As any marketing channel moves goods from producers to consumers, the marketing intermediaries perform, or participate in, a number of marketing flows, or activities. The typical marketing flows, listed in the usual sequence in which they arise, are collection and distribution of marketing research information information , development and dissemination of persuasive communications promotion , agreement on terms for transfer of ownership or possession negotiation , intentions to buy ordering , acquisition and allocation of funds financing , assumption of risks risk taking , storage and movement of product physical possession , buyers paying sellers payment , and transfer of ownership title.
Each of these flows must be performed by a marketing intermediary for any channel to deliver the goods to the final consumer. Thus, each producer must decide who will perform which of these functions in order to deliver the service output levels that the target consumers desire.
Producers delegate these flows for a variety of reasons. First, they may lack the financial resources to carry out the intermediary activities themselves. Second, many producers can earn a superior return on their capital by investing profits back into their core business rather than into the distribution of their products. Finally, intermediaries, or middlemen, offer superior efficiency in making goods and services widely available and accessible to final users.
For instance, in overseas markets it may be difficult for an exporter to establish contact with end users, and various kinds of agents must therefore be employed.
Because an intermediary typically focuses on only a small handful of specialized tasks within the marketing channel, each intermediary, through specialization, experience, or scale of operation, can offer a producer greater distribution benefits.
Although middlemen can offer greater distribution economy to producers, gaining cooperation from these middlemen can be problematic. Middlemen must continuously be motivated and stimulated to perform at the highest level. In order to gain such a high level of performance, manufacturers need some sort of leverage.
Researchers have distinguished five bases of power: As new institutions emerge or products enter different life-cycle phases, distribution channels change and evolve. With these types of changes, no matter how well the channel is designed and managed, conflict is inevitable. Often this conflict develops because the interests of the independent businesses do not coincide.
For example, franchisers, because they receive a percentage of sales, typically want their franchisees to maximize sales, while the franchisees want to maximize their profits, not sales.
The conflict that arises may be vertical, horizontal, or multichannel in nature. When the Ford Motor Company comes into conflict with its dealers, this is a vertical channel conflict.
Horizontal channel conflict arises when a franchisee in a neighbouring town feels a fellow franchisee has infringed on its territory. Finally, multichannel conflict occurs when a manufacturer has established two or more channels that compete against each other in selling to the same market. For example, a major tire manufacturer may begin selling its tires through mass merchandisers, much to the dismay of its independent tire dealers.
Wholesaling includes all activities required to sell goods or services to other firms, either for resale or for business use, usually in bulk quantities and at lower-than-retail prices. Wholesalers, also called distributors, are independent merchants operating any number of wholesale establishments.
Wholesalers are typically classified into one of three groups: Merchant wholesalers, also known as jobbers, distributors, or supply houses, are independently owned and operated organizations that acquire title ownership of the goods that they handle. There are two types of merchant wholesalers: Full-service wholesalers usually handle larger sales volumes; they may perform a broad range of services for their customers, such as stocking inventories, operating warehouses, supplying credit , employing salespeople to assist customers, and delivering goods to customers.
General-line wholesalers carry a wide variety of merchandise, such as groceries; specialty wholesalers, on the other hand, deal with a narrow line of goods, such as coffee and tea or seafood. Limited-service wholesalers, who offer fewer services to their customers and suppliers, emerged in order to reduce the costs of service. There are several types of limited-service wholesalers. Cash-and-carry wholesalers usually handle a limited line of fast-moving merchandise, selling to smaller retailers on a cash-only basis and not delivering goods.
Truck wholesalers or jobbers sell and deliver directly from their vehicles, often for cash. They carry a limited line of semiperishables such as milk, bread, and snack foods. Drop shippers do not carry inventory or handle the merchandise.
Operating primarily in bulk industries such as lumber, coal, and heavy equipment, they take orders but have manufacturers ship merchandise directly to final consumers. Rack jobbers, who handle nonfood lines such as housewares or personal goods, primarily serve drug and grocery retailers. Rack jobbers typically perform such functions as delivery, shelving, inventory stacking, and financing.
In less-developed countries , wholesalers are often the sole or primary means of trade; they are the main elements in the distribution systems of many countries in Latin America , East Asia, and Africa. Both are paid in commission for each sale and do not take ownership of the goods being sold. In addition to real estate, agents and brokers are also common in the travel agency.
Companies routinely use agents and brokers when importing or exporting products across the border. Merchant wholesalers, which are also simply called wholesalers, buy products from manufacturers in bulk and then resell them, usually to retailers or other businesses. Some carry an extensive range of different products, while others specialize in a few products but carry a large assortment.
They may operate cash-and-carry outlets, warehouses, mail order businesses or online sales, or they may simply keep their inventories in trucks, and travel to their customers. Also called functional wholesalers, distributors do not buy products from the producers. Instead, they expedite sales between the manufacturer and retailers or other businesses. Like agents and brokers, they can be paid by commission, or they can be paid in fees from the manufacturer.
Whenever a consumer buys a product from anyone other than the company that makes it, the consumer is dealing with a retailer. This includes corner stores, shopping malls and e-commerce website. Retailers may buy directly from the producers or from another intermediary. In some markets, they may stock items and pay for them only after they make a sale, which is common for most bookstores today.
Any e-commerce website that's not owned by the company that makes a product, which it then sells to a consumer, can also be called a retailer. Some examples of marketing intermediaries include large retailers such as Kmart and JCPenney and grocery stores like Kroger.
Marketing intermediaries also offer distribution practicalities that take care of "when" and "where" the customer will go in order to purchase the product as well as allowing the customer to take ownership of the product.
The intermediaries help to create an efficient and cost effective exchange process. What Are the Functions of a Marketing Intermediary? Quick Answer A marketing intermediary is a distribution channel and way for producers of various products and services to indirectly sell to the masses. What Is Allocation in Economics? Full Answer Marketing intermediaries can come in the form of wholesalers, retailers, brokers, agents, financial intermediaries or distributors.
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marketing intermediary. Individual or firm (such as an agent, distributor, wholesaler, retailer) that links producers to other intermediaries or the ultimate buyer. Marketing intermediaries help a firm to promote, sell, and make-available a good or service through contractual arrangements or purchase and resale of .
Marketing - Marketing intermediaries: the distribution channel: Many producers do not sell products or services directly to consumers and instead use marketing intermediaries to execute an assortment of necessary functions to get the product to the final user. These intermediaries, such as middlemen (wholesalers, retailers, agents, and brokers), distributors, or financial intermediaries.
Some businesses need "middlemen" to get their products to the public. Market intermediaries, part of the supply chain between the manufacturer and the ultimate consumer, keep the channels of distribution open and flowing. They create place, time and possession benefits for manufacturers by ensuring. A: A marketing intermediary is a distribution channel and way for producers of various products and services to indirectly sell to the masses. The marketing intermediaries are used to get the product or service to the consumer and are often called "middlemen.".
A marketing intermediary is the link in the supply chain that links the producer or other intermediaries to the end consumer. The intermediary can be an agent, distributor, wholesaler or a retailer. These parties are used in the selling, promotion or the availability of the goods/services through contractual agreements with the manufacturer. Sep 08, · types of distribution intermediary Introduction There is a variety of intermediaries that may get involved before a product gets from the original producer to the final user. These are described briefly below: Retailers Retailers operate outlets that trade directly with household customers.