Marketers use marketing intermediaries to assist in distribution and sales, but do not take title to the goods they sell. These companies generally operate on an extended contractual basis, selling within a territory and handling non-competing but related lines of goods. The role of a marketing intermediary is changing the traditional distribution model. Which of the following statements about marketing intermediaries is true? Let’s consider each of these statements in turn.
Using an intermediary reduces the decision-making power of the manufacturer. The intermediary may misrepresent a product and help a competitor’s product gain market share. A manufacturer might lose market share and profits due to these problems. A third issue is the possibility that the intermediary may misinform consumers about the products they sell. A fourth concern is that an intermediary may favor a competing product.
A trade promotion has two objectives: giving intermediaries an incentive to carry the product, and selling it. A pull promotion gives incentives to intermediaries in the form of discounts. It is an effective way to target households sensitive to price. Its goal is to make customers aware of the product. If an intermediary does not sell the product, they are unlikely to generate sales for the product. Which of the following statements about marketing intermediaries is true?
A marketing intermediary facilitates sales by facilitating the distribution process. Also known as a middleman, intermediaries offer customers easy access to the products a manufacturer produces. In addition to facilitating sales, marketing intermediaries can also streamline the manufacturing process. Traditional intermediaries include agents, brokers, wholesalers, retailers, and distributors. A small business owner may want to cut out these middlemen, but eliminating intermediaries will only result in additional work for logistics and customer support.
While marketing intermediaries play a vital role in the distribution of goods from producers to consumers, not all businesses use them. In fact, it all depends on the type of business and the market in which it operates. For example, the steel industry uses wholesalers to move its products, while cosmetics use distributors to sell their products. However, it does not make sense for every business to use a marketing intermediary.
Value-added resellers (VARs) typically assemble products from different vendors and resell them as packages to specialized segments. These intermediaries must have skills in branded marketing. Some former Soviet bloc countries have high levels of black market purchasing. China, for instance, has numerous operational laws that are difficult to navigate, allowing foreign firms to set up distribution networks in their own country.