Consumer Goods – Evaluation Of The Roles Of Middlemen In Distribution

Consumer Goods – Evaluation Of The Roles Of Middlemen In Distribution

In the Nigeria market, many producers do not sell their products directly to the final consumers, normally we see the consumers performing one task or the other.Busch and Houston propounded the gap theory. The gap theory is of the premise that marketing need not exist until a social economy reaches the point where the producers of economic goods are not the consumers of same. This situation creates a separation a gap. Anyanwu (2000. 26). For this gap to be bridged there must be intermediaries or middlemen like the wholesales, retailers, merchant middlemen, Agent middlemen, commissioned and non commissioned agent etc.

These people buy from the producers and resale or make it available to the consumers/users.

Marketing intermediaries (middlemen) are indispensable in the distribution of consumer goods and services.

People may ask why marketing intermediaries are used, “Why do producers give the selling jobs to intermediaries? Why don’t they distribute these goods themselves?, because giving the rights to middlemen means giving up some control over how and whom the products are sold to. According to Kotler (1998:358) “The use of intermediaries results from their greater efficiency in making goods available to target markets, though their contacts, experience, specialization and scale of operation usually offer the form and consumers more than it can achieve on its own” but with a price.

Many allegations have been leveled against the middlemen/marketing intermediaries, for raising price of consumer goods and creating artificial scarcity. Some commodities like: beans, rice, Garri, kerosene etc due to they can be stored or preserved have been made scarce artificially and it has attributed to the unethical activity of some middlemen, consumers have associated the adulteration of goods to middlemen, some also argue that middle men do not create time utility, that they are exploitative, they unnecessarily increase the price of products.

Production department is responsible for producing the product (form utility) then marketing comes to stage to make the product available to the consuming public through physical distribution (possession, place and time utility). This study is to find out whether the role of middlemen is important to the consumers and the firms or not.

Inyanga (1998: 423) attributed the raise in the cist of moving goods to consumers to the use too many channel members. There are too many actors in the physical distribution of consumer goods, before goods can get to the consumers it must have passed too many middlemen and all of them would wants to make profit, by the time the final consumer buys, the price has soared to an unbearable height.

It is on the bases of these allegation that Daodu (1984:18) referred to the Nigerian middlemen as robbers and social Cankerworms who take undue advantage of their strategic positions to control the channels of distribution to exploit both consumers and producers.

However, the question is, are these allegations true? If yes, should the middlemen be eliminated? If not what should be done by the consumers and the producers to put a stop to those exploitation and unethical behaviour of the middlemen in the distribution of consumers goods in Enugu metropolis and find a lasting solution to the problems of artificial scarcity and high price of consumer goods


One thing is to produce goods and quite another to make the goods available to the ultimate consumers. It is known that production is not yet complete until the goods produced reaches the final consumers for production to get to the ultimate buyers the firm or producers engages the services of the middlemen. The middlemen helps in making goods available as at when needed and always. The middlemen make sure that the goods are delivered at the right time, place, condition, and at a comfortable price.

In their bid (middlemen) to discharge this duties or function; have encountered many problems.

There is the geographical or spatial gap. This is caused by the distance between the producers and consumers; that is from the places of production to the places of consumption.

There is the places information separation gap. This problem arises because consumers do not automatically know about the existence of goods and the reason why they should buy it.

There is the time separation: occurs because there is usually a time lag between the production of goods and the consumption of such goods. Under this time lag there is artificial scarcity. All this problems and gap must be bridged.


This research was carried out to find solutions to problems associated with the role middlemen play in distributing consumer goods. Our goals are:

1. To know the roles played by middlemen in the distribution of consumer goods.

2. To ascertain if consumers are satisfied with the role of middlemen.

3. To know how middlemen have contributed to the economic development of the state.

4. To know whether middlemen should be eliminated or not in the distribution of consumer goods.

5. To determine the major problems encountered by middlemen in the distribution of consumer goods.

6. To access the progress made by middlemen in modernizing their operation.


Two hypotheses have been stated for the purpose of the researcher work. They are:

1. (Ho1)

There are no significant relationship between the activities of middlemen and consumer satisfaction.

2. (Ho2)

Adulteration and high price of consumer goods does not depend on the activities of the middlemen.


Marketing will be incomplete after everything without realizing the role middlemen play in the sustained growth of the economy and improvement of standard of living of the people.

This research will help the consumer in Enugu metropolis, the manufacturing firms and the entire economy of the state.

If the role middlemen play in the distribution of consumer goods will be appreciated, it will go a long way in improving the standard of living of the people, the firm and the middlemen themselves even Enugu and Nigeria as a whole will be a better place to live in.

Industries revenue will be improved since more customers will be discovered in the target Market at the long run. It will boast the revenue of the state.


Consumer goods:

Goods destined for use by ultimate consumers or households and in such form that they can be used without commercial processing.

Physical distribution:

The management of the movement and handling of goods from the point of production to the point of consumption or use.

Channel of distribution:

The structure of intra company organization units and extra company agents and dealers, wholesale and retail, through which a commodity, product or service is marketed.


A business concern that specializes in performing operations or rendering services directly involved in the purchase and/or sale of goods in the process of their flow from producer to consumer. They are also known as intermediaries.


The satisfaction derived when a particular product is being consumed.


This is the creation of a fake or counterfeit of the original product either offering it as a whole fake or mixing the fake with the original product.



“Marketing consists of business related activities that seek to anticipate demand, help in developing and making the goods/services available to the satisfaction of the consumers/users, and at a profit to the organisation”. Anyanwu (2000:21).10

Again marketing itself is typically seen as the task of creating, promoting, and delivering goods and services to consumers and businesses.

According to Kotler (1994:98) marketing mix is a set of marketing tools that a firm uses to pursue its marketing objectives in the target market. Mc carthy popularized a four-factor classification of these tools called the 4ps, which are: product, price, promotion and place (distribution) marketing mix decision must be made for both the channel and the final consumers.

According to Ifezue (1990:13) he said that the four elements of the marketing mix is inter-related, that decision in one affects the other. Price is equated with the value or worth of the product, if the two are not in line, exchange is hampered and the potential satisfaction is not realized. Just as the place (distribution) itself is as important as product. If the utility of the product is to be fully appreciated, it must reach the final consumer, better still, in the form and time desired. All the decision about the three mentioned above will still affect the promo tool the marketer decides to use, because consumers should be notified about a product in the market and why they should use that particular product.


One good marketing task is to produce product of good quality, price it well, and promote it effectively, but quite another great task to get it or make the product get to the point of consumption in the form, quality, and time the consumer wants it.

A channel of distribution is a route over which goods move from the producer to the user. In a simple society producer and consumer are in close proximity to each other. As the society be comes more complex, moving goods from producers to widely dispersed users become complicated and channels must be set up to ensure an economic flow of produced goods from the manufacturer to his market.

Marketing channels have their economic importance: which are:

Market channels play a far more important role than the mere transporting of goods from producers to users. The economic functions of various institutions that make up a channel are; cost reduction, financing storage, cooperation in setting prices, communications link between buyers and user, promotional assistance and reduction of the number of transactions.

According to Jay Diamond / Gerald Pintel (1980:283) there are many choices of channels. Marketers can select the one that is best suited to the characteristics of their product and their other requirements. The most widely used six channels for distributing consumer goods are:

 Producer Consumer

 Producer Producer –owned retailer Consumer

 Producer Franchised retailer Consumer

 Producer Independent retailer Consumer

 Producer Wholesaler Retailer Consumer

 Producer Agent middlemen Retailer Consumer


This is simply where the producer of a product sells or reaches to their consumer directly without using any middlemen. In this case the producer deals directly with the consumer or user of his product. The producer of goods may reach his consumer directly by two methods of selling: door to door sales person (Avon products, Fuller Brush) and direct mail (many small manufacturers) Again the fast food operators, who sell directly to their customers without going through other retail outlets. Direct selling to the consumer has its advantages to the manufactures:

1. Ability to control selling since the sales force is directly under the producer’s supervision.

2. Close relationship to the consumers makes the manufacturer constantly aware of style changes and other consumer needs.

3. Profits do not go to middlemen.

4. Goods gets to the consumer more quickly because they do not travel through the middlemen.

5. Certainty that the sales force is properly trained if technical knowledge is required to sell the product.


This is a case where manufacturers or producers maintain their own retail outlet where he sells his own products, for instance in Aba, Ariaria market where a producers produces his own shoe and takes it to his numerous retail outlets, he might have shops everywhere; Enugu, Onitsha, Lagos etc, if he produce he takes it there for sales, without having to sell through any middlemen or numerous intermediaries. And in that retail outlet, only the producer’s products are sold there. Even when they have a contract with a retailer they give them their terms which is: that only their own product will be sold there any day they find out that the outlet sells another product that is not their own they might withdraw the contract. Example is MTN phone office, where only MTN phones are sold anything aside MTN phone is not sold there, in Enugu, Ogui Road.

Many manufacturers such as singer sewing machines, thom MCAn shoes maintain their own retail outlets for the following reasons:

i. The effect and expense of training, maintaining and supervising a large sales staff.

ii. The difficulty of providing and maintaining inventories of goods at many locations to assure prompt delivery to customers.

iii. The enormous cost of financing and high risk involved in carrying multiple inventories and customers credit that would otherwise be shared by channel members.


A franchised contract is a legal agreement to conduct a given business in accordance with prescribed operating methods, financing systems, territorial domains, and commission fees. It holds out the offer of individual ownership while following proven management practices. The holder is given the benefit of the franchiser’s experience and help in choice of location, financing, marketing, record keeping and promotional techniques. The business starts out with an established product or service reputation. It is organized and operated with the advantage of “name” and standardization. This broadest definition is given by the small business administration.

Here a franchiser (producer) makes his profit by selling his product to a franchisee, others profit by charging a commission on all franchisee sales.

This simply means that a body or company that is not the real producer of a product obtains patent right from the real producers to market their product. Example of such consumer goods under franchise is Mr. Biggs in Ebonyi State. The person operating or that owns Mr. Biggs in Abakaliki in person of Obinna Ogba, but operating as Mr. Biggs. In this sense he obtained a patent right from the real owner of Mr. Biggs. If anything happens nobody knows Obinna Ogba, but Mr. Biggs, therefore Mr. Biggs will be liable. In this case he has the established product or service reputation, then the advantage of name standardization of the real producers. Another Example is the new CHITTIS in Abakaliki obtained by Mr. Uzo Nweke Uzo. This is simply obtaining or using a brand name of a company. These franchisee pay a certain amount of money to the franchisers for the patent right, sometimes in form of commission or royalty.


This kind of consumer distribution is mostly found were there is high-value goods, goods sold in large quality and goods or products that required installation. This is because the manufactures may not bear the cost of transporting these products to their various destinations or areas of consumption; therefore they make use of independent retailer. He buys the product in large quantities and put make-up cost to recover their money. They are called independent retailers because they stand on their own and buy or sell the kind of product they want, unlike the producer-owned retailer who sells only their producers product, but the independent retailer buy from any producer, he buys assorted kinds of product and sell them at ones, any body that wants a particular one chooses from his assortment. He does not sell a particular brand. Among the goods that are frequently sold in this way are:

(i) Fashion Merchandise, for which the time lost in distributing through middlemen, is an important factor.

(ii) High-value goods whose make up offsets the additional distributing costs to the manufacturer.

(iii) Goods sold in large-quantity individual orders, which minimizes transportation costs.

(iv) Products requiring installation.

Example of independent retailer of consumer goods are P.E.N., Okolo of 18 New market Road, Abakaliki, who buys product of Nigeria Breweries and other company’s product which buys in bulk and sell to consumers or others. Another person is Dr. Mike Okoro (vote For Jesus) who is an independent retailer of Cadbury product in Aba, Abia State.


The most common method of distribution is one in which the producer sells to the wholesaler who in turn sells to the retailer, who sells to the consumer. The wholesalers buy in bulk, and sell to the retailer who buys in smaller quantity for the consumer. In this channel system, the wholesaler is granted a part of the total profit, in return for which he or she buys, stores, sells, delivers and extends credit. It is not unusual for a producer who sells through wholesalers to reserve the right to sell directly to certain classes of retailers.

According to Ifezue (1990:p.33) this channel is often referred to as the “orthodox tradition” or customary channel for consumer product. It is the most widerly used of all the channels. The channel is also greatly encouraged, particularly where the unit value of the product is very low.


According to J. Diamonds/G. Pintel (1980:p286) the function of an agent-middleman is to buy or sell merchandise for clients. Agricultural products are examples of goods that are bought and sold by agent –middlemen. The buying or selling may be for wholesale or retail clients. Agent-middlemen do not own the goods they sell, the merely arrange for the sell. The following agents can be identified.

i. Auction companies: Provides a place where buyers and sellers can come together and complete a transaction. The companies operate by sending catalogues to prospective buyers and then taking bids at the time of the auction. The highest bidder purchases the product. They work in one time basis for a commission. They sell such products as tabacco, used cars, artwork, antiques and other products that vary widely in quality.

ii. Brokers: According to Busch and Honston, (1985), brokers are the most important functional intermediaries in terms of sales volume. They buy or sell on behalf of their principals. A broker operates on a single transaction. The principal service provided is price negotiation, so brokers tend to be concentrated in highly standardized line that can be bought or sold by description, such as agricultural raw materials, wide seasonal variations in output favour the use of brokers. They are common in fields like real estate and agriculture where there are mainly buyers and sellers and no central market for exchange. They bring buyers and sellers together, acting on behalf of one or the other. Their profit are derived either on the basis of an average commission on value, or a commission on volume or a pre-fee based on sale. There are del credere agents who received additional commission for undertaking the risk of dept collection from the buyers they introduce.

Brokers specialize in narrow lines of products. Specialization is important since the brokers value lies on their deep knowledge of particular markets and market condition.

iii. Manufacturer’s agents: Perform few functions and assume less risks. They handle only part of a producer’s output. They have warehousing facilities from where local deliveries are made, goods being held on consignment. They may represent many manufacturers of non-competing but complementary products. Examples include rooting siding, paint supplies in the building trade and tyres, batteries stock absorbers etc, in the auto supplies.

iv. Commission merchants: They play important role in the sale of goods. They take physical possession of the merchandise, arrange delivery to buyers, negotiates prices and collect and remit proceeds of sales. Payment is by a fixed rate of commission.

v. Selling agents: Are found where small manufacturers wish to be relieved of marketing responsibility so that they can concentrate their lean resources in production. The selling agents work closely with the manufacturer(s) over long periods and they have complete responsibility over sales. He may sometimes supply advice on product style and design. Some sales agents work for one principal but majority of them carries the risks of credit loss and have considerable discretion over selling prices.

vi. Export and import agents: May take any of the form already discussed. The only peculiar aspect is that they operate in international trade. Anyanwu (2000:p. 175). It should be understood that the channels of distribution available to producers are not limited to those listed above.


According to Inyanga (1998:p. 411) various authors have defined the term channel of distribution differently but they all point at one goal. The routes followed by goods and services from places of production to places of consumption or useage at the right quantity, place, time and in full possession by the user. Lets look at simple definitions by authors:

According to Kotler (1994: p.26) marketing channels is viewed as set of inter-dependent organisation involved in the process of making of product or service available for use or consumption.

According to J. Diamond et al (1980:p281) channel of distribution is a route over which goods move from the producer to the user.

According to Bushings (1995:p32) “A channel of distribution is considered to comprise a set of institution which performs all the activities utilized to make a product and it’s title from production to consumption.

Channel of distribution is the structure of intra-company organisation units and extra-company agents and dealers, wholesaler and retail, through which a commodity, product, or service is marketed.

From the researchers view, channel of distribution is the route which a product/service takes from the place of production to the place of consumption or usage at the right time, place, quality and form it is needed to the satisfaction of the consumers and profit to the organisation.

Marketing channel decisions are among the most important decision that management faces that will directly affect every other marketing decision in a company or firm. Each channel system creates a different level of sales and costs. Once a particular channel is adopted by the firm, the firm must adhere to it for a substantial period. Thus, in marketing channel, middlemen perform channel function more effectively than the manufacturers can.


There are a number of factors that must be considered when a channel of distribution is to be selected. Many choices are available, so that a careful study is required before a decision can be reached that will fit, the problems of the specific institution to the best channel of distribution. Some of the guidelines are:

i. Study the channels that are available, particularly those used by competitors.

ii. Determine the channel that will best march the characteristics of the product to be marketed.

iii. Estimate the probable demand for the product.

iv. Consider the available financial resources

v. Approximate the costs, sales and profits for each available channel.

vi. Determine the size of the product line and the amount of a typical order.


It is rare to find a product so new that no similar product is being distributed. Before making a distribution decision, the channels of distribution being used by similar products should be studied. The distribution procedures used by competitors requires careful analysis to determine their adequacy, profitability cost, and effectiveness.

The present trend toward broadering retail offerings has complicated channel selection. There are no longer clear indications of product channel requirements. Twenty years ago, a drug manufacturer distributed through channels whose sales force called on drugstores. At present, drug items are being sold in supermarkets, variety stores, departmental stores and door to door. Since each system requires a somewhat different channel, it is common place to move the same item through several different distributional channel.


Goods may be broadly classified into two areas, wholesale and retail within each classification further breakdowns may be made into more specific categories. In the determination of the type of channel to be used, the distributional requirements of the specific item to be sold are perhaps most significant. The characteristics of each product are unique and the manner in which it is distributed should be based on its necessities. For example perishables must get to the consumers quickly. The same is true to fashion merchandise. Heavy equipment, whose installation requires a technology that only the manufactures can provide, must be sold directly. Seasonal goods, which requires large investments in inventory, may need middlemen to help with the financial burden.

Although the nature of the goods dictates their channel treatment, other considerations must also be taken into account. The financing of large inventories can be done through wholesalers, but this is not mandatory for a manufacturer with ample funds. Again, it is not impossible for the producer of heavy equipment to find a distributor middleman whose staff has the know-how to handle the installation problems, or perhaps the middleman can sell the equipment and the responsibility for installation can remain with the manufacturer.


Since the function of the channel of distribution is to get the goods to the customer, the channel must be based upon customers, their habit and their convenience. A product that is retailed only in hardware stores must be sold in hardware stores, and if manufacturers are unable to economically sell to such stores, they must set up a channel that will include wholesalers who distribute to hardware retailers on the wholesale scene, manufacturers who habitually buy manufacturing supplies, along with other merchandise, supply houses, are likely to change from the procedures to buy a particular type of supplies directly from the producer.

The geographical location of the market is important. The producer of a product that is to be distributed nationally must weigh the decision to market through wholesalers or to get up and maintain a nationwide network of distribution centers.


The system of distribution used by many firms is dictated by their financial resources. Small firms, of limited financial strength, are often forced to select channels by cost rather than by effectiveness. Frequently, weak producers select channels for the financial help they get in carrying inventories and extending credit. It is not unusual for a financially strong wholesaler to lend money to a manufacturer to ensure the continuation of high production.


In a highly competitive market, the price the final user of the product will pay depends more on the market than on the wishes of the producer. The channel profit, the difference between the producer’s cost to manufacture and the selling price paid by the user, is available for distributing the product and return on investment for the producer and the various institutions that make up the distributive channel various channel members demand various shares of this profit. Consequently, the make-up of the channel depends on large part on the approximate amount of profits available in the product. For example, if the difference between the cost to produce the item and the selling price to the user is 40percent the channel selected must be one whose members are willing to perform their functions for a share of the 40%. Each channel member is paid according to the function he or she performs. A food broker, whose responsibility is limited to selling, is paid 2 to 5 percent of sales, general line grocery wholesaler who store goods, give credit, deliver, and sell, operate on approximately 10percent of sales, which channel the product can afford can be determined by approximating the cost, selling price, and profitability of the item.


As a rule, middlemen can be eliminated when a sales person can make a living carrying the product. a salesperson can make only a limited number of calls per day. If the typical order is too small to pay for his or her salary, middlemen, whose sales force carries many products, must be used orders increase in size as the size of the line and the selling price per unit increase. Manufacturers of extensive lines of merchandise or high-priced merchandise are more likely to have their own force than single product, low-priced producers.


Physical distribution here is the management of the movement and handling of goods from the point of production to the point of consumption or use, it is the term used to describe all the activities that have to do with planning and implementing the movement of goods from manufactures to the buyers dusks.

A product is not a product until it gets to the final consumer at the right place, right time, and right form it is required to the satisfaction of the user. Or a product is regarded as such when the physical distribution have been completed, that is when the product reaches the point where the producers of a product are not the consumers of same. This process of moving goods and services from one location to the other is the concept of physical distribution. It therefore consists of all activities that are involved in physical distributions, which are. Transportation, storage, warehousing, risk bearing, delivery etc.

According to Zik mound (1980:p382) physical distribution is a term employed in manufacturing and commerce to describe the long range of activities concerned with efficient movement of finished product from the end of production time to the consumer.


After the channel of distribution have been determined and the physical distribution concept as well, a manufacturer must decide upon the number of members that should be installed at each level of distribution. This can be thought of as the degree of intensive at which manufacturers wants the product to be marketed. Although there are many degrees in between, this topic can best be discussed in terms of intensive (mass) distribution, selective and exclusive distribution.


Highly competitive convenience goods – for which customers will not go out of their way to buy and for which substitute are readily available – require maximum exposure and mass distribution. Goods such as cigarettes, candy, toothpaste etc. should be placed in every available outlet. Since the extent of distribution is vast, merchant wholesalers are an absolute necessity.


Selective distribution is the practice of distributing through a carefully selected channel in each geographical area. By carefully choosing the institutions through which the goods reach the consumer.

Selectivity can reduce credit risks by limiting sales to those stores that are financially secure. By limiting the accounts to be sold, marketing costs are reduced. Since the shipments are larger and fewer, transportation costs drop. In addition, fewer customers mean fewer sales people. Selling only to retail leaders who advertise extensively reduces the producer’s advertising costs. And most firms that distribute their products on a selective basis feel that the small loss in gross sales resulting from this system is more than offset by a considerable increase in profit.

The chief disadvantage of selective distribution is the difficulty most firms have in getting the desired high-volume, prestigious retailer to handle their lines.


Exclusive distributions are granted by some manufacturers to wholesales and retailers. Wholesalers guarantee that they will not sell their products to any competitors in the area. Exclusive distribution has the effect of including the dealer as part of the producer’s organisation. Generally, exclusive distribution either on the wholesale or retail level is awarded to the channel member in compensation for a specific service performed.


The ideas of a well-planned and co-ordinated system of physical distribution was not realized in commerce and industry until the late 1950’s.(Taff-1984:p. 14) has reported that a research concluded on behalf of the united state, National Council of physical distribution management, found that physical distribution cost over 10% of sales revenue for manufacturer and over 25% for reseller companies. The total cost of physical distribution, transportation account alone 46% for manufacturers and 28% for reseller companies (Olakunon 1993:p. 92).


Stanton (1994:p. 74) identified physical distribution areas of consumer goods as follows:

i. Choose the inventory locations and establish a warehousing system.

ii. Establish a material handling system

iii. Maintain and inventory control system

iv. Develop procedures for processing orders.

v. Select method of transportation.

Any decision made on one of these activities affects the others. Location of a warehouse influences the selection of transportation method and carriers. The decision on carriers influence the optimum size of shipments and so on.

Therefore, in physical distribution of consumer goods, management must deal with a large number of responsibilities associated with this activities and it requires statistical and mathematical techniques to achieve a considerable result.


That products get to the final consumer or users from the production point is a task performed by the channel members (middlemen). In attempt to perform their basic function, they perform the following tasks.

The general functions or roles of middlemen have been summarized by Inyanga (1998:p419:420).

i. Research: Middlemen help in gathering information necessary for planning and facilitating exchange for both the manufacturer and themselves.

ii. Promotion:

The middlemen helps in the development and dissemination of persuasive communication about the offer and influencing the buyer to favour the product or its sponsor. Through advertisement, auctioning, outlet display, billboard display etc.

iii. Contact:

The middlemen helps in searching out and communicating with prospective buyers. And they are the link between the manufacturers and their consumers.

iv. Matching:

The middlemen perform such functions shaping and fitting the seller to the buyer requirement. This includes such activities as manufacturing, grading, sorting, assembly and packaging.

v. Negotiation:

The middlemen’s attempt to reach final agreement on price and other terms of the offer, includes negotiation, in other to transfer ownership of possession.

Vi Physical distribution:

This is seen as transportation. Moving of goods from the place of production to that consumption. And this transportation function lay heavily on the middlemen who are responsible for delivering goods to the consumers.

Vii. Storage

Storage creates time function. It is involved with the holding of goods from the time of their production to that of their final sale. This is also another role of middlemen. It is a very complex and difficult task because some goods in their possession might get spoilt or deteriorate before their final sale.

viii. Financing:

The middlemen helps in financing marketing activities, they offer the manufacturers financial help to ensure the continuation of production activities by paying their ordering money before the actual time the products will be ready.

Ix. Risk bearing:

The middlemen share in bearing the risk of what comes out in their activities. The assumption of risk in connection with carrying the necessary inventory anything can happen to the goods on transit or at any other time.

x. After sales service:

This is another major role of middlemen, since the consumers do not know the manufacturer of their product they consume or the are not in close contact with them the after sales service falls back at the middlemen who sold the product to them. The middlemen ensures that the consumers are well satisfied.

All these and many others not mentioned constitute the roles or functions of middlemen.


Despite the vital roles performed by the middlemen the manufacturers and the consumers have criticized them; here are some of their shortcomings:

1. Adulteration:

This is the creation of artificial products to compete the original product or reducing the quality and quantity of the original product. The middlemen are guilty of this allegation. Sometimes they put a fake product in original pack.

2. Hurdling:

This simply means creating artificial scarcity. The middlemen in their bid to make more profit create artificial scarcity by keeping back products and refusing to sell it till the product is scarce, they start selling it above the normal price. This affects the distribution of consumer goods and price of the product.

3. Poor or lack of storage facilities:

The lack of storage facilities is another limitations of middlemen. They do not have the necessary storage facilities for their product. Sometimes this results to the low value of product. Some of the products spoil on their way, their by causing loss to the middlemen, and their middlemen on their own increase the prices of the remaining ones so that they can make up on the ones lost.

4. Lack or poor transportation facilities:

Another limitation of middlemen in carrying out their duties or the things they encounter in their day to day activities is the poor transportation routes and facilities. The roads are bad and the cars bad as well. The roads are very bad that it spoils cars making the drivers weary in trying the routes, the ones that accepts to go to that at a very high cost. This also affects the cost of productions because the middlemen adds money on their product to cover transportation cost. And consumers argue that middlemen do not create time and place utilities. Sometimes its true, due to the bad condition of the roads, some have to take the long road that is better or fair than the short cut that is bad, thereby delaying in delivering the goods on time.

5. Too many middlemen:

Another problem or shortcomings of middlemen, is that, too many middlemen are involved in the distribution of consumer goods. After the manufacturing of a product, it is sold to the middlemen, a middleman sales to another middleman, that one sales to retailer that person sells to another retailer the line continues, at the end the cost of the product increases more than the actual price.

All these weakness on the part of the middlemen have brought about the question on if the middlemen should be eliminated from the channel of distribution. In attempt to answer this question Kotler and Armstrong (1999:0:353) decided to answer the question with question.

Why do producers give some of the selling job to intermediaries? When doing so means giving up some control over how and to whom the product are sold to. He went further in the text to explain how the importance of middlemen cannot be over emphasized. The use of middlemen cannot be eliminated because of their greater efficiency in making goods available to the target market, through their contacts, skills, specialization and scale of operation, middlemen usually offer the firm more than it can achieve on its own.

For the purpose of this study we will focus on the retailer, because we are dealing with consumer goods. As we know that any channel of distribution that involves the retailer is concerned with consumer goods.


A retailer is one whose primary business is to sell to the ultimate consumer.

Retailing is the aspect of marketing that is most familiar to the ultimate consumer. The goods purchased by household consumers are bought through various retail institutions. Retailing simply defined, is that form of business that starts with purchasing goods from vendors and ends with reselling them to the ultimate consumers. A retailer is a merchant middleman who sells primarily to ultimate consumers. The activities included in this transfer of goods from the producer to the user are buying, advertising, display, promotion, and selling


i. Buying:

The retailer engage in buying from wholesalers or from any intermediaries that precedes them and then make it available to the consumers by considering their location and that of the other intermediaries, they buy in assortment and offer to the consumers.

ii. Advertising:

Retailers help in advertising goods for the manufacturers, they advertise sometimes through personal selling and give the consumers information about the product in question. They create awareness, they put the product in bill boards, they share out handbills to potential buyers and urge them to make purchase.

iii. Display:

This is setting up products in the shop in an appealing manner. The retailers display products in their shop in a manner that it will attract customers. Even if it means the customers window shopping. Because without the retailer displaying what he has the customers will not know what he has.

iv. Promotion:

This comprises of a wide variety of tactical promotion tools of a short –term incentive nature. Offered by a company or retailer to encourage the purchase or sale of products. The retailers sometimes offer something free and attach it to another product to induce the consumers.

(v) Selling:

The existence of wants necessitates the act of selling for a customer to buy any goods or service he must have a want to satisfy. Therefore a retailer helps in selling if the customers has a want or could be made to appreciate the need for a good or service.




This is classified into convenience, shopping and specialty outlets.

a. Convenience stores: They are so called based on their central locations. They are usually located near residential areas or near workplaces of their target customers. The owners of such stores emphasize location, parking, easy movement within the stores, long hours and quick checkout service all these aimed at making shopping for the consumers convenient.

b. Shopping outlets: These are outlets which are favoured by consumers shopping for certain types of products. Such products may include clothing, appliance, sporting goods, electronics etc. owners of such stores usually make effort to create perceived difference between them and other competitors through advertisements, product quality, price offers and other customer service.

c. Specialty outlets: These are retail outlets for which consumers have developed strong allegiance and preference. The commitment to shop in such given stores may be based in the product line offered, the service, reputation etc. Mc Carthy (1981) has documented certain reasons why consumers may buy from a particular store. These are convenience variety of selection, quality of products, courtesy of sales people, integrity, services, offered and value offered.


This classification is based on the form of ownership or control.

a. Independents: These are retailers who own their single stores, which are not affiliated to others. Consumers patronize them because they may derive the following benefits – convenience in shopping since they are usually neighbourhood stores; the advantages of such stores includes ownership control, personal relationship with customers, fast decisions, low operating costs etc. owners of independent outlets suffer such disadvantage as incompetence, unbalanced experience, lack of managerial experience and lack of experience in the product lines.

b. Chain stores: Technically, a chain store system is an organisation consisting of two or more stores centrally owned and managed and handling the same line of goods on the same level in the distribution structure. Chain stores enjoy such advantage as quantity discount since they centralize their buying, strong financial position, store loyalty due to advertising power, good management. In addition, chains may own their means of transportation, and warehousing.

c. Association of independents: these are individual retailers who have agreed to come together in order to take advantage of the benefits of group membership without giving up their freedom and flexibility. The following can be identified – cooperative organizations, voluntary chains, and franchise (McCarthy, 1981).

i. Cooperative organisation: Under this grouping the independents pool their resources in order to maintain their own wholesaling operation. In this way they take advantage of large scale purchasing.

ii. Voluntary chains: These are like cooperative organizations except that in this case, a wholesaler initiates and runs the organisation. A wholesaler with decline retail customers may initiate the formation of a group of independent retailer who benefit from the advantages of large-scale operation.

iii. Franchise: According to Birnbaum (1981) “a franchise is a contractual agreement in which a parent company (Franchisor) grants an individual or a relatively small company (Franchisee) the right to do business in a prescribed manner over a certain period of time in a specified place”. The rights granted may include sale of the product, use of company name and adoption of methods, trademarks, and architecture. The franchisor may also provide additional assistance in the area of advertising, packaging and supply of basic ingredients for the product. In return for these services, the franchisee pays a royalty based on the volume of sales.

The advantages for the franchisor include increase in distribution network, increase of the prospects for more profit, increased source of revenue. The franchisee benefits from proven business idea, management and guidance of the franchisor.


The classification is based on the lines and depth of the products carried.

a. General merchandiser is a retailer who carries a wide range of products for customers. They emerged from what is called “scrambled merchandising” and “conglomerate merchandising” in search for additional profits.

b. Limited – line retailers as their name implies carry limited lines of products. They are usually found in drugs, apparel, shoe businesses. They emphasize assortment and expertise in the products they handle.

c. Specialty – line retailers go a step further by offering only one or two product lines but with substantial depth and greater expertise. They operate in tobacco, bakery, and electronics businesses.


Retailers that fall under this classification are in the majority and account for the bank of retail sales. They are classified into two-stores and non-store retailers.

a. Stores retailers refer to those of them who operate from stores and include departmental, discount, supermarket, and shopping centers.

i. Department stores offer wide variety of product lines with varying depths according to stores. The popular departments include cosmetics, clothing, appliances, house wares, toys and even services like hairdressing, restaurants, travel assistance etc.

ii. Discount stores: Are self service, general merchandise stores that combine low prices and high sales volume to achieve profits. They also advertise their stores and goods. The major attraction to patronize the discount stores is the low prices they offer. They keep their store interiors plain and may not offer such services as sales assistance, credit and delivery.

iii. Supermarkets: These are large self- service stores that carry a full line of food products and a number of non-food products and fresh produce. Supermarkets have low profit margin and strive at all times to keep operating costs low.

iv. Shopping centers: Are group of retail stores that are planned, developed and controlled by an organisation. The organisation may be a departmental store or an individual investor. The emphasis is on free flow of traffic zones, which are outside the intercity.

b. Non-store retailers are those who operate retailing business without necessarily having stores.

i. Mail order firms which accepts and fill orders by mail. Some firms specialize in mail order business while others undertake it as a supplement to their business activities. A customer may buy from the mail order firms through any of the three methods.

a. He may place an order after consulting the firm’s catalogue, which contains the pictures and prices tags of the products. All he needs to do is to post the required amount indicating the goods he wants.

b. He can mail in a newspapers cutting which the firm has caused to be advertised in national dailies.

c. He may also use order form received from the seller directly on request.

ii. Mobile retailing: This is an all embracing term covering hawking, door –to-door sales and mobile shops. The mobile shop is a motorized system of selling goods to ultimate consumers.

iii. Telephone retailing involves the use of telephone by the prospective buyers to make inquires from the seller about the availability and prices of certain products. This is known as telemarketing.

iv. Automatic vending machine: This is an arrangement whereby a vending machine dispenses goods automatically after coins are inserted.


This chapter discusses the methodology system of approach used in conducting this study. For the purpose of clarity this chapter involves stating the research design, sources of data, collection, population and sample size. Techniques of data analysis, and limitation of the study.


The research is a survey type, that is meant to find out the roles of middlemen in the distribution of consumer goods and services. The researcher engager in this study some number of middlemen in Enugu metropolis that are involved in the distribution of consumer goods and services as well as consumers themselves. This design is meant to find out the roles these middlemen play in the day to day distribution of consumer goods and if their consumers are being satisfied. The survey is descriptive in nature.


The data used for this study are gathered extensively through two main sources which are primary and secondary sources of data.


This consist of first hand information. According to Anyanwu (1994:p. 13) it is a first hand or “tailor mode” information. The primary data is for the problem at hand. It is generated through observation, survey and experimentation. But here we use survey.


These are data generated by other sources for problems other than the ones mentioned in primary data. The secondary data is generated to help in determining developments in areas of study or research as well as support findings. The secondary data were mainly collected from academic textbooks, professional. Journals, publications, previous work of other writers on the topics closely related to the present one, in addition to the data is knowledge gained from lectures on related topics, related lecture materials and finally the writers personal view are genuinely expressed.


The structural questionnaire would be used to get the required information for this study. The respondents are to be asked similar questions in the same order. This questionnaire would carry the following type of question.

a. Dichotomous question

Those requiring the respondent choosing from the two possible answers.

b. Multiple choice question

This offers the respondents a number of option from which to choose. But more than two options.


The population of this study is made up of the middlemen scattered in the market in Enugu metropolis and the consumers that patronize them. The researcher concentrated only on the current customers for more reliable information.


The sample size is to determine the representative proportion of the population dealing on consumer goods that will aid to collect relevant data.

To determine the sample size of the middlemen; the population of the middlemen in the market in Enugu metropolis is 95 ninety – five (95), therefore Bourley’s formular was used to determine the sample size for the middlemen.

The formula is:

n = N


n = The sample size

N = The total population

e = tolerable error or error margin

1 = Constant

From the above,

N = 95

e = 0.05 or 5%

1 = Constant

Then substitute the formular

n = 95

1+95 (0.05)2

n = 95

1+95 (0.0025)

n = 95


n = 95


n = 76.76

n = 77 approximately

From the above calculation, the sample size for the middlemen was seventy-seven (77).

To determine the sample size of the consumers, the population of consumers in Enugu market is not known therefore. The researcher carried out a pilot survey on the pilot survey, the researcher interviewed 20 respondent (customers) out of the 20 respondents randomly selected agreed that they buy goods from the middlemen, while 2 said No that they hardly buy from the middlemen.

Therefore, the proportion that buy from the middle men is

P = 18

20 = 0.9 or 90%

The proportion that does not buy from the middlemen is

q 2 = 0.1 or 10%


To apply this proportion and use top man’s formular we have the following:

The top man formular is below:

n = z2pq



n = The sample size

Z = The value of Z score associated with the degree of freedom selected

P = Probability of positive response

q = Probability of negotive response

e = error margin

from above

z = 1.96

p = 0.9

q = 0.1

e = 0.05

substituting the formular we have:

n = (1.96)2 (0.9) x (0.1)


n = 138.2

n = 138 approximately

From the above calculation, the sample size of the respondents (consumers) is 138.

RESEARCH INSTRUMENT USED: The researcher used questionnaire in collecting data for the work. A questionnaire is an instrument or a written document given to people asking them question of what they think about a particular something. They distributed questionnaires to both customers and middlemen to get their answers about the role of middlemen in the distribution of consumer goods.


The research administered 77 questionnaires to the middlemen in Enugu metropolis, out of the 77 questionnaires distributed only 60 was returned or rather was collected, representing 78%. While 17 were not collected, representing 22%. For the consumers 138 questionnaire were administered out of which 95 were collected representing 69% while 43 were lost representing 31%.


The statistical techniques of data analysis employed in this study by the researcher to analyze the data collected for the study is descriptive test of hypothesis. The major tools used for analysis by the researcher are the use of percentage/ table and chi-square.


The percentages were used when determining the number of respondents that are in agreement or disagreement for comparison. The responses were comprised in percentage and attributed with the highest percentage. The highest percentage was chosen as the total ideal situation.

Thus, The formular F x 100% was used in analyzing the data


Where, F = Frequency of occurrence (response)

N = Total number of population.


This is used to test enumerate data (ie) it contains frequencies. It is different from reassured data in income data.

Example, supposing we have a group of people, and their income is: 9000,10000, 5000 this is a measured data.

Assumption under X2

You compare the calculated X2 value with the table X2 value and if the calculated is bigger than the table value. You reject verse versa.

X2 (chi-square) is defined in observed frequency minus the expected frequency. Use of chi-square (X2) shall be adopted to text the first and second hypothesis. Chi-square (X2) is used because it involves frequency, which is seen as number of respondents in the work.


In order to cover or draw a fairly representative sample, this research project was designed and carried out in Enugu metropolis.

The problems encountered were time limitation this means that the duration given to researchers within the semester was very short. Making it impossible to go as far as would have loved to go.

Secondly, financial constraints, lack of fund or poor finance hindered the researcher from covering all the nooks and crannies of Enugu metropolis.

Then some of the respondents were not ready to cooperate, they refuse filling the form given to them, some that collected lost or misplaced the form which resulted in the form not being complete.



A manufacturer always finds it extremely difficult sometimes impossible to reach the widely dispersed customers of his product, even when he tries, it will be with poor result . therefore, the services of middlemen are hereby required to conveniently distribute the product evenly from manufacturer to the final consumers.

Over the years in Nigeria, middlemen has come to stay for good and a large number of them are well organized.

As the case may be the middlemen or intermediaries in Enugu state are a typical example. From analysis showed at the other chapters, it is observed that wholesalers and the retailers related very well with the immediate consumers.

Some middlemen help the manufacturers in selling their products the middlemen help in bridging the gap between the manufacturers and their consumers. The middlemen help in dispatching information about a product and educate the end users on how to use a new product.

Though most of the middlemen educate their customers, yet others do not, because according to them some are not educated so there is no how they can educate the consumers who are more educated than them, and atimes, the consumers do not need their advice.

Again the middlemen sell on reedit to their consumers credit selling is another way of getting customers patronage. It also makes it easier for consumers who do not have money at the time to purchase. Any middleman who ignores completely the issue of selling on credit sometimes loses customers patronage, for instance those civil servants with a fixed salary, that will need to buy on credit then pay at the end of the moth. But some middlemen have their reason for not selling on credit, they said selling on credit will put them out of business, because you will sell to them, but when its time to pay, they will refuse to pay, while some will fight you over your money, while others are being victimized all these and many more made them decide against selling on credit, and these ones that have decided to brave not selling on credit do that at the expense of losing their customers patronage, while some still sell on credit.

Some consumers complain about the middlemen, while the middlemen complain about the consumers, the middlemen who enjoy the patronage of the consumers enjoy because, may be their consumers pay on time or as at when due. If they sell on credit to them, and those that do not enjoy their consumers patronage are those that must have had an ugly face-off with their consumers and have to take the difficult decision. All these face-off and patronage will depend on the mutual understanding of both parties.

The middlemen have a big case, which is the adulteration of the products of which they are only the custodian and not even the producers. The consumers keep wondering, why they should adulterate some things they cannot produce. since they think they can adulterate, why not go and produce their own entirely.

This unethical activities of the middlemen is seriously been frowned at, the middlemen have been accused on several occasion of adulterating goods, but some middlemen when asked if they have ever been accused of adulteration, some accepted while some denied. I do not know if I believe it or is it that they are so honorable that they do not sell fake or adulterated product, if it is the later, then such behaviour is worthy of emmulation, and should be commended ad appreciated. And this will go a long way in making Enugu a good place and Nigeria a better place to live in and most atimes they will adulterate these products and still sell it at a very high price, which is too bad.

The middlemen where asked if they sell their goods at the right price, some said yes, some said No while the rest are undecided. Those that said No that the price is not right, either it is low and should be raised or its high and should be lowered (reduced) if it is later, then those people have the welfare of Enugu State at heart. Yet some are undecided, I guess they are the O Yes! Members of the organisation who cannot think of their own but depend on the decision of others.

The glaring point is that the middlemen are indispensable in the distribution of consumer goods in Enugu metropolis. When products are been produced in concentrated areas they need to get to the end users who are scattered all over the country, the middlemen are needed to deliver the goods at the right places where they will be needed. No manufacturer will live his area of specialization to start distributing his product; it will definitely cause him, his money, effort and other things. But if the middlemen are there to bridge the gap between the manufacturers and his consumers, and the middlemen will save him his money and effort of trying to locate the scattered consumers, then they should stay.

The middlemen or distributors have been a traditional part of distribution channel for hundreds of years. They provide shopping convenience, local inventories, exchange services and repairs. The use of these middlemen has proved effective and efficient for both consumers and manufacturers of food, clothing dry cleaning etc. but of all their importance, efficience and effectiveness they still have their weaknesses and shortcomings. They will never stop cheating the manufacturers and consumers and other unethical behaviour they exhibit.

In an attempt to carry out this study, two (2) hypothesis were tested, it was discovered that the null hypothesis (H0) was rejected and the alternative hypothesis (H1) was accepted.


1. It should be recommended that the middlemen in Enugu metropolis should always ensure adequate supply of goods and services to the consumer at the least affordable price.

2. The unethical behaviour exhibited by some middlemen should be discouraged and those other honest middlemen that lead the organisation should severely punishment any offender.

3. The middlemen should always take advantage of festivities by ensuring the availability of their goods and services, they should also make sure that goods are available even when there is no festivals, meaning goods should always be available every time.

4. The marketing concept of “customers are always right and should always come first” should be adhered to in business.

5. The middlemen should charge the right price and avoid the adulteration of their product. Adulteration of goods is a risky thing to do, because it might cause somebody’s life, like, adulterating drugs.


The role of middlemen in the distribution of consumer goods have been evaluated, and it is seen that the middlemen are doing a great job in seeing that goods get to the final users. It is not a small thing trying to make goods available to the widely dispersed consumers, it needs expertise. The middlemen have to take up the responsibility of bridging the gap that exists between the manufactures and consumers, educating them on the users of a new product. They determine the best route to use in delivering goods, they also give financial help to manufacturers, they even give financial help to manufacturers, they even give after sales service to the consumers and make sure that they are satisfied at all cost, they also help in reducing the number of transaction that a manufacturer would have made. But all these preaching about the good of middlemen cannot be without faults or flaws, they have their shortcomings and weakness which are seriously frowned at by the consumers and manufacturers as well. their unethical behaviour is a very bad thing that leaves a sour taste in the mouth. From their high price, hurdling of goods to adulterating a product.

But all these their b\ad activities still does not warrant their being eliminated in the distribution of consumer goods the use of these middlemen have proved more efficient and effective than any body could have thought for both consumers and manufactures.

Therefore, no two words about it, that the middlemen are indispensable in the distribution of consumer goods in Enugu metropolis. Eliminating them will create a very gapping hole in marketing and distribution of consumer goods as a whole.


Anyanwu A.(2000) Dimensions of marketing (2nd edition)

Bush P. S. and Houston M. J. (1985) “Marketing Strategic Foundation” Home woodillinois, RichardD. Irwin Inc.

Diamond J. and Pintel G. (1980) Principles of Marketing (2nd edition) prentice-Hall, Inc, Eagle Wood cliffs, New Jersey.

IfezueA. N. (1990) Principles of Marketing Enugu, Abic books.

Inyanga Y. N. (1998) Nigeria Marketing System- the marketing Mix approach, Globalpress Ltd dw

Kotler P. (1998) Marketing Management analysis planning and Control (6th edition New Jersey USA Hall Inc. Eagle Wood cliff.

Olakunori (1993) Marketing Decision Enugu Jamoe enterprises Nigeria.

Stanton W. J. (1993) fundamentals of marketing(6th edition) Jokyo McGraw-Hill International book company.

Zikmound (1986) marketing (2nd edition) library of congress publisher.


INSTRUCTIONS: Please tick “X” in the appropriate box provided.

1. How long have you been buying from these middlemen?

a. One year

b. Two years

c. Over five years

2. Do these middlemen appreciate your patronage?

a. Yes

b. No

c. Sometimes

3. Do you enjoy credit facilities from the middlemen?

a. Yes

b. No

4. Is it easy locating the middlemen?

a. Yes

b. No

5. Do the middlemen sell their product at the right price to you?

a. Yes

b. No

6. Are you satisfied with the role of the middlemen?

a. Yes

b. No

7. What difficulties do you encounter from the middlemen?

a. Poor service

b. High price

c. Stock out

d. Adulteration

8. When do you buy in large quantity?

a. During festivities

b. At the end of the month

c. During raining season

d. During dry season

9. What factor do you consider responsible for the sudden increase in price of consumer goods?

a. Change of govt. policy

b. Scarcity of product

c. Cost of distribution

d. Activities of middlemen


INSTRUCTION. Please tick “x” in the appropriate box provided.

1. How long have you been in the business?

a. One year

b. Over two years

c. Over five years

2. Do you enjoy the patronage of the current customer of your product?

a. Yes

b. No

c. Sometimes

3. Do you sell on credit to your customers?

a. Yes

b. No

4. When do you have high sale turn over?

a. During festivities

b. At the end of the month

c. During raining season

d. During dry season

5. What difficulty do you encounter from your customers?

a. Bad Dept

b. Unreliable

c. Low patronage

6. Are you accessible to your current customers?

a. Yes

b. No

7. Do you give bonus to your current customers?

a. Yes

b. No

8. Do you educate your customers on the use of new products?

a. Yes

b. No

9. Presently, are you satisfied with your current customer?

a. Yes

b. No

10. Do you think you sell your products at the right price?

a. Yes

b. No

c. Depends

11. Have you ever been accused of adulteration of your goods?

a. Yes

b. No

12. What factors do you consider responsible for the sudden increase in price of consumer goods?

a. Change of government policy

b. Scarcity of the product

c. Cost of distribution

d. Activities of middlemen

Consumer Goods – Evaluation Of The Roles Of Middlemen In Distribution

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