The Role of Middlemen in Marketing

Let us eliminate the middlemen in marketing because middlemen make all the “profits”, are cries that have been echoed by consumers, business people, and legislators over the years. These complaints are often focused on middlemen (wholesalers and retailers). 

Over the years, some manufacturers have tried to eliminate some of these middlemen, most especially wholesalers, from their trade channels; yet, wholesaling middlemen continue to be crucial and dominate the distribution system.

Most manufacturing companies are small and specialize in all kinds of production. They lack the capital needed to maintain a sales force large enough to contact their target customers. 

Even for manufacturers who have sufficient capital, the end benefits are too small to justify the necessary sales force costs. Besides, most of these target consumers are in small number groups, with limited knowledge of the market and the suppliers. 

Thus, middlemen bridge these gaps by selling in quantities needed and locating their wares close to these target customers. This unit is designed to appraise the role of middlemen in a marketing economy and to explain various types of middlemen.

Read Also: The Importance of Channels of Distribution and Selecting an Appropriate Channel

The Role of Middlemen in the Marketing of Goods

Middlemen are very important in many cases where consumers are involved. Usually, it is simple but not practical for a producer to deal directly with ultimate consumers. 

For example, think for a moment how inconvenient it would be if there were no retail middlemen – no drug stores, newspapers/vendors, supermarkets or fuel stations, hawkers, etc.

You can eliminate the middlemen, but not their functions. Wholesalers are those merchants who act as intermediaries between the primary producers, manufacturers, or importers, on one side, and retailers or industrial consumers on the other. 

They buy goods and commodities in large quantities with a view to selling them to retailers in smaller quantities. They assemble merchandise from many sources warehouses and regroup the goods for convenient buying by end users. 

Thus, wholesalers make it possible for the manufacturers to sell to a large number of retailers to whom the merchandise cannot be easily sold directly from the factory. The wholesalers perform the following functions of marketing:

Assembling

The wholesalers collect varieties of products from different manufacturers and keep them in store for sale to the retailers at the time they need them.

Dispersion 

The products are assembled and stocked by the wholesalers who supply to the retailers that may be widely scattered.

Warehousing 

The goods purchased by the wholesalers from the manufacturers and producers have to be stocked in warehouses pending their sale to the retailers. The arrangement for such storage is the responsibility of the wholesalers.

Transportation 

The wholesalers have to move the goods from the various factories to their own warehouses and from there to the retailers’ stores.

Read Also: Types of Marketing Channels

Financing 

The wholesalers sell goods on credit to retailers.

Risk Assuming 

Wholesalers assume risks arising from the changes in prices and demand and also losses due to spoilage or destruction of goods in their warehouses and while in transit.

Grading and Packaging 

 Wholesalers have to sort out different grades of products according to quality and other considerations and package the goods into smaller lots for retailers.

Services provided to the manufacturers by wholesalers include:

The Manufacturers Get the Benefit of Bulk Orders from 

Wholesalers

Manufacturers need not take the trouble or incur the expenses of procuring large numbers of small orders.

Wholesalers Provide Up-to-Date Information for Future

Wholesalers remain in close touch with the retailers and keep themselves informed about the changes in the direction and pattern of demand and thus helping the manufacturers in planning their production.

Wholesalers Place Bulk Orders

The wholesalers place bulk orders with the manufacturer and thus enable him to concentrate on production.

Wholesalers Relieve the Manufacturers

Manufacturers are relieved of worries by wholesalers through a performance of most marketing functions as discussed in unit one.

Read Also: The Importance of Channels of Distribution and Selecting an Appropriate Channel