In recent years competition in wholesaling is increasing. Apart from new competition sources, more demanding customers, new technologies, and more direct-buying by large industrial, institutional, and retail buyers are challenges that the wholesalers are facing.
To cope with these challenges, wholesalers improved its strategic decisions on the target market and positioning, and the marketing mix.
Target Market and Positioning Decision
Wholesalers must define their target markets and position themselves accordingly. Target markets can be chosen by the size of customers (large retailers), type of customer (specialty stores), need for service (delivery), or other factors.
Wholesalers can identify the more lucrative customers, make stronger offers, and build better relationships with the target markets. Wholesalers can offer some other services to their customers.
For example, they can suggest automatic reordering systems, set up management-training and advising systems, or even sponsor a voluntary chain.
Marketing Mix Decisions
Wholesalers’ marketing mix decisions include; product assortment and service decisions, price decisions, promotion decisions, and place decisions. The wholesaler’s product is not a single item. It is the assortment of products and services that it offers.
Wholesalers are often required to carry a full line and to stock enough for immediate delivery. This may eventually reduce profits.
As a result, wholesalers are now choosing to carry only the more profitable lines. Wholesalers are also trying to build a service mix to offer for building strong customer relationships.
Another important wholesalers’ decision centers around price. Wholesalers usually add a standard mark up to the cost of goods. Excess of gross margin over expenses is the wholesaler’s profit.
Wholesalers follow other pricing approaches also. They may cut their margin on some line in anticipation of new customers. They may insist on the suppliers for special price breaks to justify that such price breaks will lead to higher sales.
Most wholesalers do not seem to appreciate the role of promotion in making their businesses successful.
Although they undertake limited-scale advertising, sales promotion, personal selling, and public relations, these activities are, in most cases, unplanned and uncoordinated.
Wholesalers should, in addition to personal selling, adopt some of the nonpersonal techniques. They should develop a comprehensive promotional policy.
To supplement their promotional activities, wholesalers should try to utilize supplier promotion materials and programs. Last but not the least, wholesalers’ locations and facilities should be chosen prudently.
Traditionally, wholesalers tend to locate in low-cost areas, with minimal investment in buildings, equipment, and systems resulting in poor materials-handling and order-processing systems.
However, large and modern wholesalers are resorting to mechanization such as automated warehouse and on-line ordering systems.
Orders are passed to the wholesaler’s computer from the retailer’s system. Goods are picked up and assembled by mechanical devices which are then shipped to the retailers.
Wholesalers are increasingly adapting their services to target customers’ changing needs and dividing ways and means to make their operations more economical.