ROLE OF MIDDLEMEN
Middlemen perform several roles and functions in the market place. Their utility is best judged from commodity markets. Besides making the product available to the customer, they also take the responsibility for the payment from the buyer to the seller. Some of their key roles are summarized below.
Middlemen have a role in providing information about the market to the manufacturer. Developments like changes in customer demography, psychology, media habits and the entry of a new competitor or a new brand and changes in customer preferences are some kind of information that all manufacturers want. Since these middlemen are close to the customer and present in the market place they can provide this information at no additional cost.
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. This is because of the intra middlemen competition. The middleman also maintains price stability by keeping his overheads low.
Promoting the product /s in his territory is another function that the middlemen perform. Many of them design their own sales incentive programs aimed at building customer traffic at their outlets.
Middlemen finance manufacturersâ€™ operations by providing the necessary working capital in the form of advance payments for goods and services. The payment is in advance even though credit may be extended by the manufacturer, because it has to be made even before the products are bought and consumed and paid for by the ultimate customer.
Most middlemen take title to the goods and services and trade in their own name. This helps in diffusing the risks between the manufacturer and middlemen. This also enables middlemen being in physical possession of the goods, which enables them to meet customer demand at the very moment it arises.
Thus, the role and functions of any marketing channel can be viewed from five different perspectives or marketing flows. The definition of a channel member goes beyond the traditional one of middlemen. Today it has come to include even suppliers of inputs (like raw material, components, capital and even labor) and other institutions like transport companies and banks that facilitate the distribution process. It is in this sense that the marketing channels have to be â€œviewed as sets of interdependent organizations involved in the process of making a product or service available for use or consumptionâ€?.