CHAPTER 15 BMGT THE EMERGENCE OF MARKETING INTERMEDIARIES Managing the flow of goods is the most important managerial functions for many organizations Marketing intermediaries middlemen organizations that assist in distributing goods and services from producers to businesses B2B and from businesses to consumers B2C Channel of distribution consists of a whole set of marketing intermediaries such as agents brokers wholesalers and retailers that join together to transport and store goods from producers to consumers Agents brokers marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but don t own the goods o Ex real estate agents Wholesaler a marketing intermediary that sells to other organizations such as retailers manufacturers and hospitals o Part of the B2B system Retailer an organization that sells to ultimate consumers WHY MARKETING NEEDS INTERMEDIARIES Intermediaries perform certain marketing tasks such as transporting storing selling advertising and relationship building It is cheaper and faster to UPS or FedEx HOW INTERMEDIARIES CREATE EXCHANGE EFFICIENCY Manufacturers contact the wholesaler establishing 5 exchange relationship the wholesaler establishes contact with 5 retailers Some intermediaries add cost value VALUE VS COST OF INTERMEDIARIES Public views marketing intermediaries with a degree of suspicion It s cheaper to have intermediaries bring the product to major cities but it would require transportation and warehousing by wholesalers Total distribution costs 25 cents goes to the farmer 75 cents goes to total distribution costs 3 points of intermediaries 1 Marketing intermediaries can be eliminated but their activities can t 2 Intermediaries organizations have survived b c they perform marketing functions faster and more cheaply than others can they must adopt the latest technology Intermediaries add costs to products but these costs are usually more than offset by the values they create 3 UTILITIES CREATED BY INTERMEDIARIES Utility is the want satisfying ability or value that organizations add to goods and services by making them more useful or accessible to consumers than they were before 6 types of utility 1 Form utility changes raw materials into useful products Ex Dell assembles computers according to customers wishes 2 Time utility retailers add time utility to products by making them available when consumers need them Ex staying accessible 24 hours a day 3 Place utility intermediaries add place utility to products by placing them where people want them Ex 7 Eleven stores remain popular because they are usually in easy to reach locations 4 Possession utility intermediaries use possession utility by doing whatever is necessary to transfer ownership from one party to another including providing credit Ex delivery installation guarentees and follow up service 5 Information utility intermediaries add information utilities by opening two way flows of information between marketing participants Ex Newspapers salespeople libraries websites and govt publications are all information sources made available by intermediaries 6 Service utility intermediaries add service utility by providing fast friendly service during and after the sale and by teaching customers how to best use products over time it is rapidly becoming the most important utility for many retailers WHOLESALE INTERMEDIARIES A retail sale is the sale of goods and services to consumers for their own use A wholesale sale is the sale of goods and services to businesses and institutions like schools or hospitals for use in the business or to wholesalers or retailers for resale Wholesalers make business to business sales MERCHANT WHOLESALERS Merchant wholesalers independently owned firms that take title to the goods they handle o About 80 of wholesalers fall in this category o Full service wholesalers perform all the distribution functions o Limited function wholesalers performs only selected functions but try to do them especially well rack jobbers cash and carry drop shippers Rack jobbers furnish racks or shelves full of merchandise like music toys hosiery and health and beauty aids to retailers Cash and Carry wholesalers serve smaller retailers with limited assortment of products retailers went to these wholesalers paid cash and carried the goods back to their stores Drop shippers solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer they own merchandise but don t handle stock or deliver it tend to handle bulky products such as coal lumber and chemicals Agents and Brokers o Agents and brokers bring buyers and sellers together and assist in negotiating an exchange o Unlike merchant wholesalers agents and brokers never own the products they distribute o Agents and brokers earn commissions or fees based on a percentage of the sales revenues o Agents maintain long term relationships where brokers are hired on a temporary basis RETAIL INTERMEDIARIES A retailer is a marketing intermediary like a supermarket that sells to ultimate consumers RETAIL DISTRIBUTION STRATEGY A major decision marketers must make is selecting the right retailers to sell their products There are 3 categories of retail distribution intensive selective and exclusive Intensive distribution puts products into as many retail outlets as possible including vending machines Ex candy cigarettes gum popular magazines Selective distribution a preferred group of the available retailers in an area Ex Manufacturers of appliances furniture clothing Exclusive distribution the use of only one retail outlet in a given geographic area Ex Luxury car manufacturers NONSTORE RETAILING ELECTRONIC RETAILING Internet Electronic retailing consists of selling goods and services to ultimate consumers over the o Getting customers and delivering the goods providing helpful service and keeping your customers are very important o Old brick and mortar stores that add online outlets are sometimes called brick and click stores o Most people outsource that function to FedEx or UPS Telemarketing the sale of goods and services by telephone send a catalog to consumers who order by calling a toll free number Vending machines kiosks and carts vending machines dispense convenience goods when consumers deposit sufficient money they carry the benefit of location carts and kiosks have lower overhead costs that stores do so they can offer lower prices on items such as t
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