Advantages and disadvantages of using intermediaries?

Answer 1

Advantages of Using an Intermediary

The advantages of using intermediaries stem from the core economics of supply-chain management: market coverage, customer contacts, lower costs, systematic cash flow, etc. The intermediary adds value to the marketing of the product by bringing in specialization, marketing knowledge, capacity to segment the market, and selling skills that allow the marketer to implement marketing strategies effectively.

Intermediaries providing logistic support increase convenience to both the producer and the consumer by offering effective delivery and pre- and post-purchase customer service as well as facilitating manufacturer services, making them indispensable to most mid- and small-scale producers.

Disadvantages of Using an Intermediary

Manufacturers quite often see intermediaries as parasites rather than assets. The disadvantages of using an intermediary stem from psychological apprehensions, market antecedents which have created such apprehensions, and lack of managerial skills or resources that are sufficient to balance and manage the intermediary. Fears, which may come true if the producer fails to manage the intermediary, might include:

• fear of losing control
• fear of losing customer contact
• fear of losing customer ownership
• fear of opportunistic behavior
• fear of inadequate communication
• fear that the objectives of the intermediary will conflict with those of the producer
• fear that the intermediary will extract rather than add to value
• fear of poor market management

Furthermore, an intermediary may have many of the same fears (except for the last two on the list). These fears often undermine the working relationship between a producer and an intermediary and keep them from effectively utilizing each other's resources and maximizing the potential of the marketing mix.

References by http://www.marketingcrossing.com/article/220071/Why-Use-Intermediaries-in-Marketing-/