Middlemen ,retailers, wholesalers and their functions

By-NYK

Middlemen

Definition :

• A trader who buys goods from producers and sell them

retailers.

OR

• A middlemen is someone who buys large quantities and

sells to merchants rather than to the ultimate

Broker

Factor

Commission agent

Underwriter

Travelling agent

AuctioneersTYPES OF MIDDLEMEN

Types of middlemen :

I. Broker : a broker is a agent involved to buying and selling on behalf of

principals for a commission , he does not hold any stock

II. Factor: he is an agent whose function is to receive goods from his

principal for sale in commission . He can sell goods in his own name

III. Commission agent: he acts on behalf of foreign importers his functions

is to buy goods on behalf of client abroad.

Cont...

IV. Underwriter : they enter into agreement with promoters of newly started

company which have not been taken up by the public.

V. Travelling agent: sometimes wholesalers appoints number of agents who

goes from place to place shows price list to retailers book orders and

forward them to principals.

VI. Auctioneers: it is an agent who sells goods by auction.

FUNCTIONS:

Information:

Middlemen have a role in providing information about the market to

manufacturer. Developments like changes in customer demography,

psychology, media habits and the entry of a new competitor or a new

Price Stability:

Maintaining price stability in the market is another function a

middleman performs. Many a time the middleman absorbs an increase

in the price of the products and continues to charge the same old

price to the customer

Cont...

Promotion :

Promoting the products in his territory is another function

middlemen perform. Many of them design their own sales

incentive programs aimed at building customer traffic at

outlets.Financing :

Middlemen finance manufacturers operations by providing

the necessary working capital in the form of advance

payments for goods and services.

WHOLESALERS

Person or firm that buys large quantity of goods from various producers or vendors, warehouses them,

and resells to retailers.

Wholesaling refers to all activities performed in selling goods and services to those who buy for resale.

They also perform such functions as warehousing, transportation, financing and risk bearing. Wholesalers

also provide market information and management services and advice to the producers.

Wholesalers who carry only non-competing goods or lines are called distributors

Functions of wholesalers:Collection of goods: A wholesaler collects goods from

manufacturers or producers in large quantities.

Storage of goods: A wholesaler collects the goods and

stores them safely in warehouses, till they are sold out.

goods like fruits, vegetables, etc. are stored in cold storage.

Distribution: A wholesaler sells goods to different

retailers. In this way, he also performs the function of

Cont..Financing: The wholesaler provides financial support to producers and

manufacturers by sending money in advance to them. He sells goods to the

on credit. Thus, at both ends the wholesaler acts as a financier.

Risk taking: The wholesaler buys finished goods from the producer and

keeps them in the

warehouses till they are sold. Therefore, he assumes the risks arising out of

in

demand, rise in price, spoilage or destruction of goods.

Retailers

Retailer is a person one who sells goods or commodities

directly to consumers these items are purchased from the

manufacturers or wholesalers and sold to the end user at

a marked up price.

TYPES OF RETAILERS

Types of retailers:

Department store: this type of retailers often the most complex

offering a wide range of products and can appear as a collection of

smaller retail stores managed by one company.

Supermarkets: generally this types of retail concentrates in

supplying a range of food and beverage product.

Warehouse retailers: this type of retailers is usually situated in

retail or business park and where premises rents are low.

Cont...

Speciality retailer: specialising in specific industries or products

this type of retailers is able to offer the customer expert knowledge

high level of service

E-tailer : this type of retailer enables customer to shop online via

internet.

Discount retailer: this type of retailer offers a variety of

discounted products. They offer low prices on less fashionable

products from a range of suppliers by reselling end of line and

goods at discounted prices.

Functions of retailers:

1. Buying and Assembling:

It has been said that a retailer stocks wide variety of products to meet the requirements of a

large number of customers. For this purpose, the retailer has to assemble products of different

manufacturers from different wholesalers through the process of buying.

2. Warehousing and storing:

Products thus assembled have to be stored by the retailer so that they are held in reserve stocks

out of which consumers requirements are met without any interruption by selling in small

quantities.

Cont...

3. Selling:

The ultimate purpose of retailing business is to sell these products to the consumers.

Though a retailer is sometimes referred to as buying agent of consumers, producers and

manufacturers regard retailer as a means of dispersing goods to the market and drawing

income into their hands so that they can continue their business of production.

4. Assumption of Risk:

The retailer has to bear the risk of physical deterioration of goods and fall in value. A retailer

has to stock goods in anticipation of demand from his customers. This stock must always be

sufficient to meet any demand from the customers.

Cont...

5. Grading and Packing:

Retailers have to sort out in different lots goods or products left ungraded by the producer

or the wholesaler. Also, they must make arrangements for proper packing of goods which

are sold loose.

6. Financing:

Often retailers have to grant credit to consumers. Credit sale in effect means facilitating

the flow of products through the marketing channel to its ultimate goal. Thus retailers

contribute in financing the marketing process.

Cont...

7. Supply of Market Information:

Retailers, being in touch with the consumers, are most favourably situated to study

consumers' ehavior, changes in the tastes, fashions and demand etc. Thus they collect

valuable information pertaining to the problems of marketing.

8. Advertising:

Retailers display goods in their

stores.

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