Question

When service producers bypass intermediaries and market directly to final buyers, or when new channel intermediaries replace traditional ones, ________ occurs.

Answer 1

Answer:

disintermediation

Explanation:

The four types of intermediaries are:

1. agents and brokers: their job is to facilitate that buyers and sellers come together, their earnings are usually based on sales commissions.
2. wholesalers: buy products in bulk and resell them to other businesses or retailers
3. distributors: act similarly to wholesalers, except that they do not purchase the goods, they just distribute them directly from the manufacturer to other businesses and retailers.
4. retailers: they purchase products from manufacturers or wholesalers and resell them to final consumers.

Each intermediary earns a profit, and when a company is able to bypass them, they will increase their earnings either by having a larger contribution margin or by selling larger quantities at a lower price. That is why a lot manufacturers started selling their products online.