Login

Channel Intermediaries: Definition and Function in Business

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:05 Channel…
  • 1:23 Merchant Wholesaler
  • 1:54 Agents and Brokers
  • 2:49 Channel Functions of…
  • 4:46 Lesson Summary
Timeline
Autoplay
Autoplay
Create an account to start this course today
Try it free for 5 days!
Create An Account

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Jennifer Lombardo
Marketing managers must have an effective physical distribution strategy, and companies must be able to deliver their products to the consumer. Most managers utilize channel intermediaries to help with transactional, logistical and facilitating functions. Learn more about this process here.

Channel Intermediaries: Definition

How does a consumer go about purchasing a product? Do they knock on the door of the producer? Most products are purchased from channel intermediaries, whose main purpose is to deliver product from the manufacturers to the end users. The purpose of a channel intermediary is to move products to consumers, whether business or consumer. Some intermediaries take title, or ownership, of the product from the producer. This means that they can set the price and control the final method of sale. This would be an example of a retailer.

When Ninja Corp first decided to launch their product line, they had to determine which channel intermediaries they would need to effectively reach their target market. Remember that the overall marketing mix consists of the 4 Ps (which are product, promotion, price and physical distribution). This lesson discusses the P of physical distribution through the channel intermediaries.

Merchant Wholesaler

Merchant wholesalers are institutions that purchase goods from producers and then resell them to other businesses, wholesalers or retailers. They can receive the title of the product from the manufacturer, hold products for inventory and then later resell them. Merchant wholesalers' customers usually consist of small- or medium-sized retailers. Ninja Corp also uses merchant wholesalers to help distribute their products to retailers that their smaller corporate trucking company can't reach.

Agents and Brokers

Some intermediaries do not want to be bothered with taking title or ownership of products. Agents and brokers are wholesalers whose main purpose is to facilitate sales. They help deliver products from the producer to the consumer. They make their profits by collecting a fee, or commission, based on the amount of sales they are successful at delivering for the producer.

For example, small start-ups or companies who want to have a better distribution tend to use agents or brokers. This allows the company to reach a larger market and still reap excellent profits as long as the agents or brokers are successful. Ninja Corp used agents and brokers in the very beginning of their marketing strategy. The agents and brokers were successful in getting them distribution until Ninja Corp had the money to build their own local delivery truck routes. Intermediaries can be a huge help to both a start-up and an established business.

Channel Functions of Intermediaries

Ninja Corp uses intermediaries to help with all types of transactional functions. These can consist of contacting and promoting, negotiating and risk-taking. Ninja Corp uses wholesalers, agents and brokers to help promote their product line and produce more sales orders. They also depend heavily on the intermediaries to negotiate payments and organize delivery schedules. Lastly, Ninja Corp utilizes them for risk-taking in the sense that the intermediaries have to take ownership of managing their product inventories.

Another type of function that Ninja Corp utilizes intermediaries for would be a logistical function. Ninja Corp needs wholesalers, agents and brokers to help with physically distributing, storing and sorting their product line. This helps with time and space issues and allows Ninja Corp to have their products available where and when their customers need their products.

To unlock this lesson you must be a Study.com Member.
Create your account

Register for a free trial

Are you a student or a teacher?
I am a teacher
What is your educational goal?
 Back

Unlock Your Education

See for yourself why 10 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back

Earning College Credit

Did you know… We have over 49 college courses that prepare you to earn credit by exam that is accepted by over 2,000 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Click "next lesson" whenever you finish a lesson and quiz. Got It
You now have full access to our lessons and courses. Watch the lesson now or keep exploring. Got It
You're 25% of the way through this course! Keep going at this rate,and you'll be done before you know it.
1
The first step is always the hardest! Congrats on finishing your first lesson. Go to Next Lesson Take Quiz
5
Way to go! If you watch at least 30 minutes of lessons each day you'll master your goals before you know it. Go to Next Lesson Take Quiz
10
Congratulations on earning a badge for watching 10 videos but you've only scratched the surface. Keep it up! Go to Next Lesson Take Quiz
20
You've just watched 20 videos and earned a badge for your accomplishment! Go to Next Lesson Take Quiz
50
You've just earned a badge for watching 50 different lessons. Keep it up, you're making great progress! Go to Next Lesson Take Quiz
100
You just watched your 100th video lesson. You have earned a badge for this achievement! Go to Next Lesson Take Quiz
200
Congratulations! You just finished watching your 200th lesson and earned a badge! Go to Next Lesson Take Quiz
300
Congratulations! You just finished watching your 300th lesson and earned a badge! Go to Next Lesson Take Quiz
500
You are a superstar! You have earned the prestigious 500 video lessons watched badge. Go to Next Lesson Take Quiz
1K
Incredible. You have just entered the exclusive club and earned the 1000 videos watched badge. Go to Next Lesson Take Quiz
20
You have earned a badge for watching 20 minutes of lessons.
50
You have earned a badge for watching 50 minutes of lessons.
100
You have earned a badge for watching 100 minutes of lessons.
250
You have earned a badge for watching 250 minutes of lessons.
500
You have earned a badge for watching 500 minutes of lessons.
1K
You have earned a badge for watching 1000 minutes of lessons.
Support