What are the marketing intermediaries and are they important for marketers?

Marketing intermediaries are the various companies and entities who, during the distribution phase, link the customers to the producers. They are also called distribution intermediaries.

These companies help reach the organization’s goods to the customers, market the products of various organizations, and also sell the offerings. It involves financial intermediaries, marketing service firms, distributors, product distribution intermediaries, etc. Distributors can do business as brokers, agents, wholesalers, or retailers.

The needs that give rise to market intermediaries are many. The organizations handing the reigns over to marketing agents also forfeit some of their control. However, there are benefits to doing so as well. Handing over control to intermediaries has more incredible benefits than taking charge of the distribution channel themselves, for example, the scale of operations, contact relationships, experience from specialization, etc. In addition, since there are intermediaries, socially, the number of transactions that take place during the transfer is reduced.

The companies must also have regulations to manage the relationship with intermediaries, assess how they are faring and what their features are. The distribution policy and regulations should also be adaptable so they are aligned with the intermediaries’ efforts.

Advantages of using Marketing Intermediaries

Intermediaries in any industry are beneficial to buyers and sellers alike. The manufacturer gets many advantages from these intermediaries. This happens because of specialization and expertise. People think intermediaries use up resources and time but:

1. Decrease interaction between consumers and producers at the same time improve customer reach of producers

The producer is able to reach out to the end consumer in many places because of the distribution network. There are multiple products from many producers that the end-user can buy simply by connecting with one distributor. The manufacturers just have to reach out to this one distributor to get their products to the customers.

2. Save distribution charges for producers

Producers who oversee distribution themselves operate at a smaller scale and often lack the expertise. This does not save on costs. Intermediaries save these resources for them. These can be concentrated on their core areas predominantly.

3. Bridging the link between Supply and Demand

Usually, there is a disconnect between the purchaser and the seller and also the other way around. Therefore, it is the intermediaries who join the two together.

4. Mitigation of the risk the producer takes

Oftentimes, prices might vary over a short period of time during an off sale with a distributor. The distributor mitigates the risk the manufacturer has. This allows producers to get back some of their investments and put them back into the business during the beginning of a production cycle.

5. Short span between successive investments

There is a risk involved when selling or purchasing products, and this gets split with the intermediaries during the process. So, the producers’ apprehensions while selling the goods decrease. They save money that can be used for production again and for the next stages of reinvestments.

6. Greater competitiveness for merchant wholesalers

The presence of the intermediaries decreases the risk, cuts distribution costs, and makes it easier for the customers to reach out to their own products. This makes the company more competitive in the market..

Disadvantages of using Marketing Intermediaries

The perception among the producers has now shifted. They now think intermediaries are of little benefit, and they suck them dry. Companies also often lack the expertise and resources needed to deal with the intermediaries. These things compound together to backfire on the producers. Some of those fears and anxieties are:

1. There is a nervousness of dropping out on customer engagement
2. The apprehension of missing out on the decision making
3. The anxiety that is brought by opportunism
4. The worry of missing out on customer ownership
5. There is always a hesitation that the interests of the firm are not aligned with those of the intermediaries.
6. The discomfort of insufficient communication
7. The concern of improper market management
8. The dread that an intermediary will take away value instead of contributing.

These anxieties become a reality if the producer cannot handle the intermediaries. These trepidations are also shared by the intermediaries. The worry can cause tension between the intermediary and producer. So, both parties end up getting sub-optimal results from the marketing mix and waste each other’s resources.

Types of Marketing Intermediaries

Multiple types of intermediaries exist nowadays

1. Retailers

Retailers are independent structures that are the customers of wholesalers or manufacturers. These products bought from them are then sold to the final consumer by the retailer. Because they are closest to the customers, they best comprehend the necessities and desires of the customers.

Therefore, in order to generate the finest buying circumstances for consumers, retailers have a varied store system..

2. Wholesaler

Wholesalers are intermediaries who purchase producers’ goods before selling them to industrial customers and other intermediaries. However, the primary clients are not the end consumers in this scenario but different retailers and firms.

3. Agents and Brokers

These are people who have to seek out and draw in distribution units. These units can be placed anywhere in the distribution chain. For example, they can be attached to the wholesalers or tied up with partners.

4. Distributor

Distributors are a lot like wholesalers. They function as middlemen between retailers and manufacturers. However, the distributors have to put in extra effort to market the products to the wholesale and retail businesses and other businesses and sell the goods eventually.

They also have to find methods to improve the brand appeal of the company and market the products.

Functions of Intermediaries

1. Buying

Intermediaries buy their products in bulk from the manufacturer. As a result of getting them in large quantities, the goods see their collective prices slashed by significant margins.

2. Transport and Stockroom

First, the products must be bought in bulk. After this, they have to be transported to a place where they can be sold, and consumers can access them. This could turn out to be an extremely expensive activity.

Intermediary firms thus often keep many transportation vehicles and multiple warehouses. This cuts the costs for the producer as this is a complex and resource-intensive phase.

3. Organization and packing

Once the intermediaries have procured the goods in bulk, smaller units of the products are then made. Finally, batches of assembled products are sorted according to the features they have that benefit the consumers.

4. Distribute the risk

The marketing intermediary is in charge of the products they purchase. The wholesaler will have to shoulder the price of the inventory until they are sold off. It is they who sponsor the purchase. There is an enormous cost involved. So accuracy is needed by the wholesalers for shipping, stocking, and purchasing.

The risk of the goods lies with wholesalers till delivery. The costs and products will have to be borne by the wholesalers if the product is not delivered in the proper condition or goes unsold.

5. Promoting

Marketing mediators will also take part in promotional activities for the goods they purchase. They have full liberty to use the marketing channel as they wish.

6. Circulation

Marketing mediators have the skills or knack to handle distribution as a whole. They function at a large scale, so the economies of scale drive the prices down by becoming more productive and reducing costs. The retailers like specialty stores and shopping malls cannot operate at that scale.

Example – Nike’s Distribution

Nike distributes the products straight to the consumer. There are digital sites and retail outlets operated by Nike that see to this. They are clubbed together to be known as NIKE Direct operations.

There are also various sales representatives, license holders, independent distribution mediums, and also retail accounts with a global presence in multiple markets. Nike lets the customers engage with services and experiences via their digital channels.

Conclusion

Marketing intermediaries are companies and organizations that connect the products made by the manufacturing company to the consumer who buys them. These companies can function as brokers, marketing agents, wholesalers, and retail outlets. The wholesalers can be subdivided into specialty wholesalers, functional wholesalers, general line wholesalers.

The producers have various regulations that dictate their interactions with these middlemen. The manufacturers abandon the control they have over the distribution process to these intermediaries. However, this has its advantages. Many firms do not have the staff or skills to oversee the distribution. So, it makes sense for them to hand over the reins to the middlemen.

The risks involved with the distribution channel are significantly lowered. The companies find it easier to salvage lost funds if things go wrong, and this amount can be re-invested for the next production cycle. The intermediaries also ensure the products find the right customers in a way the producers might not be able to. However, there exists a perception currently that intermediaries are more of a burden than a benefit.

There are fears that the companies have, and this can damage the engagement that they have with these middlemen. The distributors are at liberty to buy, transport, and store in operating warehouses and engage in marketing activities to get the products off the shelves.

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