Marketing Intermediaries - Essay Example

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The three basic functions performed by marketing intermediaries are transactional, logistical, and facilitating. The transactional function involves adding value to the distribution channel by bringing in the intermediary resources to establish market linkages and customer contacts …
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Marketing Intermediaries
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"Marketing Intermediaries"

Companies that are able to increase their network of customer realize that achievement by increasing their customer retention. The customer retention rate of a company is a very important marketing metric due to the fact that based on the 80/20 rule 80% of a firm’s sales are achieved by 20% of their customers. Logistics refers to the physical distribution of the goods sold by a company. A firm that has gained a competitive advantage due to its superior logistics is the retail giant Wal-Mart. The production of a company is divided into smaller shipments to be distributed among the different clients of a company. On many occasions the logistics of a company involve storing the goods of the firm in a warehouse facility which serves the purpose of a distribution center. “The facility function includes financially supporting the marketing chain by investing in storage facilities” (Sharma, 2011). One of the advantages of using intermediaries is that it expands the market reach of a company. Sharma, A. (2011). Why Use Intermediaries in Marketing? Retrieved May 18, 2011 from 2. The article Getting the Most out of Retail Loyalty Programs starts the discussion by stating that customers are disloyal by nature (Johnson, 2005). I believe this is very true because as soon as a customer is given a better buying option that provides greater value and utility the customer will switch brands. A way for companies to differentiate themselves in order to achieve higher customer retention is by offering better customer service. Many customers are willing to visit different stores in the same category goods or services. For example people that eat at Burger King are usually McDonald’s customers as well. I believe that companies can drive purchases without offering price incentives. Price is not the only variable that affects the purchasing decision of customers. People can become loyal to a brand due to the superior quality that the company offers. An example of company in the auto industry that differentiates itself based on superior quality and performance is BMW. Another variable that can help a company attract customers is by offering greater value. An example of greater value could be a fast food company offering unlimited soft drinks with the purchase of a combo of food. Taco Bell is a fast food firm that offers unlimited drinks in the majority of their establishments. Rewards programs that offer purchasing incentives is a great way to achieve greater customer loyalty. Burger King offers a loyalty program called BK incentives that give the customers a 5% credit towards the purchase of food items. Johnson, C. (2005). Getting the Most Out of Retail Loyalty Programs. Forrester Research. 3. A good way to ensure that intermediaries comply with the standards and protocols of an organization is by auditing them on a regular basis. It is important for companies to document the work of intermediaries. If an intermediary does not comply with the quality, timeliness, and ethical standards of your firm these business partners must be removed and their services must be terminated at once. Take for example the case of Nike Corporation and the sweatshop scandal the company was involved in. The matrix company could have prevented the formation of sweetshops if they had properly audited their supply chain network. 4. I agree with you that companies that do not a have a solid network of intermediaries are at a competitive disadvantage because intermediaries allow products to reach more customers in numerous marketplaces. Companies that have operations internationally depend a lot on the ability of the intermediaries located in foreign locations to Read More
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