The Four Types of Marketing Intermediaries
There are many ways for consumers to purchase a product. Unless consumers are purchasing a product directly from the company that makes the product, it is likely that the sale is facilitated by one or several marketing intermediaries. Marketing intermediaries, or “Middlemen,” consist of almost everyone between the manufacturer and the end consumer. Marketing intermediaries provide producers with more opportunities to reach more customers and provide consumers with an easier way to access products.
The distribution of goods takes place by means of channels, and the organizations within the supply chain that connects the producer/manufacturer to the end consumers are the intermediaries. There are four main types of intermediaries, Agents/Brokers, Wholesalers/Distributors, Retailers, and Specialized Intermediaries.
Agents and Brokers represent various manufacturers in the marketing channel process and serve to facilitate sales by assisting in the negotiation processes of the buying and selling of goods or services and the delivery of products from producer to consumer. Further, Agents and Brokers serve as commission agents, do not take ownership of the goods being sold, and are common in business to business transactions, real estate, and the service industry.
Wholesalers serve as mediators and purchase goods in bulk from manufacturers to turn around and resell the goods to other channel intermediaries such as retailers, merchants, or other businesses. Wholesalers facilitate the transportation of goods between the producers and end consumers, typically prepare the goods for resale, and store them. There are two types of wholesalers, Merchant Wholesalers, and Manufacturer Representatives. Unlike Agents/Brokers, Wholesalers take ownership of the goods or services, are independently owned, and are paid in full rather than by commission.
When a consumer makes a purchase, the consumer is dealing with a retailer; unless they purchase a product specifically from the company that makes the product. Retailers sell directly to the end-consumer and typically purchase their products from other intermediaries. Examples of retailers include department stores, specialty stores, convenience stores, and more.
Specialized Intermediaries are involved in the distribution channel to perform a specific duty and typically do not get involved with the core business practices. Advertising agencies, Marketing research firms, and insurance companies are examples of these intermediaries.
Value of intermediaries
Intermediaries are essential to the distribution channel because they reduce the number of contacts between supply chain members, make it easier for buyers to find the products they are looking for, and get the right product to the right person at the right time. They help in the negotiations, increase product awareness, drive sales, and lower distribution costs by promoting the products throughout the distribution channel. Intermediaries are the core facilitators of the distribution channel and work to connect products and consumers. They are influential in getting products onto stores because they have the necessary insights to market the products. As a result, it is cost-effective for intermediaries to be utilized rather than companies attempting to perform distribution practices independently.