Exercise 5. Read and translate the text «Distribution channels».

A manufacturer gets products to consumers. This is done through marketing channels, or plans for distributing goods. Each channel may have several members.

Many marketing channels contain wholesalers. These are companies, intermediaries between producers and retailers that buy goods in bulk (“breaking bulk”) from producers, store them (warehousing), and resell them to retailers, industrial users, or institutions. Wholesalers can do a better job at a lower cost than any other kind of distributors. They handle a variety of tasks in order to provide many services to consumers, for example, delivery, the provision of credit, etc..

At the end of the marketing channels is the retailer. Retailing consists of all the tasks involved in the sale of products to individuals or organizations for final consumption. There are three main types of retail stores: chain stores, independent merchants, and franchises.

Physical distribution consists of all the tasks involved in getting product from producers to consumers. Among these tasks are warehousing, inventory control, materials handling, order processing, and packaging. Transportation is also a major part of physical distribution. Physical distribution has become more important in recent years because of rising transportation costs, the growth of the marketing concept, competition, and the use of computers.

When a company is setting up its marketing channels, it must keep in mind the nature of its products and consumer behaviour. On this basis it decides what type of market coverage - extensive, selective, or exclusive - is best suited to each product. Companies provide market-making services as an important part of their regular activities. To view a large corporation, such as Proctor & Gamble simply as a producer of soaps and other products misses the complex forms of market-making it carries out through marketing and sales activities. A company like it has a vast distribution network, operates a complicated system of product pricing and advertising, and engages in substantial collection of information about customer demand.

Retailing. Retailing is the general term covering all forms of selling goods to the public. It is a profitable sector in the UK, especially for larger food retailers. Retail businesses in the UK are usually classified according to the number of shops or outlets they have. The smallest operations, such as local grocery or convenience stores are called single outlet retailers. Small multiple operate a maximum of nine shops, all selling the same range of products. Large multiple retailers (also known as chain stores) are big names in the business, such as Marks & Spencer. These companies have large numbers of stores selling a wide variety of items. Some operate from out town locations with parking facilities, known as either superstores (over 20,000 square feet) or hypermarkets (over 50,000 square feet). Department stores, such as Harrods in London, are large shops which sell a wide variety of products. They are organized in departments, each its own manager, and are usually found in city centres.

Retailing has both positive and negative aspects. On the negative side the competition is often fierce. The shop across the street may sell the same thing you do; or you may do well because of a good location, only to be driven out of business by a new shopping mall. Also, the rate at which retail stores become outdated is very high. On the positive side, retailing is easy to get into. It does not take very much money or training to open a store, though plenty of both certainly helps. Funds are usually available to people with proven ability. Besides the amount of money necessary to start a retail store is not great. Another positive factor is the demand for products. As long as retailers stock the things that consumers want, they will make money. Retailers also know that they have a steady source of products to sell. They don't have to work hard to obtain those products - they will be supplied by manufacturers.

Other economic factors also affect retailing. One of these is the fact that most retailers are small and serve small markets. This means they can cater to the needs of the people in their area. Also the sales volume necessary to break even usually is not very large; that is, you do not have to sell very much to make at least some profit. This makes retailing very attractive to people who want to go into business for themselves.

There are three main types of retail stores: chain stores, independent merchants and discount outlets. They differ mainly in the way they are managed.

Chain stores are groups of stores run by a central management, i.e. Safeway and Marks & Spencer. The number of stores in a chain may range by definition, from 11 to several thousand. Independent merchants own and run their own stores. They do their own buying, advertising and so on: window washer, accountant, salesclerk, truck driver and stock clerk all in one. Many people prefer this type of retailer who often runs a small store and knows the consumers' names. Discount outlets offer few services and handle large volumes of goods, usually at low prices. Many are self- service stores. This type of retailer is popular with money-conscious consumers. Franchising is a fast-growing type of retailing which makes it the biggest cross-border growth area. It offers advantages to both franchiser and the franchisee. It is now well established in the UK and has moved into Germany, from where it is expecting to expand into other countries.

Transportation and distribution. The marketing mix includes place as one of its main elements. Firms making products for a particular market have to decide how their products are to reach that market. In doing this, they will make decisions about the method of transport to use and about the channels of distribution through which the product will pass. Each channel includes the same activities: as well as the act of buying and selling, the product will be promoted at the various stages of distribution, stored for a time, then transported to the next stage.

 

Channel A: Am Ac

Channels B, C, D: Manufactures D B C Wholesales C Retailers B C D Consumers

 

Am - manufacturer - may sell direct to Ac - the customer, - as shown in Channel A, and omit both wholesalers and retailers. Some manufacturers, for example, many china producers run factory shops from which their products can be bought. Variations on the "manufacturers-direct-to-customers” channel include the door-to-door selling of products (Avon cosmetics and Betterware products are well-known exam­ples) and mail order selling through agents (who carry out some of the retailers' duties). In Channel B, the retailer is omitted, the wholesaler is receiving the goods from the manufacturer and then selling them direct to the final consumer. These wholesalers are usually based in densely populated areas and often sell consumer durables at low prices. Channel С shows the traditional pattern. The manufacturer sells in bulk to who­lesalers, who then resell in smaller quantities to retailers: the retai­lers sell single items to consumers. Many foodstuffs and finished goods are still sold through this traditional channel. The wholesaler may be omitted by a manufacturer, who then sells direct to large retailers (Channel D). These retailers, because of their size, can also carry out the function of a wholesaler, i.e. by being able to store large quanti­ties of the goods. One popular development related to this channel is where manufacturers set up their own retail outlets.

 

Vocabulary:

to contain – (not in the progressive forms) to hold; have within as a part; to keep under control or within limits

in bulk – in large quantities and not pack in separate containers

to handle – 1.to pick up, touch or feel with hands; 2.to deal with; to control; 3. to have responsibility for;

merchant – a person who buys and sells goods, esp. of a particular sort, in large amounts

to view – to consider; to regard; to think about

to operate – to work or to be in action; to carry on trade or business

to cater (to) – to try to satisfy (desires or needs, esp. of a bad kind)

(for) – to provide what is needed or wanted

to omit –not to include by mistake or on purpose; leave out; to fail to do smth. by mistake or on purpose.

 

Exercise 6. Suggest the meaning of the following:

Marketing channels, to break even, to store goods, at a lower cost, to handle a variety of tasks, final consumption, transportation costs, to keep in mind, extensive, selective, exclusive, to carry out through marketing and sales activities, distribution network, to operate a complicated system, profitable sector, a range of products, hypermarket, to be driven out of business, the sales volume, to go into business by oneself, money-conscious consumers, at the various stages of distribution, door-to-door selling, mail order selling, densely populated areas, consumer durables, provision of credit.

 

Exercise 7. Find the English equivalent for:

Оптовый покупатель, розничный продавец, складирование, контроль материально-технических запасов, перемещение материалов внутри склада, обработка заказа, упаковка, транспортировка, устанавливать каналы сбыта, охват рынка, небольшой магазин, сеть маленьких магазинов, сеть больших магазинов, парковка, получить прибыль, магазин, торгующий со скидкой, фрэнчайзинг, производитель, продавать через традиционный канал сбыта, посредник.

 

Exercise 8. Insert the right word: