Outline the functions performed by market intermediaries.

Principles and Practice of Management notes and Revision questions and answers


I. Contacting Function:
They reduce the number of sales contacts on sales needed to reach all the customers. As the number of sellers and customers increases, the number of sales contacts increase geometrically, otherwise arithmetically in cases where there are middlemen.
II. Sorting Function:
This involves bulk breaking (buying in large units and breaking down into smaller units for resale) as
Well as bulk building (middlemen buy from various small producers, sell to marketing boards, millers
or Processors of foreign buyers-especially in the marketing of coffee).
III. Physical Distribution Function:
Transportation and storage of products from producer to final consumer- Transportation creates utility by ensuring good are available where desired Warehousing/Storage-Ensures that products are available when desired. This ensures continuous production since manufacturers storage space is continuously emptied by outflow of stock going to middlemen. The middlemen assume ownership of goods/merchandise thus financing the stock and assuming the risk.
IV. Demand Stimulation:
In a bid to make a profit, middlemen engage in marketing function like the marketing mix variables. Though they engage in marketing, they stimulate sales of their stock, which also include competitor products. If a company’s product is not in demand, then they may phase it out. At times manufacturers may stimulate demand for their products by offering incentives to retailers. Demand stimulation by middlemen is appropriate for small producers who do not have fiancés to promote their products.
V. Market Information:
They provide information from producers to consumers or from consumers to producers. This information backs up what salesmen, consumers and the media provide. Middlemen explain to consumers how to use and maintain company’s products and where to take them for repair. Questions regarding function of the product by customers, warranties and guarantee conditions.
VI. Marketing intermediaries provide many producers lacking the resources to carry out direct marketing with an avenue to sell their products.

VII. In some cases, direct marketing is simply not feasible hence the choice of intermediaries.

VIII. It is better to outsource distribution function and concentrate on core business i.e. production.

Principles and Practice of Management notes and Revision

Principles and Practice of Management notes and Revision

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