers or to other manufacturers are also involved in wholesaling. If in a transaction the buyer is buying for purposes of resale, or further for his business operations, the seller in that transactions are engaged in wholesaling.
The wholesaler performs a number of role and functions in the process of marketing the goods. Of them most important ones are:
Assembling can be defined as the collection of a small lot of scattered agricultural production for economic bulk buying. It also means bringing together stocks of different manufacturers producing the same line of goods. Buying is said to be that type of activities for the selection of manufacturers and placing orders on them and making special purchases in cases of seasonal products.
Warehousing is the process of preserving the products.It is closely related to the function of assembling. As there is always a gap between the time period of production and consumption, the goods are to be held and preserved. This warehousing by wholesalers relieves both the producers and the retailers from the problems of storage.
Transportation is the process of transporting the goods and services using various means.In the processes of assembling and warehousing and re-sales, wholesalers do undertake transportation of goods from producers to their warehouses and back to the retailers. Transportation heps in exchanging of goods easily.
Grading and packaging are another functions of wholesalers. The products may be of different sizes and shapes. It is necessary to grade and pack it. It is the responsibilities of the wholesaler to pack the products which are to be sold. Without a good packaging of products, it will not be effective for selling.
Wholesaler function as marketing financing. They grant credit on liberal terms to retailers on one hand and reduce the financial burden of the manufacturers by taking early delivery of stocks from them. Wholesalers grant credit as good as reducing the credit quota of manufacturers to final users.
Wholesalers bear the risks of loss of change in prices, of damage, deterioration in quality, pilferage, theft, fire and the like of the goods held in storage. They also bear risks of non or underpayment by the retailers. Risk bearing is the part of his activities. It is obvious to bear the risk by the wholesalers.
Dispersing and selling is also the function of wholesalers.The goods assembled and held in stock are for dispersing and selling. It is the retailers who buy from the wholesalers. Similarly, wholesalers do have their own sales- army moving to retailers for collecting order.
Wholesalers have the close link between the retailers and the manufacturers. They provide important and up to date information to the retailers affecting their trade interest and also they reciprocate the same to manufacturers. The market information helps to make the situation of the market good and effective.
Koirala, Dr. Kundan Dutta. Elementary Marketing. Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd, 2014.
Thapa, Gopal, Dipendra K. Neupane and Dilli Raj Mishra. Introduction to Marketing. Kathmandu: Asmita Books Publishers and Distributors (P) Ltd., 2014.
There are three types of channel members. They are: