Intermediaries
Intermediaries are third-party entities that facilitate the distribution of products from the manufacturer to the end consumer. They can include wholesalers, retailers, and distributors. Intermediaries play a crucial role in bridging the gap between producers and consumers, often providing services such as storage, transportation, and marketing to help bring products to market.
7 Key excerpts on "Intermediaries"
- Ray Donnelly, Colin Linton, Colin Linton(Authors)
- 2010(Publication Date)
- Routledge(Publisher)
...Payment is by way of commission. The Role of the Intermediary The role of the intermediary is to simplify the distribution process add value and reduce costs. Consider one manufacturer that has 10 buyers. If another buyer enters the market and has the same 10 buyers, then 20 separate journeys are being made to the buyers. What would be the effect of both manufacturers of using one intermediary to make the deliveries? Multiply the effect hundreds of times and the benefits will readily be seen. Webster (1979) suggests there are three groups of value-added service provided by Intermediaries as seen in Figure 6.1 facilitating transactional logistics Figure 6.1 Three groups of value-added service provided by Intermediaries (Webster, 1979). Intermediaries may perform one of more of these tasks. Beamish and Ashford (2008) have broken these elements down and Table 6.2 is based on their assessment. Table 6.2 Intermediary tasks Element Description Information Collection and distribution of market research and intelligence data, such as sales data to help the planning process. Management Setting objectives and channel plans along with any risk that needs to be taken or managed. Matching Adjusting the offer to fit a buyer’s needs, including grading, assembling and packaging. Promotion Setting promotional objectives and communicating through the different tools. Price Setting pricing policies and financing policies. Distribution Managing the transport, storing and stock control of goods. Customer service Providing channels for advice support and after sales service. Relationships Facilitating communication and maintaining relationships in the channel. Selecting Channel Intermediaries The final stage of developing a new channel is to select those organisations that are going to undertake the various roles within the channel. Channel members are appointed as part of a channel strategy, when a number of Intermediaries may be appointed, or when circumstances require a new appointment...
- Bonita Kolb(Author)
- 2020(Publication Date)
- Routledge(Publisher)
...This can greatly increase the number of consumers who have the opportunity to conveniently purchase the product. However, the intermediary will also need to make a profit on the sale of the product. Either the producer must sell the product more cheaply to the intermediary so that once it is marked up the price will still be the same as it was originally, or the final retail price will be higher. To use an intermediary, the producer must understand the process involved in selling the product to retailers. Formerly the organization had to decide if they should distribute through stores or online. Now, the question is no longer relevant as the bricks and mortar and online worlds have merged. Retail stores that formerly had a separate ecommerce and physical store marketing division have now merged them into one. Shoppers make no distinction between buying online and onsite. They will use both based on convenience (LaFleche 2019). A consumer may use a company’s website that shows photos of the product and describes the product details for research. They may then purchase in a store. Or, they do the opposite, researching in a store but then buying online. Distribution challenges—not as easy as you would think The problem that distribution addresses is that the product may exist in one place while the consumer lives somewhere else. Intermediaries are the people and organizations that solve this problem. While this is easy to understand for tangible products, the issue is also the same for service products such as performances. In these cases, an agent is often used as an intermediary. The agent will book the venues where the entertainment takes place for either a flat fee or a percentage of the money earned by the entertainer...
eBook - ePubSales and Marketing Channels
How to Build and Manage Distribution Strategy
- Julian Dent, Michael White(Authors)
- 2018(Publication Date)
- Kogan Page(Publisher)
...04 The role of the distributor for sales and marketing channels Distributors, wholesalers and Intermediaries For the purposes of this book, we will consider distributors, wholesalers and other ‘first-tier’ Intermediaries to be the same and, certainly in terms of business model, they are the same. The distributor is an intermediary that services the final tier that serves the end user customer; for example, the cash and carry (wholesaler) serving small independent retailers, or the builders’ merchant (distributor) serving people in jobbing trades such as plumbers, builders, etc, or the broadline technology distributors serving thousands of computer or electronics dealers and retailers. This means that distributors as we are defining them are to be found only in two-tier (or three-tier) distribution models and it is worth considering their role in terms of both their customers and their suppliers. Customer role – core functions For their customers, distributors fulfil a number of core roles, many of which are aspects of being a one-stop shop for their (final-tier) customers of smaller, independent traders, dealers, retailers and so on. These final-tier players cannot afford the complexity and cost of sourcing their products from the hundreds of suppliers that are integral to their own offer to end-customers. It is more efficient to be able to go to a limited number of distributors with whom they can establish trading relationships that meet most or all of their needs...
eBook - ePub- Paul Reynolds, Geoff Lancaste(Authors)
- 2013(Publication Date)
- Routledge(Publisher)
...Manufacturers themselves feature in the channel system, as they are the recipients of goods (raw materials and components) from their own suppliers. The use of Intermediaries in a channel system has a number of advantages: 1 The sheer number of transactions that must be made is dramatically reduced when sales are effected through Intermediaries or middlemen. Instead of a manufacturer selling to numerous retail outlets or other manufacturers, distributors or wholesalers can assume this task, reducing the manufacturer’s transactions to more easily manageable proportions. 2 Middlemen relieve some of the financial burden that manufacturers need to bear when marketing directly to the end user. 3 The manufacturer’s costs of transport, storage and stock levels are reduced, as these are ‘broken up’ (the wholesaler’s function is technically known as ‘breaking bulk’) and shared throughout the channel network. 4 Channel members possess skills and knowledge of their localised markets that it would be impractical for the producer to possess. 5 Middlemen also market a variety of related (and sometimes competing) products and have established contacts and means of entry into local markets that the producer might find difficult to approach if acting independently. They may promote the product and employ a sales force with an intimate knowledge of the local market. Only the very largest manufacturers would be able to field a sales force equivalent in both number and knowledge to the combined sales teams of a group of middlemen. The advantages of the channel system can be summarised by describing the utilities that channels create: 1 Time utility : distribution is co-ordinated so products reach the user or consumer when they are demanded. 2 Place utility : this describes the physical movement of goods from one place to another. 3 Possession utility : Intermediaries ensure that possession is facilitated...
eBook - ePub- Chris Cooper(Author)
- 2020(Publication Date)
- SAGE Publications Ltd(Publisher)
...Intermediaries include tour operators who bundle together two or more elements of supply (say an airline seat and accommodation) and sell it to the public. Suppliers and tour operators are known as ‘principals’. Because it is not practical for a principal to have a sales office in every city in the world, they use a second type of intermediary to access the market – travel agents. Agents are found in the high street and in cyberspace and are paid commission for sales. According to Fyall and Wanhill (2008), the roles played by Intermediaries in the distribution channel include: Making markets by matching buyers and sellers; Transferring risk owned by a supplier, such as a hotel, to a tour operator who purchases their hotel bedstock in bulk; Reducing marketing costs for the principal by finding buyers and communicating with the marketplace; Passing on knowledge and price advantage; Acting as a one-stop shop for many products for the consumer; Acting as a cheaper source of products because Intermediaries can negotiate and purchase in bulk and pass on the savings; and Helping improve the competitiveness of destinations that leverage from the intermediary’s extensive marketing network – there is a danger here, however, as destinations can become overly dependent upon, say, tour operators to deliver tourists and so lose control of their own markets, as has been the case for some Mediterranean islands. Intermediaries: Tour operators The nature of the tourism product as a fragmented set of services has created an important role for tour operators, bridging elements of supply with the consumer. Effectively, tour operators bundle together two or more elements of supply and sell them for a single price. They make contracts in bulk with hotels, airlines and ground transport companies and assemble them into ‘inclusive tours’ communicated to the market through print brochures or the Internet...
eBook - ePub- C. Michael Hall, Richard Mitchell(Authors)
- 2007(Publication Date)
- Routledge(Publisher)
...5 The role of Intermediaries Chapter objectives After reading this chapter you will Appreciate that there is a wide range of Intermediaries that are present in the wine supply and value chains Understand the critical role that Intermediaries play for wineries Understand the importance of relationships and relationship marketing in the producer–intermediary–retailer value chain Recognise that decisions relating to choice of intermediary are complex Recognise that choices relating to Intermediaries are specific to each winery and situation Introduction Wine, perhaps more than any other industry, is an industry of Intermediaries. Intermediaries (or ‘middlemen’) provide services of different forms that distribute wine from the producer to the retailer or consumer. There are many different forms of intermediary, each with a different role to play and each of whom has the potential to add cost and, hopefully, value to the wine. Because the types of Intermediaries are many and varied, there are an overwhelming number of permutations for a winery when it comes to the selection of Intermediaries (see Figure 1.3). This is especially the case for smaller wineries that, unlike their larger counterparts, do not usually have the selling power, volume of production or resources to by-pass Intermediaries and sell directly to retailers or to negotiate contracts that benefit both winery and intermediary. The nature of the relationships between winery, intermediary and retailer is, therefore, critical to the ability of a supply chain involving Intermediaries to add value to the wine. In Chapter 4 we introduced the concept of relationship marketing at the cellar door, where wineries would develop relationships directly with consumers and we suggested that this concept was also useful in terms of B2B relationships (Grönroos, 1996). This chapter picks up these discussions and further explores the importance of trust in such relationships...
eBook - ePub- Roman Egger, Dimitrios Buhalis, Roman Egger, Dimitrios Buhalis(Authors)
- 2011(Publication Date)
- Routledge(Publisher)
...This allows the possibility of outsourcing functions and processes to suppliers outside the trade. These issues form the basis of the emerging trends described as dynamic intermediation, disintermediation and reintermediation. The unbundling of individual functions creates specialized enterprises whose core competence means that efficiency and cost benefits can be achieved. Chircu and Kauffman (2000) defined the term intermediation as the entry of a new enterprise in the value chain in order to establish a link between customers and providers, either as a provider of new and innovatory services or as competitor to existing Intermediaries. Intermediaries play an important economic role, both on physical markets and on information markets. The intermediary acts to secure quality and variety, and offers product-specific information. The intermediation costs arising must naturally be added to the production cost and as a consequence increase price and make competition more difficult. The WWW has offered a new distribution alternative alongside the three existing channels of face-to-face, catalogue and telephone sales. Nowadays, Internet users are able to search the net on their own, to compare and book offers at any time they choose from any location around the world. Greater transparency and lower transaction costs in the Internet economy result in a shifting of market forces towards the customer (empowerment). Today, the Internet can provide tourists with better information than travel agencies were able to do only a few years ago. This fact is changing the process of purchase decisions dramatically. Direct contact with the provider of services may render the route via the intermediary obsolete. Falling transaction and interaction costs reduce the role of the Intermediaries and can lead to disintermediation. In the context of tourism, this mainly affects tour operators, travel agencies and the GDS...
