Agriculture Reference
In-Depth Information
supplies are marketed in this way. Products are sold to the dealer almost as they would be to
a farmer-consumer. As farms and ranches grow bigger, many manufacturers are beginning
to recognize them as “dealers,” especially if the farmer resells at least some product to a
neighbor. In effect, the traditional manufacturer-dealer-farmer system seems to be breaking
down in some product areas.
In the food area, this channel has taken a different form with the emergence of
major retail chains such as Wal-Mart, Kroger, and Costco that control much of the retail
food market. Such retailers fi ll an important need by bringing the products of myriad manu-
facturers together under one roof for the convenience of the food consumer. While
small independent food stores remain important in some areas, national and regional
chains dominate the scene. These chains, by having access to food shoppers, are a very pow-
erful force in the marketing channel. And, many of the larger chains are also integrated into
manufacturing their own private-label food products that compete with the brands from
manufacturers.
The
distributor system
uses both distributors, or
wholesalers
, and dealers to market
products to farmers and consumers. This more complex marketing system usually evolves
for economic reasons. Larger organizations can more easily afford to develop their own
marketing system. Independent distributors may already have a well-developed network of
transportation, salespeople, and customers, and their size allows them to operate quite effi -
ciently. They can often add a new product line much more cheaply than the manufacturer
can establish an entire distribution system. This allows manufacturers to concentrate on what
they do best—manufacturing product—and allows distributors to do what they do best—
support distribution activities.
Merchant-distributors, who actually take title to the manufacturer's product, are called
distributors, jobbers, wholesalers, or cooperative buying groups. They physically order,
receive, and distribute products. As totally independent businesses, they make their own
decisions, relying on manufacturers only for technical assistance and information.
Agent-distributors perform the function of helping products move through the system,
but they do not take title to the product and usually do not physically handle the product.
Agent-distributors are known as brokers, sales agents, and manufacturer's representatives.
They are independent businesses that simply locate customers, negotiate a deal, and receive
a commission for the transaction. Agents and brokers often specialize in certain product
lines and types of customers. Their primary tool is communication. In markets in which
shortages are occurring, brokers are usually able to locate extra product for a special price.
They perform the important function of bringing buyers and sellers together.
E-commerce fi rms represent a variety of manufacturers and have no physical “store-
front,” relying instead on sophisticated websites to assist consumers and producers in making
purchase decisions. The customer or producer places the order over the Internet, fi nancing is
arranged over the Internet, and the merchandise is shipped to the home or place of business,
or is made available for pick-up at a convenient location. These “e-dealers” will continue to
search out the products and customers where they provide a more effective and effi cient
marketing channel than the traditional “bricks and mortar” channel.
The total distribution system can be far more complex than is described here. Many man-
ufacturers may use several different systems simultaneously. For example, Agrium, a large
fertilizer manufacturer based in Canada, markets fertilizer through its own retail outlets and
through independent fertilizer dealers. Pepsi products are available virtually anywhere
people get thirsty—from food and convenience stores, to sporting events, to study lounges,
to restaurants and institutional food service outlets, to drink machines on almost every
