Page 2 - Lesson Note 5

For example, a wholesaler of cashew nuts may procure a large quantity

from different cashew nut producing areas, which would contain nuts of

varied quality and sizes. He then sorts the nuts into homogenous groups on

the basis of the size or quality.

2. Accumulation: This function involves accumulation of goods into larger

homogeneous stocks, which help in maintaining continuous flow of supply.

3. Allocation: Allocation involves breaking homogenous stock into smaller,

marketable lots.

For example, once cashew nuts are graded and large quantities are built,

these are divided into convenient packs of say 1 kg, 500 gms and 250 gms,

to sell them to different types of buyers.

4. Assorting: Middlemen build assortment of products for resale. There is

usually a difference between the product lines made by manufacturers and

the assortment or combinations desired by the users. For example, a

cricket player may need a bat, a ball, wickets, gloves, helmet, a T-shirt, and

a pair of shoes.

5. Product Promotion: Mostly advertising and other sales promotion

activities are organized by manufacturers. Middlemen also participate in

certain activities such as demonstrations, special displays, contests, etc., to

increase the sale of products

6. Negotiation: Channels operate with manufacturers on the one hand and

customers one, the other. Arriving at deals that satisfy both the parties is

another important function of the middlemen.

They negotiate the price, quality; guarantee and other related matters with

customers so that transfer of ownership is properly affected.