The most significant difference between a manufacturing company and a merchandisin business is that a

manufacturer makes goods to sell and a merchandiser buys or acquires goods for resale. In developing a
small business, it is critical to understand whether your strengths, available resources and environmental
factors contribute to a manufacturing or merchandising setup.

Expertise

Given their primary functions of either making or acquiring goods for resale, expertise is a core
difference between manufacturing and merchandising. A successful manufacturing business features
expertise in developing an operation that produces high-quality, efficient or high-value goods and then
distributing them. A merchandiser owns strengths in acquiring goods, increasing their value and
marketing them to buyers. A distributor buys items and then resells to retailers, consumers or business
buyers. A retailer buys goods and then resells to consumers.

Relationship

Manufacturers and merchandisers also have different roles in their interrelationship within a traditional
distribution channel. The distribution or trade channel represents the flow of goods from manufacturer
through distribution, retailer and on to the final customer. The manufacturer makes goods and
traditionally sells them to the distributor or retailer. Wholesaling merchandisers are the traditional direct
buyer of manufacturers, although retailers may buy directly from manufacturers as well.

Marketing Strategies

Manufacturers typically use a combination of "push" and "pull" marketing strategies. Pull marketing
occurs when the manufacturer promotes its brands to end customers. The idea it to create market
demand and pull the products through the distribution process. Push marketing occurs when a
manufacturer promotes goods directly to trade buyers, or merchandisers. This includes a mix of
communicating benefits and offering trade incentives or discounts. Retailer merchandising businesses
focus on promoting their company and product brands to targeted customers. They must attract
customers to make sales.
Inventory

For manufacturers, production inventory includes raw materials used in producing finished goods. Low
costs and efficient use of raw inventory is key in manufacturing profitability. Once raw materials are
converted, the manufacturer possesses a finished-goods inventory. A reseller buys finished goods and
either holds its new inventory in a distribution center or in storage areas in stores. When floor inventory
or merchandise grows low, stock is replenished by retail associates.