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Good & Bad of Relying on Marketing Intermediaries

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Whereas the far and wide progressive marketing companies have begun developing a value network system to get directly products in the hands of consumers, but in Pakistan dependency on intermediaries are getting higher. Companies are heavily relying on a host of marketing intermediaries, enslaving themselves to this third party power. Besides compromising their core brands’ value, risking product/services quality lose and their consumers ended up paying an additional cost.

In Pakistan majority producers do not offer their products and services directly to final consumers. Between companies and end consumers there is a tall presence of marketing channels, a host of marketing intermediaries performing a variety of activities, keeping their financial vested interests? The idea is not to avail services of these marketing intermediaries, agents and facilatators, but heavely relying on their capability to deliver brand promise to craft brand value is a questionable process. Most of the local and foreign companies operating in Pakistan either not fully focussed or deliberating joined bandwagen to adopt slack marketing channel decisions, which are among the most critical decisions facing management because the company’s chosen channel(s) profoundly affect all other marketing decisions.

It is common practise that companies use intermediaries when they lack the financial resources to carry out direct marketing, when direct marketing is not feasible, and when they can earn more by doing so. The most important functions performed by intermediaries are information, promotion, negotiation, ordering, financing, risk taking, physical possession, payment, and title. But in Pakistan there is flip effect, companies even a reasonable resources are shifting burden to marketing intermediaries because of companies’ lack of businesses seriousness. One example, which I always consider a big mistake, is not having marketing department to market their brands.

Manufacturers have many alternatives for reaching a market. They can sell direct or use one-, two-, or three-level channels. Deciding which type(s) of channel to use calls for analysing customer needs, establishing channel objectives, and identifying and evaluating the major alternatives, can be better operative if it can opt for direct sell.

A value network is one big misunderstanding for Pakistani companies. They are only focused on financial value, ignoring companies’ suppliers, their suppliers’ suppliers, their immediate customers, and their end customers. It is utmost necessary that they should identify their and set up a value network for the company by compare and contrast the components of the value system to a competitor. To be success in the market companies should identify the components of the value network that produced the augmented offering.

14 Comments

  • Ahmed Khan Babar

    Removing or reducing this practice can benifit both the company and the customet.
    Customer is always in the need of the product directly from the producer ,without doubts it is more trustworthy for him and the source is clear near him .
    In addition to many other issues as mentioned the suppliers are also adding up fake goods in the products they are supplying to their customers that is a big issue for customers as well as the brand name it self .
    The fake unilever , PnG , Pepsi etc products being manufactured and added by the suppliers in the local markets is not a hidden thing at all in Pakistan

  • Iqra Rasheed

    The loopholes in the “value network and the elevated levels of intermediaries” of the companies have very righlty been highlighted in the article.
    In addition to that if I talk from the consumers’ prespective, there is an increased dubiety when the customer has to make a purchase from any of the intermediary because for them “quality comes first”; “counterfeit” is another major concern of the consumer when buying from any intermediary; augmented distrust about price i.e “Price-consciousness” being one of many other fears is there because consumers’ pocket is involved. Majority of the consumers are so complacent with the final producer that they are just not convinced about the idea of buying from any third party at all which has given them fair vindications about not adding up layers of middle men for reaching out to the final consumer.

  • Rana Ijaz Ahmad

    This is the need of small and medium size companies to rely on intermediaries due to lack of financial resources, unawareness of the buyer market, smaller setup of networking and distribution system. According to my opinion it is beneficial and in greater interest for smaller and medium size companies to rely heavily on intermediaries to increase sales and gain buyers of your product but in case of big organizations and well known brands, this extra cost should be bear by company to build customer values.

  • M. Usman Jamil

    What I have experienced in past seven to eight years working with different manufacturers as distributor, majority of middle level and upper level manufacturers in Pakistan are not willing to work on both manufacturing and selling directly to consumers at a same time. They are ready to pay incentive to middleman for selling their product to consumers so that they themselves can totally focus on production department. Production itself is one hardcore duty. Unless and until a manufacturer does not builds a separate department to control production and hire specialists like engineers, it is not possible that a production department runs on labor only. Manufacturers here in Pakistan are not willing to hire specialists on high payrolls. So they lack this opportunity of production department running on its own. Owners in manufacturing industry supervise production by themselves and so are not able to work on sales.

  • Salman

    in case of smaller companies involving intermediaries can be more beneficial financially. But big companies which are actually in dire need to develop these departments are intentionally lacking in corporate culture development at their organizations. and the main reason here in Pakistan is the lack of awareness on customers side, due to which they are even then performing well even in the absence of promotion, negotiation, ordering, financing, risk taking, physical possession departments.

  • Faizan Mahmood

    Expelling or decreasing this practice can benefit both the organization and the customer. Client is dependably in the need of the item specifically from the maker ,without questions it is more reliable for him and the source is clear close him . Notwithstanding numerous different issues as said the providers are likewise including fake merchandise in the items they are providing to their clients that is a major issue for clients and in addition the brand name it self . The fake unilever , PnG , Pepsi and so forth items being fabricated and included by the providers in the nearby markets is not a shrouded thing at all in Pakistan

  • Namra Nadeem

    For local companies the idea of marketing is considered fancy which is only required if they need to advertise something to the target market so they merely focus on it. They do not value the dire need and the “real job” of the marketers. Developing a great product is not even close to a 50% deal done in constructing value chain network for the consumers as well as the company itself but it is just the initial step. Companies need to agree to the fact that they will not be able to make revenues for a longer term until they invest and get specialised in the essential elements which will make their product a “brand”.

  • Ezaaz Waseem

    In certain cases this idea of having market intermediaries is must like Amazon.com and Ali Baba cannot rely without these and so is the case with tech giants Dell which the work fails to understand has been once a good assembling brand combining best parts to make one product and nothing in it was their own at all beside the name tag Dell.
    This philosophy was widely copied by Chinese companies. However, in Pakistan the culture of research or trying something new is missing. It is either due to a fear of failure or simply a major cash drain. What companies fail to realize is that investing in R&D is always beneficial and if not success then companies learn what they shouldn’t do else they will fail. This courage and obviously the research culture as a whole is missing in our nation.
    Beyond that I would like to highlight that intermediaries are mostly managing a huge array of responsibilities for more than a dozen companies at minimum and they will never take ownership of any idea or company’s marketing vision.
    Therefore, I feel it is imperative to thoroughly research over pros and cons of carrying out marketing with or without intermediaries. It all depends on companies’ leadership as well.

    I also had a blog written three and half years back about how ideologies can make or break a company. It might be somewhat irrelevant here but I would love to share this since it carries the concept of vision and it is the vision that Pakistani brand managers (so called) need to excel locally and more so globally.

    https://www.techjuice.pk/idea-can-change-life-ideologies-can-change-lifestyles/

  • Rehan Mir

    The idea of having marketing intermediates in Pakistan is because of the invisible hand of third parties exerting political or financial pressure on the brand. The strategy of the brand is more dependent on the loop holes of Pakistani law and justice system. It is also the reason because of which big brands work differently in Pakistan unlike international market.

  • Mohammad Ali

    The best example I can quote here is that of Apple. A company which never relies on any distributors or intermediaries. They have Apple stores where people go and buy products with all the assistance provided by the Sales Staff. The Sales Staff are not their to push the customer to buy some product so that they can pocket in some commission. Rather, they are there to guide the customer. They talk to the customer, engage them, show them how an Apple product functions and how they can use it to their convenience. And even after sales, if a customer comes back with any defects in the product, the Sales staff are able to fix the problems on spot.
    This practice can never take place if a company relies on third parties. In Pakistan most companies are just trying to make sure that there product, one way or the other, ends up in the hands of the consumers. That is why they are overly relying on a third party who serves the purpose.

  • Bilal Zaheer Butt

    Having a third party managing some part of the business is useful in one way or the other. But this also poses a threat to the impact a company wishes to maintain in the eyes of its customers. Not having a marketing department is a disaster in itself for any company who are striving to achieve their desired market share. Third parties needs to be managed and controlled in such a way that the overall control remains with the parent company and decisions are properly channeled through the higher management of the company.

    In Pakistan, third party concept is gaining grounds and companies seems to be reducing their overall liability towards their end consumers.

  • Haider ali khan

    The most important thing for consumers is to have their requirements fulfilled at lower prices. By having intermediaries in the middle, unnecessary cost is added to the company’s expense. If this cost is instead used to develop marketing department internally, that would have an extremely positive impact on the company’s health. By this I mean, an internal marketing department would be inline with the philosophy of the company and this will produce better results. It may reduce expense of the company and the overall quality of the products.

  • Wajeeh Ul Hassan

    Cannot agree more!
    One thing I would like to add here is that approach towards outsourcing to intermediaries by the companies is totally dependent on three factors:
    1- Brand Competition – brand competition exists between similar products
    2- Substitute competition – this competition exists between products that satisfy the same needs
    3- General competition – In a general sense it is the way every company competes for the share in consumer’s budget
    It means it depends on the existing scenario of the competition within the region where the brand is present. Having strong brand, substitute and general competition forces the companies to showcase their strength at maximum whereby they engage with end consumers directly because they cannot afford to loose a single consumer just because a third party was unable to deliver their values.
    On the other hand where mediocre competition exists the companies mostly remain dormant in this aspect.

  • Ushna Sabir

    In case of Pakistan, there are many social, legal, economic as well as political pressures that are faced by the brands. In this regard, the role of marketing intermediaries is very important as they can effectively activate the brand and improve its perception among consumers. The marketing intermediaries are however dependent on the system being run in this country which has many bad practices. Due to such a thing, mainstream brands have a different working strategy as compared to their counterparts in other parts of the world.

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