Some of the major functions performed by the intermediaries are mainly physical distribution, communication and facilitating functions.
Functions Of Distribution Channels
Some of the major functions
performed by the intermediaries are mainly physical distribution, communication
and facilitating functions. When we talk about physical functions, they include
braking bulk, accumulating bulk, creating assortments, reducing transactions
and transporting and storing.
of the important role intermediaries perform is bulk-breaking function. Here
these organizations buy in large quantities and break them into smaller
quantities and pass them to the retailers, wholesalers or even to the
customers. By doing so, the intermediaries reduce the cost of distribution for
the manufacturers as well as the consumers. This particular function is also
termed as ‘resolution of economic discrepancies’. Exhibit 4.2 gives a pictorial
description of bulk breaking
At times the intermediaries also
do the task of accumulating the bulk. The intermediaries may buy bulk from
different small producers accumulate them and offer to those buyers who prefer
large quantities. The intermediaries in accumulating the bulk are mostly found
in the agricultural businesses, whereby the intermediary will procure
vegetables from local farmers and assemble them and sell it to the wholesalers.
Exhibit 4.3 gives a clear picture on accumulating bulk. Once the marketers accumulate
bulk they start to sort the products identifying differences in the quality,
grades and classify them into different categories
The third important function of the
intermediaries is creating assortment. When we take the case of magazines, on
an average there are around thousands of magazines being published in a month
and it is impossible for a particular newsstand to get it going, here big
distributors and agents work in creating assortments and enable a speedy
process. This needs a lot of teamwork and timing. Certain magazines become
outdated within certain period of time.
One of the biggest reasons that
keep the economy moving and the customer smiling is the presence of
intermediaries, they reduce the number of transactions necessary to accomplish
the exchange of goods. Exhibit 4.4 shows the complicated nature of the
transaction if an intermediary does not come in place
4.4 Transaction without an intermediary
the above exhibit, we find that it becomes a complicated process for the
manufacturers to work on with different retailers, when a intermediary comes in
the form of a wholesaler we find the whole situation becomes different.
Intermediaries do not only reduce the number of transactions but also help in
the reduction of the geographical distances that both buyers and sellers have
Channel intermediaries doing the
roles of a buying agent for their customer and selling agents for the
manufacturers does simplify the process of transaction considerably From
exhibit 4.5, we find the reduction in the number of transactions that happen
between the manufacturer and the retailer.
Transporting and Storing Apart from breaking,
accumulating, creating assortments and reducing transactions they also perform
two key marketing functions namely transporting and storing. The final product
has to be moved from the point of production to the point of consumption. This
means it involves storing the product along the way till it is delivered. Most
of the big retailers hold enough of the product in order to cater to the consumers
Credit Services Apart from the function of
physical distribution the intermediaries also help in offering credit services.
Even though there are firms like Metro, which are predominantly cash and carry
kind of intermediaries, most of the intermediaries provide credit facility or
even paying in parts. Many intermediaries offer about 30 to 45 days to the
retailers for paying back.
Risk Taking one of the vital functions of the
intermediaries is risk taking. Not every product finds favor in the eyes of the
customer, much fallout within few months, as a result of which the
intermediaries would be at risk. An uncontrollable factor like floods,
earthquakes or even contamination or fire could pose a serious threat. The intermediaries
have to bear these risks along with the market risks. These are some of the
core functions intermediaries perform enabling goods and services to reach
consumers at the right time.
Tags : MARKETING MANAGEMENT - Marketing Channels
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