This exercise will give you some practice in choosing the right type of wholesaler. Each of the following cases describes a situation in which a buyer or seller might want to use one or more types of merchant wholesalers or agent middlemen. Read each case carefully and then indicate which type$($s$)$ of wholesaler$($s$)$ would be most appropriate for each situation. Then explain your answer.

The first case is answered for you as an example.

CalMex Food Company was started in Los Angeles in $1960$ by a Mexican immigrant. Over the years, the company's spicy corn chips have become a snack food favorite in the greater Los Angeles metropolitan market. In fact, CalMex's chips have become so popular that the company is now planning to open new plants in Dallas and Phoenix and expand its market coverage across the whole Southwest. However, the marketing manager for the company doubts that CalMex can afford to set up the same plant$-$to$-$retailer delivery service in the new market areas as it now operates in the Los Angeles area.

Type of Wholesaler: Merchant wholesaler$--$truck wholesaler

Explanation: The perishability of these products and the wide variety of outlets suggests the need for wholesalers who specialize in carrying stock and delivering on a frequent basis. There might be some specialty wholesalers willing to do this job$--$but truck wholesalers have specialized in this area for some years and might better understand the needs of the appropriate target markets. There still might be a problem in "selling" them on taking on this company's line.

Josie Palthrow has been managing a frame shop that she owned with her husband. That seemed like an interesting thing to do when she graduated from college, but now she wants to start her own business. She thinks that the growing interest in healthy food opens up some interesting opportunities. With money borrowed from her father, she made a down payment on a bakery which formerly belonged to a local cookie manufacturer. As her first product, she decided to produce a unique honey and bran muffin. She "discovered" the recipe for this tasty product while traveling in Switzerland, and she is certain that it can be a profitable item if she can distribute it through health food stores and nutrition centers. A number of the health food stores in her area have already expressed interest in carrying the muffins. But Palthrow knows that she needs to obtain wider distribution$--$i$.$e$.,$ outside her present area$--$to $\text{'}$be successful. One of the problems with expanding distribution, however, is that the muffins use no preservatives$--$so they are perishable.

Type of Wholesaler: $\_\_\_\_\_$

Explanation: $\_\_\_\_\_$

PowerSecure Corporation$--$a large manufacturer of backup $("$uninterruptible$")$ power supplies and battery packs for computer systems$--$has decided to produce and sell a new line of automobile batteries. The company deliberately avoided the highly competitive consumer replacement market in the past$--$but now feels that it has a product that is much longer lasting than any battery currently on the market. PowerSecure plans to distribute its new batteries through gasoline service stations, automotive stores, hardware stores, and mass$-$merchandisers. At the present time, the company has very limited financial resources$--$due to the cost of expanding its manufacturing facilities to produce the new line of batteries.

Type of Wholesaler: $\_\_\_\_\_$

Explanation: $\_\_\_\_\_$

TripleA Windows produces a line of insulated windows that are used for residential and commercial construction and remodeling. It supplies lumberyards, large glass contractors, and home$-$builders throughout a three$-$state area. TripleA uses its own trucks for deliveries within a hundred miles$--$and ships carload quantities by railroad. Currently, five sales reps call directly on its present customers. The company is faced with large swings in demand, however, and has had difficulty finding new customers.

Type of Wholesaler: $\_\_\_\_\_$

Explanation: $\_\_\_\_\_$

Jerry Milton recently developed a patented recycling process for diseased trees. Officials from nearby cities$--$lacking any ecologically acceptable alternatives for disposing of trees that have been cut down$--$have agreed to deliver their trees free of charge to Milton's plant. There, the trees are processed and converted into products such as wood chips for landscaping, bark mulch, railroad ties, and patio blocks. However, Milton has little marketing experience and know$-$how. Usually, buyers come to him by word of mouth$--$and then he is not sure how to price his products. The firm is in trouble financially and may have to declare bankruptcy unless Milton can locate a steady and sizable market for his products. But, he has no funds to hire a sales rep or to promote his products.

Type of Wholesaler: $\_\_\_\_\_$

Explanation: $\_\_\_\_\_$