9.7 Key Terms

Accumulating: Bringing similar stocks together into a larger quantity. Twelve large Grade A eggs could be placed in some cartons and 12 medium Grade B eggs in other cartons. Another example would be to merge several lines of women’s dresses from different designers together. 9.4

Allocating: Breaking similar products into smaller and smaller lots (allocating at the wholesale level is called breaking bulk.) For instance, a tank-car load of milk could be broken down into gallon jugs. The process of allocating generally is done when the goods are dispersed by region and as ownership of the goods changes. 9.4

Broker or Agent Channel: Includes one additional intermediary. Agents and brokers are different from wholesalers in that they do not take title to the merchandise. In other words, they do not own the merchandise because they neither buy nor sell. 9.2

Channel of Distribution: also called a marketing channel, a set of interdependent organizations involved in the process of making a product or service available for use or consumption, as well as providing a payment mechanism for the provider. 9.1

Direct Channel: Is the simplest channel. In this case, the producer sells directly to the consumer. 9.2

Distribution Channel: On their way from producers to end users and consumers, products pass through a series of marketing entities 9.4

Grading and Packaging: Wholesalers buy a very large quantity of goods that they then break down into smaller lots. The process of breaking large quantities into smaller lots to be resold is called “bulk breaking”. Often this includes physically sorting, grading, and assembling the goods. 9.3

Information Flow: The individuals who participate in the flow of information either up or down the channel. 9.1

Negotiation Flow: The institutions that are associated with the actual exchange processes. 9.1

Ownership Flow: The movement of title through the channel. 9.1

Product Flow: The movement of the physical product from the manufacturer through all the parties who take physical possession of the product until it reaches the ultimate consume. 9.1

Promotion Flow: The flow of persuasive communication in the form of advertising, personal selling, sales promotion, and public relations. 9.1

Purchasing: Wholesalers purchase very large quantities of goods directly from producers or from other wholesalers. By purchasing large quantities or volumes, wholesalers are able to secure significantly lower prices. 9.3

Retail Channel: Is different from the direct channel in that the retailer doesn’t produce the product. The retailer markets and sells the goods on behalf of the producer 9.2

Risk Bearing: Wholesalers either take title to the goods they purchase, or they own the goods they purchase. 9.3

Sorting Out: Breaking many different items into separate stocks that are similar. Eggs, for instance, are sorted by grade and size. Another example would be different lines of women’s dresses—designer, moderate, and economy lines. 9.4

Wholesaler: Is primarily engaged in buying and usually storing and physically handling goods in large quantities, which are then resold (usually in smaller quantities) to retailers or to industrial or business users. 9.2

Wholesale Channel: Looks very similar to the retail channel, but it also involves a wholesaler. 9.2