The Scope of the Market Today

The Scope of the Market Today

The Scope of the Market Today

The type of market into which one is selling will have an important influence upon the choice of distribution method to be adopted. If it is anticipated that a large proportion of one's total output will find its way to the consumer through such major outlets as chain and department stores, supermarkets or cooperative stores, then one must be prepared to supply direct to these distributors. Large retail businesses of this nature usually prefer to deal direct with the manufacturer. One discovers that, because of their buying power, they will often insist upon doing so.

Another reason why many product manufacturers decide to supply direct to the retailer is that often a wholesaler runs his own branded lines, which he has had specially made or at least specially packed for him, in competition with those of the bona-fide manufacturers, whose goods he also carries. Naturally, he will encourage his salesmen to give greater preference to the sale of his own brands.

Perhaps one of the most telling reasons why so many manufacturers are prepared to set up their own selling organizations and to deal directly with the retailer is that they find the wholesaler reluctant to adopt new product lines and new selling techniques. Where such criticism is justified, the wholesaler is abdicating his role of risk-taker and innovator and deserves to be by-passed by the energetic producer who is bristling with novel ideas. There are manufacturers who consider, also, that the wholesaler's representatives have a tendency merely to be order-takers, not salesmen. In fairness to the sales forces of wholesale houses, it must be accepted that some firms are guilty of running too many lines, with the result that the salesman is unable to do sufficient justice to any one of them.

There are, nevertheless, many types of market situation where distribution via the wholesaler remains the best policy. The wholesaler can provide the manufacturer with two powerful aids: a large and experienced sales organization, which often is nationwide, and a wealth of market knowledge accumulated over many years.

The manufacturer, who plans to enter a market and supplyto the retailer direct, will have to provide himself with these facilities and they can cost him a great deal of money. The creation of a good sales team, as we have seen already, can be a lengthy and costly process. The acquisition of market knowledge can, of course, be bought by means of attracting experienced and capable men drawn from wholesale houses. This too, can cost a lot of money and does not always work out so well in practice because good market knowledge is often the result of close team work. By taking a man from a close-knit and long-established team and placing him into one which has not yet been welded together by the passage of years and shared experience, can often result in his 'losing touch' and his knowledge quickly becomes out of date.

The need for a large sales force will be apparent in a market which consists of a very large number of small retail outlets each of which is likely to buy a wide variety of products in small quantities. What is often overlooked by the manufacturer who elects to supply direct is the equally vital need for an accurate knowledge of the credit standing of these small retail firms. The manufacturer, who starts opening credit accounts for thousands of small retailers spread throughout the country, will soon have at risk very large sums of money. Adequate credit control is so heavily dependent upon a knowledge of local conditions and of the personalities of one's customers, that the wholesale house, with years of past experience at its command, is in a far better position than the manufacturer with only limited trading experience in the market.


Next - s Factors in Merchandising



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