Business and Marketing

For most part the manufacturing function is divorced from that retailing. There are few important examples of such vertical integration (that is, where a manufacturer runs or controls other links in the supply chain, either integrating “upwards” towards his raw materials or integrating “downwards” towards the retail outlets) but in most instances, like a famous manufacturing chemist or an equally famous catering firm, the retail outlets are either not primary outlets for the firm`s own manufactured products or, in the other case, serve as retailers only incidentally, the main retail distribution of their products being through other retails.

One can say, therefore, that vertical integration of this kind is less influential than one might suppose. For the most part, the pattern is for the retailer, or retail chain, to buy their stock from manufacturers direct, or from wholesale distributors either acting merchants in their own right or as manufacturer`s agents.

In this situation, with the retailer able to act as a freelance merchant (that is buying on his own account and holding stock at his own risk) the manufacturer is led to try to arrange matters so that the retailer is virtually forced to stock his product. He does this by establishing a strong brand, that is, persuading the public to demand that product in the shop. Further than this, the manufacturer, by means of mass communications, establishes a brand loyalty as a direct relationship between the consumer and himself -with the result that the retailer initiative in the matter is reduced to the minimum.

This article is bundled from previous Distribution and Selling article.

Pre-selling, and the directness of communication between manufacturer and consumer, has certainly changed the traditional role of the retailer, and indeed of the wholesaler too, in a great number of products. This process is still incomplete, and great changes are still taking places, but one thing is already plain -the traditional role of the retailer as a merchant, selling his own special “know-how” and service, is very nearly at an end, except in certain special fields, for instance fancy goods, fashion, and relatively low-value imported drapery. Incidentally, the latter are often merchandised on a straight selling comparison with branded goods, thus indirectly selling by a form of inverted branding. In other words “own brands” are sold to some extend on the advertising of the national brands.

The transformation of the retailer into a dispenser of branded goods is a process that is still very much in a state of flux -in so far so it is not yet possible to see the retail selling pattern settling down into what looks like a long term equilibrum. Even where this role as a branded goods dispenser is most in evidence, namely the grocery and mass-repeating products fields, there are indications that the struggle for the initiative between retailer and manufacturer is still being fought out.

The reason for this battle should be understood before one can begin to make an intelligent assessment of the distribution function.

Distribution is the industry that provides the purchasing points, and a proportion of service, for products to meet consumer desires; selling is the means whereby manufacturers ensure that the products are stocked in all the appropriate outlets, or sold direct, depending on marketing requirement.

Distribution is most frequently described in terms of the grocery, toiletry, confectionery and household good trades simply because it is in these product fields that the distribution “follow-through” of marketing policy can be most clearly seen. In other products fields, the methods may differ widely though the basic principles are the same -for example industrial products may be sold more by direct selling, household durables more by selling to the retailers and less by pre-selling- but this is mainly a matter of degree.

We understand how the aim of marketing policy is to “pre-sell” as far as possible, thereby reducing the power of the retailer to influence the manner in which the product was presented to the customer. Again, the effect of the branding revolution has been to form “brand-loyalties” (or consumer franchises) for the products concerned, binding the customer to a brand so that, irrespective of the retailer`s attitude -or indeed who or where the retailer was- that loyalty would remain.

Put another way, branding and pre-selling produces a direct communication between manufactured and consumer. And the product becomes, in effect, a stage in that communication- both the aim of the communication process and a factor in it.

Indeed one can even go further and say that the product continues to make that communication even after the purchase has been made. This in one of the functions of the brand name, the pack, and the selling message on it -in order that it should continue to make the manufacturer`s communication to the family, visitors,or passersby while the product is in use, long after the sale has made.