Chapter 26 What Is Place?
327
Customer: One Place,
Many Goods
Suppose you need apples, bread,
canned soup, and eggs. If there were no
intermediaries, you would have to go to the
apple orchard for the apples, the bakery for
the bread, the soup factory for the soup, and
the chicken farm for the eggs.
Now think of how one intermediary
can facilitate your grocery shopping. That
one intermediary is a retailer, the grocery
store. The grocery store takes on the task
of contacting the apple orchard, the bakery,
the soup factory, and the chicken farm. The
grocery store buys products from the four
producers. The grocery store handles the four
transactions with those producers. You go to
the grocery store. You have the convenience of
picking up the apples, bread, soup, and eggs in
one place. You also only have one transaction,
that is, with the grocery store, 26-11.
Producer: One Transaction,
Many Customers
Now think of the producer’s situation.
The apple farmer wants to sell as many
apples as possible. Imagine that there are no
intermediaries. In order to sell his apples,
the farmer would have to go to where the
customers are. The farmer will have to
take a day away from the orchard to go
to a farmer’s market. Suppose the farmer
wants to sell 20 bushels of apples. The most
that one customer might buy is one bushel.
Therefore, the farmer would have to handle
at least 20 individual transactions with
20 separate customers.
Now think of how an intermediary
could facilitate exchanges for the farmer.
The farmer contacts the grocery store. The
grocery store buys 20 bushels of apples.
The farmer has one transaction for all
20 bushels. The grocery store handles
the 20 or more individual transactions
with the customers, 26-12.
Bulk-Breaking
Another important function of inter­
mediaries is called bulk-breaking or break-
bulk service. Most goods are shipped in
large quantities, such as a truckload or a
railroad carload. Bulk is another term for
large quantity. Most consumers do not want
a truckload of jeans or a railroad carload of
computers. They usually want one of
an item.
One Place, Many Goods
Apple
Orchard
Grocery
Store
Customer
Bakery
Soup
Factory
Chicken
Farm
26-11
The retailer, in this case the grocery store,
handles transactions with many suppliers. Thus
the retailer can provide a wide variety of goods
in one location. As a result, shopping is more
convenient for the customer, who only has to go
to one store for a variety of goods.