Firstly, let me discuss the functions of intermediaries. Intermediaries helped in the business of Pepsi Cola and Pepsi Cola. The will help reduce cost of doing business and they will also increase revenues of said companies. This observation is confirmed by. Allen, G. (1999) in discussing “Place” when the author said, “Costs are associated with an exchange and can be reduced by reducing the number of transactions (exchanges). Marketing intermediaries increase efficiency in making products available to target markets. Through contacts, experience, specialization, and scale of operation, intermediaries usually offer the organization more than it can achieve on its own.”
In addition there other functions performed by said intermediaries. Thus, Allen, G. (1999) continued saying, “Intermediaries smooth the flows of products to buyers by performing the key functions of informing, promoting, and physical possession (including negotiation, title, payment, risk taking and financing). A producer will use an intermediary when it believes that the intermediary can perform the function(s) more economically and efficiently than it can. The information function involves gathering and distributing marketing research and intelligence about the environment for planning purposes. Scanner technology provides a great amount of information. The promotion function involves developing and spreading persuasive communications about an offer. The physical possession function consists of the transporting and storing of products. This activity involves the negotiations for reaching an agreement on price and other terms. The title is the actual transfer of ownership from one organization or person to another. The payment involves buyers paying their bills. The risk taking function assumes the risk of carrying the product and receiving payment. The financing function involves acquiring and using funds to cover costs.”
Now let me discuss the function of financial regulatory bodies within the companies. Financial regulatory bodies are of course not intermediaries. Instead they regulate the business of the companies; they are usually government agencies like the US Securities and Exchange Commission. To regulate means to have the companies need to comply with certain government rules for the legal and normal functioning of the companies. One best example of a regulatory function is the prohibition for companies to connive for purposes of monopoly. Monopoly is an economic situation where the only one company controls the industry and there prices could also be controlled and thereby prohibiting competition among companies.
As an example, Preliminary Country Paper – Uganda (2005) quoted the following, “According to unconfirmed reports, the two biggest soft drink producers, franchises of big international companies Pepsi Cola and Coca-Cola, are alleged to have bought into the leading water bottling companies. According to the reports, Pepsi bought into NC Beverages, bottlers of Highland brand mineral water and Rwenzori Beverages Companies makers of Rwenzori Brand is alleged to have gone to Coca Cola. However, the two companies deny the allegations. Instead the companies state that they have joint distribution arrangements. Products from the water and soft drinks companies are routinely jointly distributed to retail outlets.” One could observe that the two companies are possible connivance for monopoly; they instead prefer to call it “joint distribution arrangements.” The financial regulator could come in to declare nullity of such arrangement if disadvantageous to the economy.
References:
- Allen, Gemmy (1999), Place, Accessed October 3, 2006
- Preliminary Country Paper – Uganda (2005), Capacity Building on Competition Policy in select Countries of Eastern and Southern Africa, Accessed October 3,2006