The advantages of using agents and brokers are explained below:
Advantages of agents and brokers
1. Reducing selling and distribution costs: If a service firm needs to contact every potential buyer, the cost would be higher. For example, travel services command a wide market and meet even the minute requirements of the tourists. In the absence of travel agents and brokers, travelers would have to struggle for suitable guidance for arranging their travel plans.
2. Special skills and Knowledge: Intermediaries have special knowledge and skill and are proficient in their areas. They collect enormous details about the services market with the help of reference materials and online services. They are knowledgeable and provide helpful information to clients.
3. Wider representation: Agents and brokers charge commission for the services rendered by them. But then the consideration payable to agents and brokers is invariably affordable. So, there is little risk in extending the service offerings to a wide market. The representatives of the services firm who work for commission travel long distances in marketing the services. If buildings and equipment are to be located in distant places, the costs would be exorbitant. By hiring agents and brokers, service firms need not pay for the infrastructure facilities to reach the customer. The benefits of a wider market coverage are available to the service firm at a lower cost.
4. Knowledge of local markets: Agents and brokers are experts in the markets they serve. They have a thorough knowledge about the local as well as international market and can understand the varying needs of different markets. They know how to adapt the services to match the needs of clients. Customers who are dispersed internationally become familiar with the service offerings only by contacting their agents and brokers.
5. Customer choice: Certain agents like travel agents, agents for financial services etc., represent the services of multiple suppliers so that the customers need not approach different agents for different services. If a traveler needed to visit five different travel agencies, each of which carried the services of a single supplier, the efforts of the customer would leave him drained.
A single agent representing multiple suppliers can provide varied services simultaneously. This saves time for the customer in searching for different sources. Similarly, independent agents who have the right to sell a variety of services allow customers a wide choice. For example, if an agent sells UTI schemes and also ICICI Bank schemes at one place, customers stand to benefit.