Differences Between Intermediaries & Dealers in Marketing
One of the most-challenging aspects of marketing a product is getting it to the consumer. If you are a baker baking and selling goods directly to customers on a local scale, you won't need to use intermediaries. However, if you want to expand your business and sell your product to a greater number of customers over a wider geographical area, you will have to set up a distribution channel of one or more intermediaries -- some of which may be dealers.
Distribution Channels
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In marketing, a distribution channel refers to the chain of businesses that a product must pass through before it reaches the customer. For example, a bakery sells muffins to a wholesale distributor of baked goods; those muffins are then shipped by one or more trucking companies and resold to a specific supermarket or convenience store. Large manufacturers may rely on many channels of distribution, each of which are composed of intermediaries.
Intermediaries
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The term intermediary is used by economists to describe any business in a distribution channel between the manufacturer and the consumer. There are several different types of intermediaries. A wholesaler, for instance, is a type of intermediary that buys large volumes of products from many manufacturers and then sells them to other intermediaries. A retailer sells directly to consumers through some form of store, including a physical retail store, catalog or an Internet site. A value-added reseller is an intermediary that buys a product from the manufacturer, improves it and then resells it.
Dealers Versus Other Intermediaries
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The term dealer is used to describe a specific type of intermediary that is not a retailer, value-added seller or wholesaler. The term dealer can refer to both a company or an individual, and can describe an intermediary that buys directly from the manufacturer or from another intermediary. Unlike a wholesaler, a dealer represents the end of a distribution channel and sells a product directly to the consumer. A dealer is distinct from a value-added seller because a dealer does not alter a product. Whereas a retailer -- such as a department store -- may sell a variety of different types of products, a dealer specializes in one type of product.
Dealers Versus Renters
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The term dealer can also be used to distinguish between an entity that permanently sells products to a customer and an entity that rents products to a consumer. This is true of the automobile industry, where an "auto dealer" describes the last intermediary in the distribution channel and is distinct from a rental agency. However, a rental agency that sells used rental cars directly to consumers can also be referred to as a dealer.