Which of the following statements is more accurate regarding marketing intermediaries? The first and most obvious answer to this question is that there are simply too many intermediaries in any marketplace. It simply would be impossible to identify and rank all of them. However, the second most accurate answer is that marketing intermediaries perform three primary functions in the marketplaces where they are active.
Retailers sell products and/or services directly to the final consumers. Marketing intermediaries provide these retailers with a method for reaching these final consumers. For example, wholesalers may distribute to manufacturers or distributors. In other words, retailers only contact the final consumers. When the final consumers contact retailers, the retailers send representatives who approach the actual consumers.
Marketers direct sales to the final consumers. Retailers only contact the final consumers when they are contacted by a marketing intermediary. The marketing intermediaries carry out the actual sales process. For example, wholesalers may act as representatives who visit wholesalers and arrange sales between the wholesalers and the retailers. Retailers contact suppliers of raw materials, equipment, machinery, chemicals, agricultural products, fish and poultry, and financial resources.
All three of the functions described above are performed by marketing intermediaries. Therefore, marketers cannot eliminate intermediaries from the market. On the other hand, intermediaries can be effective if they perform one or more of the functions listed above. There are many different intermediaries in any market.
The list of possible intermediaries is not very long. The types of intermediaries include wholesale market makers, wholesale suppliers, manufacturers, distributors, drop shippers, direct manufacturers, direct providers, importers, exporters, multinational companies, government institutions, non-governmental organizations, and individual entrepreneurs. Distribution channels may include direct selling, liquidation, and billiards or gambling stores. The distribution channel may also include trucking, real estate agents, and individual sellers and buyers.
Market makers and distributors do not directly control or operate the end users. Marketers play an intermediary role between the market maker and the end user. They decide whether the customer should buy the product or not. Therefore, all three of the statements “the market consists of” and “the market is divided into independent markets” are equally true regarding marketing intermediaries.
All marketing intermediaries have their own strengths and weaknesses. One weakness of some intermediaries is that they often charge market makers high commissions. This means one that would like to set up a business in this sector must pay too much for advertising. However, a market maker’s charges are calculated using factors such as his overhead and his sales volume. Therefore, one cannot conclude that the charges of marketing intermediaries are entirely unjustified.
On the other hand, there are other factors that should be taken into consideration when analyzing the distribution market. Distribution channels have varying profit margins depending on the type of merchandise. Distribution channels are also affected by weather conditions, taxes, unemployment rates, and supply and demand. In addition, there are still other issues such as land ownership, access to transportation, and land rights that should not be ignored. Distribution channels are usually a stable market where the supply and demand remain intact.
Therefore, distribution channels provide an excellent opportunity to enter into the marketing game. If one has a good marketing team and a sound distribution system, they can generate huge profits. Distribution should be considered as a strategic advantage rather than an expense. However, you do need to manage your capital expenditure and make sure you do not spend excessively.