Importance of Middlemen in Business PDF

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The vast majority of commodities and services are dispersed via a network of distribution channels. Manufacturers of consumer goods and services do not often offer their products and services directly to consumers without the aid of intermediaries. When we need something, we purchase it from a retai...

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IMPORTANCE OF MIDDLEMEN IN BUSINESS ________________________________________________________________ The vast majority of commodities and services are dispersed via a network of distribution channels. Manufacturers of consumer goods and services do not often offer their products and services directly to consumers without the aid of intermediaries. When we need something, we purchase it from a retail seller who serves as the ultimate point of distribution in the distribution network. Examples of such items are salt and bulbs, tea and sugar, soap, and ink, paper, books, and flowers. According to the information presented in the preceding section, the majority of items are delivered via a network of marketing channels. The issue then becomes, why is it so prevalent to employ channels of distribution or marketing intermediaries in the first place? Why is it preferable to distribute via intermediaries rather than direct distribution? It is the relevance of channels, as shown by the following discussion, that provides the solution to these questions:-

(i)

Efficient use of time and resources

The channels allow for more efficiency in effort. This may be better understood with the assistance of an example. Assume you need to purchase four items: sugar, bulb, coffee, and ink, all of which are available for purchase. The most likely scenario is that you would stroll into a general merchant's store and purchase all of the

items in one location. Consider what would happen if there were no intermediaries such as stores to facilitate transactions. In such situation, you would have to purchase

the

items

straight

from

the

makers.

Consequently, there would be four interactions, one with the producer of sugar, one with the producer of bulb, one with the producer of coffee, and one with the manufacturer of ink. When all of the items were purchased from the same vendor, there was just one point of contact in comparison to this. Let us now suppose that there are four consumers who all need the identical four goods from the vendor. In the event that manufacturers decide to promote their goods directly to consumers, a total of sixteen connections would need to be established. When compared to the scenario when just one intermediary is engaged, this would result in much higher costs for transportation and telephone service, as well as more annoyance.

(ii)

Increased Distribution Efficiencies

Distribution is a difficult process to do. It consists of specialised operations such as selling, transporting, storing, negotiating, and other similar tasks. A company that is involved in manufacturing work as well as direct distribution

work

will

be

unable

to

conduct

the

distribution job as effectively and inexpensively as a company that is solely engaged in distribution business.

(iii) Difficulty in the Distribution Process

Some consumer items need a large distribution network in order to reach their ultimate purchasers. Consumers' willingness and ability to get certain items such as cigarettes and soft drinks, as well as newspapers and chocolates, determines the success of such products. This is because the maker of such items is unable to build such a large distribution network on their own. To ensure that their goods reach the ultimate consumers, companies must thus rely on intermediaries for distribution.

(iv) Marketing and Promotional Coverage

Because customers are dispersed over a vast geographic region, it is important for the manufacturer to rely on intermediaries. Consumers are not often concentrated in a certain location, neighbourhood, or city. When a company wishes to reach a large number of customers and accomplish large-scale distribution, the usage of channels becomes vital.

(v)

Convenience for the customer

The intermediaries increase consumer happiness and convenience since purchasing many things from a single retailer is simpler and more convenient than purchasing the same items from a lot of different locations.

(vi) Information about the Market

Manufacturers are often positioned a long distance away from their target consumers. Because of this, it becomes very difficult to keep track of numerous consumer and industry trends. The fact that intermediaries operate in close proximity to the market means that they have ready access to market information. They are, without a doubt, the most genuine and dependable sources of market knowledge available. Furthermore, the expense of gathering such information via intermediaries is often the least expensive method of gathering it....