DIFFERENCES BETWEEN INTERMEDIARIES & DEALERS IN MARKETING

Differences between Intermediaries & Dealers in Marketing

One of the most-challenging aspects of marketing a product is getting it to the consumer. If you are a baker baking and selling goods directly to customers on a local scale, you won't need to use intermediaries. However, if you want to expand your business and sell your product to a greater number of customers over a wider geographical area, you will have to set up a distribution channel of one or more intermediaries -- some of which may be dealers.

Distribution Channels

In marketing, a distribution channel refers to the chain of businesses that a product must pass through before it reaches the customer. For example, a bakery sells muffins to a wholesale distributor of baked goods; those muffins are then shipped by one or more trucking companies and resold to a specific supermarket or convenience store. Large manufacturers may rely on many channels of distribution, each of which are composed of intermediaries.

Intermediaries

The term intermediary is used by economists to describe any business in a distribution channel between the manufacturer and the consumer. There are several different types of intermediaries. A wholesaler, for instance, is a type of intermediary that buys large volumes of products from many manufacturers and then sells them to other intermediaries. A retailer sells directly to consumers through some form of store, including a physical retail store, catalog or an Internet site. A value-added reseller is an intermediary that buys a product from the manufacturer, improves it and then resells it.

Dealers versus Other Intermediaries

The term dealer is used to describe a specific type of intermediary that is not a retailer, value-added seller or wholesaler. The term dealer can refer to both a company and an individual, and can describe an intermediary that buys directly from the manufacturer or from another intermediary. Unlike a wholesaler, a dealer represents the end of a distribution channel and sells a product directly to the consumer. A dealer is distinct from a value-added seller because a dealer does not alter a product. Whereas a retailer -- such as a department store -- may sell a variety of different types of products, a dealer specializes in one type of product.

Dealers versus Renters

The term dealer can also be used to distinguish between an entity that permanently sells products to a customer and an entity that rents products to a consumer. This is true of the automobile industry, where an "auto dealer" describes the last intermediary in the distribution channel and is distinct from a rental agency. However, a rental agency that sells used rental cars directly to consumers can also be referred to as a dealer.

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