Function of the channels of distribution, Marketing Management

Function of the channels of distribution or the role of middle man or intermediaries:

1.       Information: Middle men have a role in providing information about the market to the manufacturer. Development like changes in customer demography, psychographic, media habits and the entry of a new competitor or a new brand and changes in the customer preferences are some of the information that all manufactures want. Since these middle men are present in the market place and close to the customer they can provide this information at no additional cost.

2.       Price stability: maintaining price stability in the market is another function a middle man performs. Many a time the middle man absorbs an increase in the price of the products and continues to charge the customer the same old price. This is because of the intra - middle ctionman competition. The middle also maintains price stability by keeping its overheads low.

3.       Promotion: promoting the product is in his territory is another function that the middle man performs. Many of them design their own sales incentive programmers, aimed at building customers traffic at the other outlets.

4.       Financing: middleman finance manufactures operation by providing the necessary working capital in the form of advance payments for the goods and services. The payment is in advance even through the manufacturer may extent credit, because it has to be made even e before the products are bought, consumed and paid for by the ultimgate consumer.

5.       Title: most middleman take the title to the goods, services and trades in their own name. This helps in diffusing the risks between the manufacfessturer and middleinman. This also enables to the middle man to be in physical promotion of the goods, which in turn enables them to meet customer demand at very moment it arises.

6.       Help in production function: the producer can concentrate on the production function leving the marketing problem to middlemen who specializa in the profession their services can best utilizeto selling theproduct thefinanance required for organizing marketing canprofitably beused in production where the rate return would be greater

7.       Matching demand and supply: the chief function of intermediaries is to assemble the goods from many producers in such a manner that a customer can affect purchases with ease. According to wrote alderson the goal of marketing is the matching of segments of supply and demand. The matching process is undertaken by performing the following functions:

A. contractual: finding out buyers and sellers.

B. merchandising: producing goods that will satisfy market requirements.

C. pricing: process of attaching value to the product in monetary terms.

D. propaganda: sales promotion activities.

E. physical distribution: distribution activities.

F. termination: settlement of contract paying the value and receiving the goods.

8.       Pricing: in pricing a product the producer should invite the suggestions from the middlemen who are very close to the ultimate users and know what they can pay for the product. Pricing may be different for different markets or products depending upon the channel of distribution.

Posted Date: 9/19/2012 7:07:31 AM | Location : United States

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