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Even now there are still intermediaries between the sthetal and phronetal cells.

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Rivers have always been the great intermediaries between land and sea, for in the ocean all find their common destination.

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A proposition is then made, by the usual intermediaries, for the union of these two corpses in the bonds of matrimony!

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Unless customers are buying a product directly from the company that makes it, sales are always facilitated by one or more marketing intermediaries, also known as middlemen. Marketing intermediaries do much more than simply take a slice of the pie with each transaction. Not only do they give customers easier access to products, they can also streamline a manufacturer's processes. Four types of traditional intermediaries include agents and brokers, wholesalers, distributors and retailers.

In an age where it is easy for any company to set up shop with an e-commerce website, it may be tempting for a small business to eliminate intermediaries to maximize profit. For a scaling business, however, this can create a lot of work in logistics and customer support.

For example, if 1,000 customers were to buy a product directly from the producer in a single month, this would entail 1,000 separate shipments to 1,000 locations, and with a minimum of 1,000 customer interactions. If you added customer inquiries about the product, returns and after-sale support – and all the customers who initiate a purchase without following through – you would have several thousand interactions with customers for every 1,000 sales. Selling through three or four intermediaries with a weekly shipping schedule, the manufacturer would have only a dozen shipments to schedule each month with a fraction of the interactions.

Agents and brokers are nearly synonymous in their roles as intermediaries. In fact, when it comes to real estate transactions, they are synonymous to any client, despite the differences in their roles in the industry. In most cases, however, agents serve as an intermediary on a permanent basis between buyers and sellers, while brokers do this on a temporary basis only. Both are paid in commission for each sale and do not take ownership of the goods being sold.

In addition to real estate, agents and brokers are also common in the travel agency. Companies routinely use agents and brokers when importing or exporting products across the border.

Merchant wholesalers, which are also simply called wholesalers, buy products from manufacturers in bulk and then resell them, usually to retailers or other businesses. Some carry an extensive range of different products, while others specialize in a few products but carry a large assortment. They may operate cash-and-carry outlets, warehouses, mail order businesses or online sales, or they may simply keep their inventories in trucks, and travel to their customers.

Also called functional wholesalers, distributors do not buy products from the producers. Instead, they expedite sales between the manufacturer and retailers or other businesses. Like agents and brokers, they can be paid by commission, or they can be paid in fees from the manufacturer.

Whenever a consumer buys a product from anyone other than the company that makes it, the consumer is dealing with a retailer. This includes corner stores, shopping malls and e-commerce website. Retailers may buy directly from the producers or from another intermediary. In some markets, they may stock items and pay for them only after they make a sale, which is common for most bookstores today.

Any e-commerce website that's not owned by the company that makes a product, which it then sells to a consumer, can also be called a retailer. However – with companies such as Amazon, which make their own products and sell them directly to customers in addition to products made by other companies – the line between producers and retailers is becoming increasingly blurry.

Have you ever noticed the presence of an intermediary in your everyday life? Did you know that the grocery store you go to on most days, and the shopping malls you visit, are forms of intermediaries? Did you know that people can also act as intermediaries? Read along to become an expert on all the different types of intermediaries.

Intermediaries in Marketing

Companies sometimes require external agents to help them market their products. The external agents are called intermediaries.

Intermediaries help a company to promote, sell and distribute its products to its customers.

Marketing intermediaries act as middlemen between various stages in the distribution chain. Intermediaries make the accessibility of the products easier for customers. With the technological advancements now available, and the rise in the digital engagement of customers, intermediaries can also be seen on digital platforms. Intermediaries are part of the distribution chain, with four main types of intermediaries.

Types of intermediaries

Mainly four types of intermediaries act at the different stages of distribution.

Intermediaries: Agents and brokers

Agents are people that represent another person or entity. They serve as an intermediary between buyers and sellers on a permanent basis. They have the power to negotiate and are given decision-making power. They are most actively present in the real estate industry.

Brokers are similar to agents in their role as intermediaries between buyers and sellers. However, they are not permanent representatives of a person or an entity. They are most active in the trading sector.

Both agents and brokers are paid on commission for a sale or transaction they have mediated.

Intermediaries: Wholesalers

Wholesalers act as intermediaries between manufacturers and retailers. They buy products from manufacturers or farmers and sell them to retailers. Products are purchased in huge quantities from the manufacturer, and the wholesaler distributes them to retailers. A wholesaler might buy only a specific product from manufacturers or have a variety of products from manufacturers available in large quantities.

Wholesalers mainly focus on the Business-to-Business (B2B) market rather than the Business-to-Consumer (B2C) market.

Wholesalers can operate in traditional cash-and-carry outlets or warehouses, but technological advancements have also allowed wholesalers to move their business onto digital platforms.

Intermediaries: Distributors

Similar to wholesalers, distributors are in direct contact with the manufacturer. But unlike wholesalers, they do not sell the products to a retailer but the end-user. They usually distribute only from a specific manufacturer and provide after-sales services to customers. They are either paid in commission or fees by the manufacturer.

Intermediaries: Retailers

Retailers are the types of intermediaries consumers are most familiar with and interact with the most. Shops, supermarkets, websites, etc., are examples of retail. Retailers have a wider reach. They either buy from the manufacturer or another intermediary.

Retailers purchase fewer items than other intermediaries but have a more comprehensive range of products. E-commerce platforms such as Amazon, Shopify, etc., are also forms of retail.

Not all businesses have intermediaries in their distribution channels. This depends upon the industry and the operating market. For example, the steel industry usually uses two intermediaries in their distribution channel, namely the wholesalers and the retailers, as shown in Figure 1. The cosmetic industry, however, usually only needs one intermediary between the manufacturer and the end consumer, the distributors, as shown in Figure 2.

Fig. 1 - Role of intermediaries in the steel industry

Fig. 2 - Role of intermediaries in the cosmetic industry

Examples of intermediaries

Let's now look closely at a few specific examples of intermediaries.

Examples of agents

Real estate agents work with people trying to sell and buy properties. This can be seen in Figure 3. They show the property for sale to the interested buyers and negotiate prices that both parties agree upon. They are paid in commission, which is a pre-determined percentage of the transaction made through the sale. For instance, their agreed commission could be 5% of the total value of the sale (e.g., the sale of a house).

Fig. 3 - Role of intermediaries in the real estate industry,

Literary agents work as intermediaries between authors and publishers, as shown in Figure 4. Agents pitch an author's work to the publishing company and increase the chance of the work getting published.

Fig. 4 - Role of intermediaries in the literature industry

Examples of wholesalers

Websites such as thewholesaler, mxwholesale, dkwholesale, etc., are examples of wholesaler websites in the UK.

The Booker Group, acquired by Tesco, is the largest wholesaler in the UK in terms of revenue.

The Booker Group supplies many products, including groceries, wine, beer, stationery, tobacco, and more. They stock over 200,000 products. They supply products to restaurants, retail stores, theatres, and even the prison service in England and Wales.

Examples of distributors

The UK has the most significant number of distributing companies in London, followed by Manchester.

Some of the largest distributors in the country include:

  • John Distilleries Pvt Ltd

  • Esso petroleum company Ltd

  • TATA steel UK Holdings Ltd

John Distilleries is an Indian company and one of the biggest distributors in the UK. John, as the name suggests, produces distilled beverages. Its chief products include whiskey, wine, malts, and vodka products. The drinks are manufactured in India, exported to the UK, and sold by distributors to the people in the UK, making it easier for them to reach this product.

Examples of retailers

Some of the biggest and most common examples of grocery retailers in the UK include:

  • Tesco

  • Sainsbury

  • Walmart (Asda)

  • Morrisons.

For instance, Tesco works with thousands of suppliers, who supply them with all kinds of different grocery products (e.g. milk, vegetables, bread, etc) which they sell in their numerous Tesco supermarkets.

Importance of intermediaries

The importance of intermediaries comes down to a few key factors. Intermediaries of all levels are important as they make the availability of products or services for their users much more accessible. They make the process of offering the desired product to the right user efficient and effective, as they have information about the customers and their needs. The importance of intermediaries is also prevalent as they have direct contact with the customers and are therefore knowledgeable about what products to source and where to source them from. They base these decisions on the manufacturer's quality and customer demands.

As intermediaries deal with smaller quantities of products but of a wider variety, they can match the different needs of customers. They have information as to what customers are looking for and can link them to the right supplier for a fee, making the job much quicker and easier for both parties.

Advantages and Disadvantages of Intermediary Channels

The advantages of intermediaries include the following:

  • Better accessibility of products and services

  • Physical distribution of goods

  • Storage of supplies

  • Better market coverage

  • Improve buyer-seller relations

  • Before-and-after sales services.

The disadvantages of intermediaries include:

  • The manufacturer loses some decision-making power.

  • The manufacturers' profit is reduced due to the money they have to pay the intermediaries.

  • Intermediaries may be misinformed about the product, thereby misinforming the customer.

  • Intermediaries may favour a competitor's product if they offer a better fee, and as a result, the manufacturer may lose their target market or market share.

As you can see, intermediaries are essential for businesses because of their various roles. Without intermediaries, it would be much more difficult for manufacturers and customers to find the right products quickly and efficiently.

Intermediaries - Key takeaways

  • Intermediaries help a company promote, sell, and distribute its products to its customers.

  • There are four main types of intermediaries that act at the different distribution stages: agents or brokers, wholesalers, distributors, and retailers.

  • Agents are people that represent another person or entity. They serve as an intermediary between buyers and sellers on a permanent basis.
  • Wholesalers act as the intermediaries between manufacturers and retailers.
  • Distributors act as the intermediaries between manufacturers and end-users.
  • Retailers buy products from manufacturers or other intermediaries and sell them to the end consumer.
  • Storage of supplies, improving buyer-seller relations, and providing before-and-after-sales services are a few advantages of intermediaries.
  • Loss of the manufacturer's decision-making power, reduction in profit, and misinformation about products are a few disadvantages of intermediaries.