Question

Discuss the role of intermediaries in the distribution of consumer non-durable products.

Answer 1

Intermediaries play an important role in the distribution of consumer non-durables. They facilitate the transfer of goods from the place of production to the place where they are consumed.

The following are the different functions performed by the intermediaries in the case of non-durables.

1. Arrangement:- An intermediary receives the supply of goods from various sources. He then sorts these goods into homogeneous groups based on their characteristics such as size, quality, etc. For instance, an electronic goods seller receives a supply of different electronic goods (T.V., washing machine, etc.) and then sorts them based on their functions.
2. Collection:- An intermediary maintains a large stock of the goods so as to ensure easy flow of supply. For instance, the electronic goods seller maintains a large stock of each type of electronic item.
3. Allocation and Packing:- This function includes breaking the larger stock into smaller units. For instance, each electronic item as well as its spare parts are packed separately.
4. Building Variety:- An intermediary acquires various goods from different sources and assembles them in a single place. Thus, it maintains a variety of goods. He procures the products and then sells them in different combinations as desired by the consumers. For instance, a television and a video player are preferred together by most people. Thus, the retailer can sell a combination of both.
5. Promotion of Product:- They assist in the promotion activities undertaken by the manufacturers. For example, the manufacturers use advertising for the promotion of their products. The intermediaries can aid this process by putting banners and displays. For example, an electronic goods retailer puts up banners for various products highlighting their features.
6. Mediation:- Middlemen perform the function of setting a deal that can satisfy both the producers and the consumers. They negotiate the price, quality, quantity, etc. for efficient transfer of ownership so as to satisfy the need of both parties.
7. Bearing Risk:- Intermediaries acquire goods from the producers and keep them in their possession till the final sale. In the process, they bear the risk of fluctuations in demand, price, spoilage, etc. For example, suppose a retailer acquires large quantities of air conditioners. However, after a few months winter sets in and the demand for air conditioners falls. Thus, the stock remains unsold and the retailer would suffer a loss.