Marketing intermediaries refers to resellers, physical distribution firms, marketing services agencies, and financial intermediaries. These are the people who help the company promote, sell, and distribute its products to final buyers. Resellers are those who hold and sell the company's product. They match the distribution to the customers and include places, such as Wal-Mart, Target, and Best Buy. Physical distribution firms are places, such as warehouses, that store and transport the company's product from its origin to its destination. Marketing services agencies are companies that offer services, such as conducting marketing research, advertising, and consulting. Financial intermediaries are institutions, such as banks, credit companies, and insurance companies.
Types of Intermediaries in Distribution
There are several types of intermediaries that operate in a particular channel system. The objective is to gather enough information to have a general understanding of the distribution tasks these intermediaries perform. Based on this background information, several alternatives will be eliminated.
(1) Exclusive distribution (such as Ethan Allen and Drexel Heritage Furniture):
- The use of a single or very few outlets.
- Creates high dealer loyalty and considerable sales support.
- Provides greater control.
- Limits potential sales volume.
- Success of the product is dependent upon the ability of a single intermediary.
(2) Intensive distribution (such as candy). The manufacturer attempts to get as many intermediaries of a particular type as possible to carry the product.
- Provides for increased sales volume, wider consumer recognition, and considerable impulse purchasing.
- Low price, low margin, and small order sizes often result.
- Extremely difficult to stimulate and control the is large number of intermediaries.
(3) Selective distribution (such as Baskin-Robbins), an intermediary strategy, with the exact number of outlets in any given market dependent upon market potential, density of population, dispersion of sales, and competitors' distribution policies.
- Contains some of the strengths and weaknesses of the other two strategies.
- It is difficult to determine the optimal number of intermediaries in each market.
- It is up to the channel manager to evaluate these alternatives with respect to some use of criteria.
Company factors, environmental trends, reputation of the reseller, experience of reseller are just a few examples when selecting the type of intermediaries and channels.