Many producers do not sell products or services directly to consumers and instead use marketing intermediaries to execute an assortment of necessary functions to get the product to the final user.
These intermediaries, such as middlemen wholesalers, retailers, agents, and brokersdistributors, or financial intermediaries, typically enter into longer-term commitments with the producer and make up what is known as the marketing channel, or the channel of distribution. Manufacturers use raw materials to produce finished products, which in turn may be sent directly to the retailer, or, less often, to the consumer.
However, as a general rule, finished goods flow from the manufacturer to one or more wholesalers before they reach the retailer and, finally, the consumer. Each party in the distribution channel usually acquires legal possession of goods during their physical transfer, but this is not always the case. For instance, in consignment selling, the producer retains full legal ownership even though the goods may be in the hands of the wholesaler or retailer—that is, until the merchandise reaches the final user or consumer.
Channels of distribution tend to be more direct—that is, shorter and simpler—in the less industrialized nations. There are notable exceptions, however.
For instance, the Ghana Cocoa Board collects cacao beans in Ghana and licenses trading firms to process the commodity. Similar marketing processes are used in other West African nations. Because of the vast number of small-scale producers, these agents operate through middlemen who, in turn, enlist sub-buyers to find runners to transport the products from remote areas.
It was possible for a product to pass through a minimum of five separate wholesalers before it reached a retailer.
Businesses may sell products directly to the final customer, as is the case with most industrial capital goods. Or they may use one or more intermediaries to move their goods to the final user.
The design and structure of consumer marketing channels and industrial marketing channels can be quite similar or vary widely. The channel design is based on the level of service desired by the target consumer. The service variables are quantity or lot size the number of units a customer purchases on any given purchase occasionwaiting time the amount of time customers are willing to wait for receipt of goodsproximity or spatial convenience accessibility of the productproduct variety the breadth of assortment of the product offeringand service backup add-on services such as delivery or installation provided by the channel.
It is essential for the designer of the marketing channel—typically the manufacturer—to recognize the level of each service point that the target customer desires. A single manufacturer may service several target customer groups through separate channels, and therefore each set of service outputs for these groups could vary.
One group of target customers may want elevated levels of service that is, fast delivery, high product availability, large product assortment, and installation. Their demand for such increased service translates into higher costs for the channel and higher prices for customers.
In order to deliver the optimal level of service outputs to their target consumers, manufacturers are willing to allocate some of their tasks, or marketing flows, to intermediaries. As any marketing channel moves goods from producers to consumers, the marketing intermediaries perform, or participate in, a number of marketing flows, or activities. The typical marketing flows, listed in the usual sequence in which they arise, are collection and distribution of marketing research information informationdevelopment and dissemination of persuasive communications promotionagreement on terms for transfer of ownership or possession negotiationintentions to buy orderingacquisition and allocation of funds financingassumption of risks risk takingstorage and movement of product physical possessionbuyers paying sellers paymentand transfer of ownership title.
Each of these flows must be performed by a marketing intermediary for any channel to deliver the goods to the final consumer. Thus, each producer must decide who will perform which of these functions in order to deliver the service output levels that the target consumers desire.
Producers delegate these flows for a variety of reasons. First, they may lack the financial resources to carry out the intermediary activities themselves. Second, many producers can earn a superior return on their capital by investing profits back into their core business rather than into the distribution of their products.Skip Navigation.
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Download Free PDF. A short summary of this paper. Abdul-Razak A1. E-mail: 1kpanvomc yahoo. This paper evaluated the effectiveness of channel structure, channel strategies and economic efficiency of Coca Cola Ghana Limited in Tamale Metropolis.
A survey was conducted on 70 respondents, thus 65 retailers and 5 wholesalers and it was found that the dominant channel structure that Coca Cola uses is the link: producer, wholesaler, retailer, and consumer. All the channel members have been effectively carrying out their roles and the channel strategies adopted by Coca Cola is very effective.
Thus, a good This means that it might not necessarily be product needs be complemented with the the direct role of the producer to make the right pricing, promotion and placing.
There is the need for relevantputs it that, the necessity of the intermediaries who significantly play roles distribution as a specific economic activity in making the products available to the arises from the gap, mismatch between the customer or the ultimate consumer in the production of products and consumption right quantities, at the right places, at the place, time quantity and quality Product prices and at the right time.
Every global firm determines how many According to Farrelleconomic intermediaries or independent agencies efficiency would be decomposed into influence the distribution of its products allocative and technical efficiency. This from the production point to the ultimate therefore means that, the broader focus of consumer of the product.
As Debreu puts it, the ability to Undoubtedly, Coca Cola has carved a measure product prices accurately enough niche on the global market as being among depends on the economic efficiency. This the lead global brands. Answers to the following questions were sought in a bid to The economic efficiency can be realised if a realize the research objectives.
Related to this Hill Company? Arnold has outlined seven rules for international distribution to be effective. Thus, distribution of the Coca Cola products in findings and the recommendations made the Tamale Metropolis. All intermediaries in Mainly primary data was sought from the the channel structure will also benefit from intermediaries in the channel structure and the outcome of the study as they will have the unit of analysis is therefore the an evaluative report on the channel wholesalers and retailers in the channel effectiveness of the Coca Cola Company in structure.
Primary data was sought from Tamale metropolis. Secondary data was practical realities on the channel structure, got from relevant journal articles, textbooks strategies and the way they influence the as well as internet sources. All wholesalers distribution of Coca Cola Products.
The and retailers in Tamale metropolis are the Research therefore made useful target population and a sample was drawn recommendation on which subsequent from that on which the research was researches can be conducted.
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WordPress Shortcode. Full Name Comment goes here.Intermediaries in a distribution channel provide services that enable manufacturers to reach different types of customers. A channel might include a number of intermediaries, such as agents, wholesalers, distributors and retailers. Intermediaries act as middlemen between different members of the distribution chain, buying from one party and selling to another.
They also may hold stock and carry out logistical and marketing functions on behalf of manufacturers. Manufacturers sell products and services to their customers through direct and indirect channels.
What Are the Functions of Intermediaries in a Distribution Channel?
Where manufacturers sell direct to customers through their own salesforce or website, they do not require intermediaries. If they wish to sell to customers and prospects their sales teams cannot reach, they appoint intermediaries to act on their behalf.
Agents act as independent representatives for manufacturers, selling to other intermediaries such as wholesalers or retailers. These agents can be individuals or companies. Agents earn commission or fees for the sales they make or the services they provide.
Independent stores and retail chains sell products to consumers and business customers. By appointing retailers, manufacturers can reach different areas of the country and target smaller customers they could not afford to serve directly. Retailers buy products for resale direct from manufacturers or from wholesalers. They generally stock goods from many different suppliers, including competitive offerings in the same product category, so manufacturers must use incentives and discounts to encourage retailers to push their products in order to achieve strong sales.
Wholesalers buy products in bulk from a number of different manufacturers, stocking them in warehouses and selling them to retailers.
International Market Intermediaries – International Business
By holding stock, wholesalers enable manufacturers to supply customers in different regions without investing in their own warehousing facilities. Wholesalers also help manufacturers reduce their logistics costs by delivering stock to retailers or offering stores a collection service. Distributors carry out similar functions to wholesalers, but generally have closer working relationships with manufacturers.
Distributors may have exclusive arrangements with manufacturers and do not carry competing products. They may be part of a franchise, only offering the products of one manufacturer. Like wholesalers, they provide valuable warehousing and logistical functions for manufacturers.International Market Intermediaries are middleman or intermediaries who act as channel members in the product distribution channel.
They facilitate the sales process buy linking buyers with sellers. Foreign retailers deal in products meant for consumers. Generally utility and telecommunication equipment are sold to state controlled companies by manufacturers. Example — State Trading Corporation of India. Export Broker — An export broker is engaged in exporting goods for a domestic company by charging a fee. Export brokers act as a representative of a manufacturer and are responsible for bringing together buyers and sellers and negotiating the terms for the seller.
The export broker may operate under its own name or that of the manufacturer. Export Management Company — It is a company that manages the entire export activities of a domestic company on a contract. It may function as an export department for a manufacturer therefore it is also known as a Combination Export Manager CEM.
Cooperative Exporter — Manufactures of a particular product in the domestic country form a cooperative union to manage their export activities. Example — Singer, Borg Warner. Webb-Pomerene Association — It is an export cartel jointly formed by two or more domestic manufacturers to market their product overseas. Country controlled buying agent — It is a government agency involved in locating and buying products for its country.
Resident Buyer — A resident buyer is an independent agent located near a highly centralized production industry involved in buying products on behalf of an importer. Export Merchant — An export merchant is a person who buys products in domestic country to sell them in foreign country.
Export Drop Shipper — A person who links exporters and importers. An export drop shipper is also known as a desk jobber or cable merchant. Export Distributor — A company which is granted exclusive rights to represent the manufacturer in selling the products in foreign country.
Overview Notes Projects Ebooks Contact. International Market Intermediaries — International Business. Notify of.
Inline Feedbacks.Intermediaries make it possible for a company to deliver its products to the end user without needing to own the whole supply chain. Without intermediaries, it would be close to impossible for the business to function at all. This is because intermediares are external groups, individuals, or businesses that make it possible for the company to deliver their products to the end user.
For example, merchants are intermediaries that buy and resell products. There are four generally recognized broad groups of intermediaries: agents, wholesalers, distributors, and retailers.
Agents or brokers are individuals or companies that act as an extension of the manufacturing company. Their main job is to represent the producer to the final user in selling a product. Thus, while they do not own the product directly, they take possession of the product in the distribution process.
They make their profits through fees or commissions. Unlike agents, wholesalers take title to the goods and services that they are intermediaries for.
They are independently owned, and they own the products that they sell. Wholesalers do not work with small numbers of product: they buy in bulk, and store the products in their own warehouses and storage places until it is time to resell them. Wholesalers rarely sell to the final user; rather, they sell the products to other intermediaries such as retailers, for a higher price than they paid.
Thus, they do not operate on a commission system, as agents do. Intermediaries : Retailers sell products to end users. Distributors function similarly to wholesalers in that they take ownership of the product, store it, and sell it off at a profit to retailers or other intermediaries. However, the key difference is that distributors ally themselves to complementary products.
For example, distributors of Coca Cola will not distribute Pepsi products, and vice versa. In this way, they can maintain a closer relationship with their suppliers than wholesalers do. Retailers come in a variety of shapes and sizes: from the corner grocery store, to large chains like Wal-Mart and Target.
Whatever their size, retailers purchase products from market intermediaries and sell them directly to the end user for a profit.
A firm can have any number of intermediaries in its channels. Streamlining distribution involves the planning and efficient use of supply chain resources and may involve working with intermediaries.
Distribution Center : Streamlining decisions go beyond the distribution center itself. It involves all of the elements in the logistics and distribution process. Streamlining distribution involves the efficient use of all technologies included in the work of logistics and distribution centers.
It should be mentioned that the scope of the planning of logistics and distribution processes is not limited only to the planning of production, transportation, or distribution.