Name: Steven P Sanderson IIDate: 7-12-06Class: Into to Business BA11 5040Professor: McNamaraThis paper will be on topics discussed in chapter 15 which is based on distributing products quickly and effectively. Today’s markets are made up of many people and processes. The market place is made up of such people like marketing intermediaries, achannel of distribution, agents/brokers, wholesalers and retailers. To further discuss thistopic we need to know, what they all are. Marketing intermediaries are organizations thatassist in moving goods and services from producers to industrial and consumer users, achannel of distribution is a whole set of marketing intermediaries, such as wholesalersand retailers that join together to transport and store goods in their path or channel from producers to consumers. Agents and brokers are another part of the process, they bring buyers and sellers together to help facilitate exchanges of goods and services yet never take title to any goods. A wholesaler is a marketing intermediary that sells to other organizations and a retailer sells to the ultimate consumer also known as the end user. Now you may ask why manufacturers need marketing intermediaries.Manufacturers don’t need intermediaries, so why use them? The answer is thatintermediaries can perform certain tasks and usually cheaper, such as transporting,storing, selling, advertising and relationship building faster, than most manufacturers can.Intermediaries can also create exchange efficiency. Suppose that five manufacturers that produced goods wanted to do business with five different retailers, well that’s 25 differentrelationships. Now if the five manufacturers used one wholesaler there would only be 10relationships total and manufactures would only need on relationship instead of 5 whichis an 80% reduction in necessary relationships which ultimately would be more costeffective not only to the manufacturer but also to the end user.There is also a value added to products when intermediaries are involved.Marketing intermediaries have always been looked down upon and viewed with varyingdegrees of suspicion. The reason is that many surveys show that about half of the costsof products and services come from intermediaries, so in all reality prices could begreatly reduced if we got rid of them. Sounds good right? Everyone wants to save somecoin, but is it really worth it? If the intermediaries were not there you may have to drivegod knows how long to get the products you want, then with today’s gas prices alone andyour time it wouldn’t be worth it., for example lets take a box of cereal, that sells for $4,how could we as consumers get the cereal for less? Well you could drive to the plant andget it if you want, but suppose the plant is 20 miles away and it will take you 30 minutesto travel that distance. Now say you drive an SUV that gets an average of 17mpg. Nowwe will see how much it really costs you. Now say you get the cereal for $2 for at the plant, you would be saving $2 by not getting it at the store, now let’s see how much ingas and time it will cost you to cut the intermediary out so you can save $2. So its $2 for the box of cereal and at a round trip of 40 miles at 17mpg you will uses 2.35 gallons of gas at an average price of$3.209 per gallon. So just in gas alone you will be paying$7.54. Now that box of cereal costs $2 plus gas $7.54 which is $9.54 and 40 minutes of
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