Place/Distribution & Information Systems - Assignment Example

Middlemen are intermediaries, and without them, it may be true that distribution costs will be reduced only on condition that the supermarket for example can perform those roles more efficiently as compared to a wholesaler. However, the supermarket inventory costs may raise as a result, therefore less efficiency and no savings. The justification that middlemen may not possibly be eliminated can be viewed in terms of their roles in the channel. First, they are the people who ensure that there is efficiency.

There are some exchange-related costs that necessitate the reduction of transactions or exchanges. Without a middleman, each buyer must negotiate and transact with the seller. For instance, with one middleman, each buyer will have to negotiate with a single middleman as opposed to five sellers. And a single seller will have to negotiate with a single middleman as opposed to five buyers. The second role is that they act as specialists in the exchange procedure, offer access to and control significant resources for the smooth functioning of the channel of marketing; this is division of labour and it requires the services provided by wholesalers and retailers offer.

If these middlemen were eliminated, then a totally different person would assume their roles. Such individuals who may replace them may be either consumers or producers. However, the functions can be shared among the members of the channel or can be shifted, but such functions cannot be eliminated, except if the buyer will have to assume them. The two reasons thus imply that even though middlemen can be eliminated, there functions can never be eliminated. If middlemen are done away with, there will be a problem in the convenience, shopping, and sought goods and services.

This is due to the reason that, the basic role of the middlemen is to convert the assortment of goods by manufacturers in the assortment desired by the customers. Producers make slight assortments in huge quantities, yet consumers want broad assortments packed in small quantities. If middlemen miss here, there might be discrepancy in assortment and quantity of goods packed and sold to consumers at easy reach and good time. Other delegated responsibilities of middlemen include information flow, payment and title flow, contacts, negotiations, financing, promotion, and assuming risks.

They provide working capital through payment of goods prior to the sales. A producer will use him when he knows that the middleman can perform the roles more efficiently and economically. Most consumers buy their goods from the retailers because they are near to them and most of them are more convenient in terms of services as compared to the producers. Regarding the flow of information, there will be hardships in maintaining high sales for companies or producers because the wholesalers and retailers give more detailed information on the products.

This is done through negotiations and promotions because they are always geared to convincing customers to purchase products so that they can keep their businesses going and also make profits. This is unlike producers who may just send their products to the markets and may not bother much to follow up. In fact, the producers get feedback about the goods they manufacture from the middlemen and they can know where to rectify. Middlemen elimination will thus eliminate feedback about the