Home Helpers, Inc. produces a variety of reasonably-priced household appliances. To cut costs, the company has decided to eliminate all of the marketing intermediaries who help distribute its products. Home Helpers will be able to reduce its total marketing costs by eliminating the marketing functions these intermediaries perform.

Question

Quizplus · Accepted Answer

Although marketing intermediaries can be eliminated, their functions must still be performed. If Home Helpers eliminates marketing intermediaries, it will have to perform their functions itself, or shift some of them to consumers. Unless Home Helpers and its customers are better at performing these tasks than its marketing intermediaries, total marketing costs could actually rise rather than fall.