ADVANTAGES OR ARGUMENT IN FAVOUR OF MIDDLEMEN IN THE CHAIN OF DISTRIBUTION

In the chain of distribution, middlemen are the retailers, wholesalers and agents who act as intermediaries between the producer and the consumer.

Middlemen link the producer and the consumers together.

Middlemen Links buyer and Consumer

Middlemen generally buy goods, not for consumption, but for reselling until goods get to the final consumers.

Although they have been some arguments for the elimination of middlemen, middlemen are very essential for the function they perform such as breaking goods into bulk and providing after-sale services, just to name a few.

The following are advantages or arguments in favour of middlemen:

1. Necessity of distribution: Not every producer has the resources or means to get their products to customers far and wide.

Hence, it is only necessary that middlemen are in place to perform this function for the producer.

Indeed, the presence of middlemen makes it possible to easily deliver goods and services to clients who are located inside or outside of the city.

2. Convenience of break-bulk buying: Rather than buy in bulk, Some consumers prefer to buy goods in units.

Such consumers would not love to buy directly from the producer because most producers sell only in bulk, not units.

To ensure that such consumers are not deprived of the opportunity of purchasing goods and services, and to ensure that the producers do not lose the revenue from such sales to competitors, it is very important that middlemen are used.

3. Relieves producer workload: Producing goods is not an easy task. You will agree with me that combining production with the activities of individually contacting customers is very stressful.

To reduce their workload, producers create goods and then sell them to middlemen, who will then contact buyers and sell the goods to the buyers also.

4. After sale services: This is yet another argument in favour of middlemen.

Producers generally do not directly produce after sale services to their customers. They do this through middlemen.

Without these middlemen, producers may not be able to provide after-sales services to their customers.

5. Storage of goods: Although some producers have facilities for keeping their products in storage, these facilities are typically small and can only hold a small number of the producers' products.

The wholesaler comes to his rescue by providing it with a warehouse to store goods.

Wholesalers buy in bulk from the producers and then store goods in their warehouse until they are needed by the retailers or the consumers.

6. Credit facilities: Due to the massive amount of money invested in production, most producers are not in a good position to provide credit facilities to consumers.

As a result, the middlemen assume this role by giving credit options to both the consumer and the manufacturer.

The wholesaler provides credit to the producer by paying in advance for bulk orders of goods and services.

The wholesaler also grants credit to the retailers by allowing them to take possession of goods and services and pay later after the goods are sold.

Similarly, the retailers provide credit by allowing the consumer to buy goods and pay instrumentally for goods and services.

7. Source of market information: Middlemen serves as an invaluable source of market information.

As they are closer to the consumers than the producer, middlemen can gather market information such as changing preferences, and feedback from the consumers.

This market information is then passed to the producer, who will use this information to improve the quality of his product.

8. Helpful for seasonal demand: Seasonal demand is when a product, such as Christmas trees, is only needed for a brief period of time each year

Such commodities must be kept in storage until a particular time when their period is often high. Until they are needed, middlemen keep goods at their shops or warehouses.

9. Provide variety to consumers: Producers generally in the production of one or more related goods.

However, consumers want variety as they love to select from a variety.

The middlemen, or more specifically, the retailer does this, by buying goods from different wholesalers and then putting them on display for consumers to select the goods that they would love to purchase.

10. Promotions: Producing goods is not enough. Goods must be promoted and communicated to potential customers.

Producers usually lack the time and resources to effectively promote their products adequately.

Hence, they leave this function to the middlemen. 

Middlemen such as agents, wholesalers and retailers are known to be good at promoting products to stimulate demand for their goods and services. 

Bottom-line

The arguments in favour of middlemen are valid because the producers would have to perform the functions of the middlemen if middlemen are eliminated.

To argue that intermediaries cannot be eliminated would not be an exaggeration given that producers typically lack the skills, finances, and time to carry out the middlemen's tasks.

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