(a) State five importance of middlemen in marketing (b) Explain five factors that can determine the type of channels of distribution to be used by a company...

Answer Details

(a) Five importance of middlemen in marketing

1. Bridging the gap between producer and consumer: They link producers who are far away with the final consumers, making goods available where they are needed.
2. Breaking bulk: They buy in large quantities from producers and sell in smaller units that consumers can afford.
3. Provision of storage: They hold stock, thereby relieving producers of storage burden and ensuring goods are available when demanded.
4. Provision of finance/credit: They often pay producers promptly and may extend credit to buyers, easing the flow of trade.
5. Risk bearing: They take over risks of price fall, spoilage and unsold goods once they buy from the producer.
6. Provision of market information: They supply producers with information about consumer needs, tastes and complaints, and inform consumers about available goods.
7. Sales promotion: They advertise and promote goods, helping to increase sales.

(b) Five factors that determine the type of channel of distribution to be used

1. Nature of the product: Perishable goods (e.g. fish, bread) need short, direct channels, while durable goods can pass through longer channels.
2. Nature of the market: A market that is widely scattered with many small buyers needs long channels with more middlemen; a concentrated market of few large buyers suits short channels.
3. Financial strength of the company: A financially strong firm can afford its own outlets and salesforce (direct channel); a weak firm relies on middlemen.
4. Volume/quantity produced: Large-volume producers use longer channels to reach many outlets, while small producers may sell directly.
5. Cost of distribution: The firm chooses the channel that gets goods to buyers at the least cost.
6. Degree of control desired: A firm that wants tight control over pricing and promotion prefers short, direct channels.
7. Middlemen availability and competition: The number and quality of available middlemen and the channels used by competitors also influence the choice.