6. Find the odd word.

1.	a) agent b) broker c) merchant d) sale		2.	a) to purchase b) to buy c) to sell d) to acquire		3.	a) spend b) manufactured c) purchased d) delivered
4.	a) competitive b) timely c) smooth d) economically		5.	a) supermarket b) superstore c) warehouse d) department store		6.	a) to raise b) to increase c) to boost d) to lessen

II. Reading comprehension

1. Give Russian interpretation of the text. Try to do it first without consulting a dictionary. Then read it again with a dictionary if necessary and make certain you understand both the main facts and the details added.

The overview of distribution

A marketing channel (channel of distribution) is made up of organizations whose transactions create a link between producers and final customers. The specific individuals and organizations that connect producer and consumer are called marketing intermediaries. Their function is to create place, time, and possession utility. The efficiency of the market exchange process depends on smooth working channels of distribution. The two principal types of intermediaries are wholesalers and retailers.

The marketing channels for industrial products are shorter than for consumer products: instead of relying on intermediaries, the producer of industrial products provides most of the utility directly to the customer (example: manufacturers of machinery providing factory training to customer’s employees).

Sometimes it is more efficient to combine two or more marketing channel functions under a single management. In this process, called vertical integration, one organization in the channel takes over another – or even arranges to control the entire channel. A vertical marketing system (VMS) is a planned distribution channel: all intermediaries are under a single manager. A VMS may improve the efficiency of a distribution channel.

The number of outlets a manufacturer will employ to make a product available to a market is the level market coverage. Using all available outlets for distribution is intensive distribution. Convenience goods are intensively distributed. In selective distribution, outlets are chosen from among many available. Higher priced items such as audio equipment and furniture are selectively distributed. Infrequently purchased items such as a Rolls Royce are usually found in only a single outlet in a specific area. This is, obviously, exclusive distribution.

Wholesaling activities are carried out by wholesalers, intermediaries who sell to industrial users, retailers, or other wholesalers. Sixty percent of all products pass through wholesalers. Wholesalers provide important services, including ownership, credit, risk assumption, promotional assistance, market information, product assortment, and local and long-distance shipping. A wholesaler who buys products and then resells them is a merchant wholesaler. Sixty percent of wholesale sales are by merchant wholesalers. Manufacturer-owned sales branches, like merchant wholesalers, buy products and resell them. They also provide inventory, promotion, credit, and delivery services. Agents are wholesalers who work for a buyer or a seller on commission only. The function of a broker is to bring together a buyer and a seller on a temporary basis.

Retailing is the most familiar point in the distribution process. Retailing involves selling goods and services to the final consumer for household and personal use. There are approximately 2 million retail businesses in the U.S. Types of retail stores include department stores, discount stores, specialty stores, supermarkets, superstores, convenience stores, warehouse showrooms, catalog showrooms, and warehouse clubs. Selling goods and services outside of stores is called nonstore retailing. Door-to-door sales and home television shopping are examples of in-home selling. An even more extensive type of nonstore retailing is direct marketing, including direct mail and catalog sales, telephone soliciting, and radio and television pitches for items obtainable only by dialing a special number. Finally, vending machines provide 24-hour-a-day access to common convenience items such as candy, gum, soft-drinks, newspapers, and coffee.

Retailing is highly competitive. Careful planning greatly improves a store’s chances for success. There are five factors to consider in retail planning. (1) Where to locate the store to take advantage of both auto and pedestrian traffic flows. (2) The design, or atmosphere of the store’s physical space. What combination of exterior, interior, and overall layout features will appeal to the target market? (3) Should the retailer try to boost sales volume by adding new, unrelated products to the existing product mix? This practice, called scrambled merchandising, is increasingly popular among retailers. (4) The wheel of retailing is a theoretical model of how retail stores begin, grow, expand, begin to lose their competitive edge, and become vulnerable to new competitors. (5) Advances in technology, particularly in computerization, enable retailers to improve efficiency, protect against loss through theft, lower labor costs, and get quicker access to timely, accurate information.

In order to deliver possession, place, and time utility, products must be physically moved through marketing channels from producer to customer. Physical distribution activities include: (1) Setting customer service standards as specific, measurable goals. (2) Shipping products to customers by truck, rail, air, water or pipeline. (3) Warehousing activities include receiving goods from producers, storing them safely, recording quantities delivered and on hand, and coordinating shipments to customers. (4) Receiving and preparing customer orders for shipment. (5) Materials handling: finding ways to use warehouse space more efficiently, and to minimize the number of operations required to warehouse a product. (6) Inventory management.

Learning Objectives

1.	To define the term marketing channel and identify the two major types of marketing intermediaries.
2.	To explain how marketing channels are integrated vertically.
3.	To define wholesaling and describe the functions wholesalers perform.
4.	To define retailing and outline the activities retailers perform.
5.	To discuss the major considerations in retail planning.
6.	To explain the role of physical distribution and identify its components.