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CLEP Principles of Marketing Study Notes

Distribution center concept is an alternative to

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Distribution-Center Concept is an alternative to either keeping one centrally located stock of inventory for all markets, or creating numerous dispersed inventory sites. Creating distribution centers which are large, centralized warehouses designed to ship products to customers in regional markets quickly. The problem with having only one centralized inventory for the entire market is potentially high transportation costs and delivery delays, while having too many inventory sites results in complex inventory control and increased handling costs. PART V Wholesaling - consists of all exchanges among organizations and individuals in a distribution channel except for those transactions with ultimate consumers. Consists of all transactions in which the buyer intends to use the product for resale , for making other products, or for general business operations. It does not include transactions where the product is being sold to ultimate consumers. Whether or not wholesalers are involved, distribution of goods requires wholesaling activities , which typically include: Warehousing Transporting
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Financing Major wholesaling - activities include warehousing, transporting, and financing. Inventory control and promotion are also often included. Customer Service Standard – different customers requiring different levels of service. Wholesalers often play a part in the sorting process, by accumulating products and redistributing them in smaller units. Sorting process consists: Sorting, Accumulating, Assorting Intermediaries often handle some or all of the sorting process, with wholesalers typically doing the sorting and accumulating, and retailers doing the assorting . Out of the marketing mix, producers often choose to control product, pricing, and promotion, while shifting physical distribution functions, such as transportation, warehousing, and financing over to wholesalers . Suboptimization – cost-reducing actions in 1 distribution function that increase overall cost of other distribution functions. Physical Distribution is the one of the "Four P's" which many producers don't directly control themselves. Independent wholesalers can usually more efficiently handle distribution functions, while also acting as an extension of the producer's sales force. Order Processing – receipt & transmission of sales order info. Electronic Data Interchange (EDI) – allows company to integrate order processing, production, inventory, transportation into 1 system. Materials Handling – physical handling of goods in warehouse & transportation. Unit Loading – Group boxes on pallet/skid . Containerization – consolidating items in 1 container. Warehousing – designing/operating facilities for both storing & moving, dispatching goods. Types of Warehouses: 1.
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