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 additional steps and costs in connection with the product. Some of these additional Return costs include:

D. Return Steps: Return steps include activities required to return defective product to the supplier. These activities include the work to deliver the product to the supplier and receive credit for the returned product.

  1. Communicate problem to supplier: The customer must explain to the supplier the nature of the problem with the defective product.

  2. Package product: The customer must prepare the defective product for return to the supplier.

  3. Deliver product to Final placement: The customer must deliver the product as directed by the supplier.

  4. Receive credit for returned product: The customer must receive credit or repayment for any products he returns to the supplier.

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