Page 453 - Foundations of Marketing

420 Part 5 | Distribution Decisions

Table 14.4 Services That Agents and Brokers Provide

Manufacturers’ Commission
Selling Agents Brokers
Agents Merchants
Physical possession of merchandise Some Some Yes No
Long-term relationship with buyers or sellers Yes Yes Yes No

Representation of competing product lines No No Yes Yes

Limited geographic territory Yes No No No
Credit to customers No Yes Some No

Delivery of merchandise to customers Some Yes Yes No
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prices, promotion, and distribution. To avoid confl icts of interest, selling agents represent
noncompeting product lines. They play a key role in advertising, marketing research, and
credit policies of the sellers they represent, at times even advising on product development
and packaging.
Commission merchants receive goods on consignment from local sellers and negotiate
sales in large, central markets. Sometimes called factor merchants, these agents have broad
powers regarding prices and terms of sale. They specialize in obtaining the best price possible
under market conditions. Most often found in agricultural marketing, commission merchants
take possession of truckloads of commodities, arrange for necessary grading or storage, and
transport the commodities to auction or markets where they are sold. When sales are com-
pleted, the agents deduct a commission and the expense of making the sale and turn over
remaining profi ts to the producer. Commission merchants also offer planning assistance and
sometimes extend credit, but usually do not provide promotional support.
A broker’s primary purpose is to bring buyers and sellers together. Thus, brokers perform
fewer functions than other intermediaries. They are not involved in fi nancing or physical
possession, have no authority to set prices, and assume almost no risks. Instead, they offer
customers specialized knowledge of a particular commodity and a network of established
contacts. Brokers are especially useful to sellers of products such as supermarket goods
and real estate. Food brokers, for example, connect food and general merchandise fi rms
to retailer-owned and merchant wholesalers, grocery chains, food processors, and business
buyers.

Manufacturers’ Sales Branches and Offices
commission merchants
Agents that receive goods on Sometimes called manufacturers’ wholesalers, manufacturers’ sales branches and offices
consignment from local sellers resemble merchant wholesalers’ operations. Sales branches are manufacturer-owned inter-
and negotiate sales in large,
central markets mediaries that sell products and provide support services to the manufacturer’s sales force.
Situated away from the manufacturing plant, they are usually located where large custom-
sales branches Manufacturer-
owned intermediaries that sell ers are concentrated and demand is high. They offer credit, deliver goods, give promotional
products and provide support assistance, and furnish other services. Customers include retailers, business buyers, and other
services to the manufacturer’s wholesalers. Manufacturers of electrical supplies, plumbing supplies, lumber, and automotive
sales force parts often have branch operations.
sales offices Manufacturer- Sales offices are manufacturer-owned operations that provide services normally associ-
owned operations that provide ated with agents. Like sales branches, they are located away from manufacturing plants, but
services normally associated unlike sales branches, they carry no inventory. A manufacturer’s sales offi ce (or branch) may
with agents sell products that enhance the manufacturer’s own product line.

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