Intermediaries

An Overview: Intermediaries 

The term “intermediary” came into use in the late seventeenth century in the context of commerce, especially international trade and finance. The word is derived from the French word for “go-between,” which originally meant a person or organization that used to transfer funds between parties. 

In other words, an intermediary can perform two functions: 

(1) act as a middleman between two parties; 

(2) act as an agent for one party in fulfilling a contractual obligation.

Business intermediaries serve as a point of contact between producers and customers. Business intermediates are independent professionals or businesses who distribute or otherwise sell the products of another firm to clients. The degree to which an intermediary is involved with clients and owns the goods they sell varies according to the sort of middleman they are.

You can think of an intermediary as someone who brings together two people or organizations to form a business relationship.

An intermediary may have one or more of the following functions:

• Providing sales and marketing services such as advertising, sales leads and promotional products
• Providing information about products and services
• Arranging for delivery of goods or services (delivery agents)
• Conducting warranty repairs
• Making claims on behalf of clients

Who is an Intermediary?

In an ideal world, the product is the core of the business and you don’t need to worry about marketing intermediaries at all. But we know that is not the case in most industries, especially highly competitive ones. In these industries, you will likely find a range of intermediaries which make it easier for customers to buy from your competition: from direct competitors like Amazon or Apple to social networks (like Facebook), personalization platforms (think LinkedIn or Pinterest), search engines (like Google or Bing), payment gateways (like PayPal), etc.

Role of Marketing Intermediaries in Brand Building

You might be tempted to think of the big-box stores, take-away restaurants, or big brands when you think of marketing. You can quickly forget that marketing is a secondary concern for most businesses. But when businesses do a good job by marketing and building awareness of their products, they usually make a strong brand value around their addressable market.

Today’s companies rely on marketing intermediaries — from print media to TV commercials — to increase brand awareness and build brand loyalty. The result is that companies with solid brands are often the ones most susceptible to capturing a huge market share in a competitive product segment.

Non-Contractual Intermediary

One might have heard about the term “non-contractual intermediary” a lot. But what does it mean? A non-contractual intermediary isn’t created by a legal contract but rather an unwritten deal between two traders that don’t want to involve themselves in formal contracts but works on mutual trust and self-interest.

Risks Involved with Non-contractual Intermediaries

Just as a trader might be happy to sell something for less than its real value, an intermediary can sell something for more than its actual worth. Most of the time intermediaries are not neutral on their part and might upsell products with inferior quality. Sometimes the risks involved with non-contractual intermediaries may become very high in a non-regulated market. Hence, one should be very careful when dealing in such markets.

Financial Intermediaries

A financial intermediary is an institution that acts as a link between a saver who deposits money in a bank and a borrower who obtains a loan from the bank. All contributed money is combined into one large pool, which is then lent out. A common example of a financial intermediary is a bank.

Banks significantly simplify the process by which a complex economy conducts the amazing variety of transactions that occur in the commodities, labour, and financial capital markets. Consider for a moment how the economy would function if all transactions were conducted in cash. 

When making a significant purchase or travelling, you may be required to carry huge cash in your pocket or purse. Even tiny enterprises would require financial reserves to pay employees and purchase goods. A bank enables individuals and companies to deposit money in either a checking or savings account and then withdraw it as required via a direct withdrawal, writing a check, or using a debit card.

Intermediaries

An Overview: Intermediaries 

The term “intermediary” came into use in the late seventeenth century in the context of commerce, especially international trade and finance. The word is derived from the French word for “go-between,” which originally meant a person or organization that used to transfer funds between parties. 

In other words, an intermediary can perform two functions: 

(1) act as a middleman between two parties; 

(2) act as an agent for one party in fulfilling a contractual obligation.

Business intermediaries serve as a point of contact between producers and customers. Business intermediates are independent professionals or businesses who distribute or otherwise sell the products of another firm to clients. The degree to which an intermediary is involved with clients and owns the goods they sell varies according to the sort of middleman they are.

You can think of an intermediary as someone who brings together two people or organizations to form a business relationship.

An intermediary may have one or more of the following functions:

• Providing sales and marketing services such as advertising, sales leads and promotional products
• Providing information about products and services
• Arranging for delivery of goods or services (delivery agents)
• Conducting warranty repairs
• Making claims on behalf of clients

Who is an Intermediary?

In an ideal world, the product is the core of the business and you don’t need to worry about marketing intermediaries at all. But we know that is not the case in most industries, especially highly competitive ones. In these industries, you will likely find a range of intermediaries which make it easier for customers to buy from your competition: from direct competitors like Amazon or Apple to social networks (like Facebook), personalization platforms (think LinkedIn or Pinterest), search engines (like Google or Bing), payment gateways (like PayPal), etc.

Role of Marketing Intermediaries in Brand Building

You might be tempted to think of the big-box stores, take-away restaurants, or big brands when you think of marketing. You can quickly forget that marketing is a secondary concern for most businesses. But when businesses do a good job by marketing and building awareness of their products, they usually make a strong brand value around their addressable market.

Today’s companies rely on marketing intermediaries — from print media to TV commercials — to increase brand awareness and build brand loyalty. The result is that companies with solid brands are often the ones most susceptible to capturing a huge market share in a competitive product segment.

Non-Contractual Intermediary

One might have heard about the term “non-contractual intermediary” a lot. But what does it mean? A non-contractual intermediary isn’t created by a legal contract but rather an unwritten deal between two traders that don’t want to involve themselves in formal contracts but works on mutual trust and self-interest.

Risks Involved with Non-contractual Intermediaries

Just as a trader might be happy to sell something for less than its real value, an intermediary can sell something for more than its actual worth. Most of the time intermediaries are not neutral on their part and might upsell products with inferior quality. Sometimes the risks involved with non-contractual intermediaries may become very high in a non-regulated market. Hence, one should be very careful when dealing in such markets.

Financial Intermediaries

A financial intermediary is an institution that acts as a link between a saver who deposits money in a bank and a borrower who obtains a loan from the bank. All contributed money is combined into one large pool, which is then lent out. A common example of a financial intermediary is a bank.

Banks significantly simplify the process by which a complex economy conducts the amazing variety of transactions that occur in the commodities, labour, and financial capital markets. Consider for a moment how the economy would function if all transactions were conducted in cash. 

When making a significant purchase or travelling, you may be required to carry huge cash in your pocket or purse. Even tiny enterprises would require financial reserves to pay employees and purchase goods. A bank enables individuals and companies to deposit money in either a checking or savings account and then withdraw it as required via a direct withdrawal, writing a check, or using a debit card.

Conclusion

Intermediaries have either an active or passive role in the commercial transaction (referring to the intermediary as a participant). Their roles include buying and selling, competition, price negotiations, establishing preference and payment terms, etc. In this article, “intermediaries” is used as an umbrella term to refer to all sellers who work with buyers to exchange goods or services.