Many producers lack the financial resources to carry out direct marketing. Ex. Maruti udyog sells its cars through more than 600 dealer outlets; even maruti udyog would be hard pressed to raise the cash to buy out its dealers.
Direct marketing would require many producers to become middlemen for the complimentary products of other Producers in order to achieve mass distribution economies. Ex.maruti udyog will have to become middlemen for auto ancillary companies if it establish its own distribution network.
producers who can afford to establish there own channels can offer earbn a grater return by increasing their investment in their main business. If a company earns a 20 percent rate of return on manufacturing and foresees only a 10 percent return on retailing. It will not want to undertake its own retailing.
Marketing intermediaries through their own contacts, experience, specialization and scale of operations, offer the firm more than it can usually achieve on its own.
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