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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