Trade is the sector of the economy that distributes goods manufactured or produced by manufacturing establishments. It thus represents the connection between production and consumption.
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Objectives of trading companies
Ziel der Handelsbetriebe ist somit die Bewerkstelligung des Austauschs von Gütern in einer Volkswirtschaft. Ein Handelsbetrieb beschafft Waren auf eigene Rechnung und setzt diese unverändert wieder ab. Er gehört damit im weiteren Sinn in die Gruppe der Service companies.
Tasks of trading companies
The tasks can be described as follows, regardless of the type and type of operation of the investigated trading operations:
Space compensation function
Trade bridges the physical distance between the producer and the consumer or user of a product. The producer no longer has to deal with thousands or even millions of consumers, but only with a few hundred wholesalers and retailers who distribute the goods to the local customers.
Example: The manufacturer of goods is based in Dortmund and sells his goods throughout Germany.
Time compensation function
Herstellung und Verbrauch liegen zeitlich z. T. erheblich auseinander. Das gilt nicht nur für Waren, deren Konsum gleichbleibend ist, deren Herstellung jedoch saisonal erfolgt (z. B. Obst- oder Gemüsekonserven), sondern auch umgekehrt für Waren, deren Verbrauch starken Schwankungen unterliegt, deren Herstellung jedoch kontinuierlich erfolgen kann (z. B. Spielwaren, Elektrogeräte). Der Handel erfüllt hier durch eine entsprechende Warehousing einen Ausgleich der zeitlichen Differenzen.
Example: While the trade sells the corresponding textiles in the summer, the industry is already producing the winter goods.
Volume balancing function
The cost-effective production of goods requires the production of large series in industrial operations, while consumption is subject to opposing fluctuations in terms of quantity or is constant. The trade here has the task of regrouping in terms of volume. He does this on the one hand in the form of buying up large quantities (e.g. whole harvests through the wholesale trade) or in the form of stockpiling and gradual distribution through the retail trade.
Assortment creation function
The range of an industrial company is mostly specialized in a few goods in order to take advantage of the mass degression of manufacturing costs. The consumer or user wants, however, as complete a range as possible, which corresponds to his need for shopping “under one roof”. This applies in retail z. B. for department stores, supermarkets or specialty shops, in wholesale z. B. for special wholesalers in which all conceivable goods of a group are available.
Advisory and information function
Because the industry is able to produce an incredible variety of goods, the consumer or user often lacks the necessary market overview. The task of retailing is to guarantee this market overview due to its special product range and, moreover, to offer the consumer its knowledge of goods in the form of advice as a service. In this context, customer service and customer support after the purchase has been made is becoming increasingly important.
Types of trading establishments
A number of features can be used to differentiate trading operations according to type of operation and type of operation:
- The form of sale represents the way in which customers select the goods, receive advice and come into possession of the goods.
- The range denotes the range of different articles. The breadth of the range includes the number of different products, the depth of the range, on the other hand, how many different versions and types of an article are available.
- The pricing can be set low, medium or high.
- The size of the company is characterized by the turnover, the number of employees, the sales area and the range of products.
- The location plays a special role in retail. It can be fixed, changing, sales-oriented or traffic-oriented.
Example: While an industrial company only manufactures a product six times a year, this product is always available in stores.