(a) Outline the chain of distribution for manufactured consumer goods. [4marks] (b) Explain the functions of the (i) wholesaler; (ii) retailer. [8 marks eac...

Answer Details

(a) Chain of distribution for manufactured consumer goods. This is the route a good follows from where it is made to the final user. The usual chain is:

Manufacturer (producer) → Wholesaler → Retailer → Consumer.

The manufacturer makes the goods, sells them in bulk to the wholesaler, who breaks the bulk and supplies smaller quantities to retailers, who then sell in the smallest quantities to final consumers. (In some cases an agent or middleman links the manufacturer and the wholesaler.)

(b)(i) Functions of the wholesaler.

• Buying in bulk and breaking bulk. He buys large quantities from manufacturers and sells them in smaller quantities to retailers.
• Storage (warehousing). He holds stocks of goods until they are needed, thereby relieving both the manufacturer and the retailer of the burden of storage.
• Bearing risk. He carries the risks of price changes, deterioration, and loss while the goods are in his possession.
• Providing finance. By paying the manufacturer promptly and often granting credit to retailers, he finances part of the chain.
• Transportation and preparation. He moves goods from the factory and may grade, pack, and brand them for the retailer.

(b)(ii) Functions of the retailer.

• Selling in small quantities. He breaks the wholesaler's bulk further and sells to consumers in the small amounts they can afford.
• Bringing goods near the consumer. By operating shops in convenient locations, he makes goods readily available to final buyers.
• Providing variety and information. He stocks a range of goods so consumers can choose, and advises them on the qualities and uses of products.
• Granting credit and after-sales service. He may sell on credit and offer services such as delivery and repairs.
• Holding small stocks and advising producers. He keeps ready stock for immediate sale and passes consumers' preferences back up the chain.