CHAPTER 9: WHOLESALING AND PHYSICAL DISTRIBUTION

NATURE AND IMPORTANCE OF WHOLESALING

The role of wholesaling in the marketing mix is important for the marketers as it
involves the process of transferring the product to first layer middlemen who will have
the task of delivering it to the next level in the marketing channel.
WHOSALERS - are the middlemen searching for opportunities and expansion
Advantage of wholesaling in the marketing mix
1. Wholesaling skills are efficiently concentrated
2. Specialization results in the economies of scale
3. It shortens transactional economics in the buying process.

NATURE AND IMPORTANCE OF PHYSICAL DISTRIBUTION

The role of the middlemen in this activity is very important as the timing of supply
must meet the needs of the end users.

Functions of physical distribution

1. Warehousing and location inventory
2. Material handling
3. Inventory management
4. Order processing
5. Transportation

MANAGEMENT OF PHYSICAL DISTRIBUTION

Management had made substantial progress in reducing cost of production and

marketing of the product. Effective distribution could also be a source of strong
differential advantage through punctual delivery of the products.
STRATEGIES IN PHYSICAL DISTRIBUTION
1. Improve customer service
2. Reduce distribution cost
3. Create time and place utility
4. Price stability
5. The influence of marketing channels

PHYSICAL DISTRIBUTION MANAGEMENT FUNCTIONS

Physical distribution - management the development and operation processes
resulting in the effective and efficient physical flow of products.

INVENTORY LOCATION AND WAREHOUSING

Inventory management- the most important function in the distribution system
1. Distributions Centers
2. Type of warehouse used
Materials handling - The process of selecting the proper equipment and building
facilities for handling and storage of the products
Containerization - The process of putting the products into the container for distribution

INVENTORY CONTROL
1. Customer Stocks Requirement
2. Economic Order Quantity
3. Just-in Time Delivery System

ORDER PROCESSING - Process in the physical distribution system that sets

procedures for receiving, handling, and filing orders.
Advantages in the use of computer in order processing
1. Orders are likely to be free of errors
2. There is increase in accuracy and efficiency
3. It reduces the out-of-stock items
4. It has greater sales in retail level
5. It satisfies customers and generates loyalty

TRANSPORTATION - Major considerations in the physical delivery of the products to

the customers
1. Mode of transportation used in Physical Delivery
a. Cargo trucks
b. Train
c. Pipelines
d. Water Vessels
e. Airplane
2. Freight Forwarders - These are business organizations that handle small amount of
goods or packages for delivery to intended customers