Describing the Customer’s Costs


Intermediary customers are those commonly termed "channel" customers. Intermediary customers include wholesalers, retailers and occasionally, brokers. These Intermediary types of customers see that the product is sold and delivered to a Final customer.

Intermediary customers take four major steps with the product:
Obtain, Sell, Guarantee and
Return. Each of these steps cause an Intermediary customer to incur costs in connection with the product. Some of these additional costs in Obtain include:

Obtain Steps: Obtain steps include all activities preceding the selling of the product. These activities include the costs of identifying potential suppliers and stocking the product.

  1. Find and evaluate potential suppliers: The customer must know that your company is a potential supplier and learn how your company compares to other companies who are also potential suppliers.

  2. Find and evaluate product/services: The customer must find what product might fit his needs and compare that product to other competing products and services.

  3. Estimate demand: The customer must determine his final customer's demand for your product.

  4. Set inventory: The customer must set an appropriate inventory level to support sales of the product.

  5. Order product: The customer must understand his inventory position and order replenishment inventory.

  6. Take delivery of product: The customer must receive incoming product.

  7. Pay for product: The customer must match documentation items such as purchase orders and invoices for the product and then make a payment to close his transaction.

  8. Test incoming product: The customer must ensure the quality of the incoming product.

  9. Inventory product: The customer must place the product in his physical inventory.

Back to Describing Customer Costs