Types of Middleman and their Characteristics
The distribution channel starts with the producer and ends with the consumer. In between, there are many intermediaries or middlemen. These middlemen are of two types:
- Merchant middlemen
- Agent middlemen
A merchant middleman is one who takes title to the goods and later carries out sales. An agent middleman, on the other hand, does not take title to goods. He simply gets orders from the buyers and passes on the same to the producers.
The various kinds of middlemen in the market are:
- Wholesalers: They are the people who buy in bulk from the producers and sell in small quantities to the retailers.
- Retailers: They are the people who buy in small quantities from the wholesalers and sell to the ultimate consumers.
- Agents: They are the middlemen who do not take any title to goods. They render all services required in marketing. They represent either the seller or the buyer. They receive commission for their work.
- Brokers: Like agents, brokers also represent either the buyer or the seller. They do not usually have physical control over the goods in which they deal. Example: share brokers. They get ‘brokerage’ for their work.
- Dealers: They are the business houses that resell goods. Example: Quicker
- Distributors: They are the same as wholesalers.
- Jobbers: They are associated with stock exchanges. A jobber deals in certain securities. He transacts only with a broker and does not deal directly with the public.
- Branches: These are establishments maintained by manufacturers at different places to promote sales. Example: Adidas Shoe company.
- Consumer Co-operatives: These are owned and managed by the ultimate consumers. Such cooperatives buy and distribute goods mainly to the members.
- Company show room: A company may run its own show room to sell its goods. Example: Philips, BPL and Thomson have their own showrooms in Chennai.
- Facilitating Agencies: These agencies are directly or indirectly involved in the performance of certain marketing functions. These are transport organizations, warehouses, banks, insurance companies and so on.