Intimidate is the skill of frightening someone into doing what you want them to do. It is not in fact easy for the very fact that frightened and angry people are irrational and unpredictable.
A failed intimidate check results in a person who is either not frightened or who is frightened or angry and who is unwilling to do what you want them to do. This can be interpretted in several ways.
1) The target doesn't realize the danger he is in and he mocks the intimidator.
2) The target overestimates his own resources and counters the intimidator with threats of his own.
3) The target becomes so angry and filled with hatred for the intimidator that they will resist to the death out of spite or stubborn pride. This resistance can be stubborn silence, shouting continually, attacking the intimidator, or simply refusing to obey any request.
4) The target goes into a shock and cowers, is mentally dazed, goes temporarily insane, faints, or becomes catatonic, and is unable mentally or physically to comply with any demand regardless of how it is made.
5) The target feigns compliance, but goes beserk at the first oppurtunity.
6) The target simply flees in a panic, too frightened to comply with any demands.
7) The target feigns compliance, but flees in panic at the first oppurtunity.
8) The target feigns compliance, but engages in some act of subterfuge that renders the compliance useless.
9) The target becomes enraged and immediately attacks the intimidator, even if this would be suicidal.
And so forth.
The point is that if you fail an intimidate check, you may well get some sort of behavior, but its not likely to be the behavior you wanted.
So, as for your example:
For example, Johnny the Wizard is 8th level, with 8 charisma and no intimidate training. Statistically, he's a nebbishy geek who isn't even slightly intimidating.
However, being an 8th level wizard, he is fully capable of blowing the average peasant/merchant/whatever into kingdom come.
Johnny is interacting with said average peasant/merchant/whatever, and says, "do what I say, or I'll kill you."
DM rolls intimidate, and Johnny gets like a 7--by the numbers, he's not scaring anyone. Mr. Peasant Merchant says, "hell no, nerd."
Johnny shoots his leg off with a magic missille. Then says, "okay, now do what I say, or I'll kill you."
So far, you've run it pretty much how I would. Here though I diverge.
Johnny has earned an intimidate reroll based on demonstrating the willingness and ability to inflict voilence on the merchants person. He might also potentially be eligible for a circumstance bonus, but in this case I would rule that even though the wizard has shown an extreme capacity for violence he's blown it by inflicting so much trauma that any edge he might gain has been lost due to effect of the pain, shock, etc. on the merchant.
Johnny rolls another intimidate check. If he fails again, the merchant engages in one of the above behaviors as is suitable to the merchant's personality:
#1) This appears to have been the merchants original stance - he thinks the wizard was bluffing. Well, he's clearly not bluffing, so the merchant has been probably removed from this stance.
#2) The Merchant screams in pain and rage and threatens the wizard, "You'll hang for this you bloody witch!"
#3) The Merchant goes into a stony silence, glaring at the wizard and daring him to do anything further. He greets any request by spitting at the wizard or simply doing nothing.
#4) The Merchant goes into shock and cowers. He responds to any request by saying, "Look what you did to my leg.", and otherwise commenting on his own condition. He shows no real awareness of anything the Wizard does.
5) The Merchant pretends to comply with the wizards request, but as soon as he gains his feet and gets within reach of a weapon, he tries to bludgeon the wizard in a beserk rage.
6) The Merchant begins crawling and hobbling away at his fastest possible speed, preferably toward help. He makes no response to anything the Wizard says
7) The Merchant feigns compliance but as soon as the Wizard engages in any other task, he tries to flee in a panic and begins screaming for help.
8) The Merchant feigns compliance, but subtly damages any good that he gives the wizard, poisons the wizard's food, takes longer to perform any task than it should, tries to pass notes to people explaining his need for help, lies to the the Wizard, or otherwise does his best to be utterly unhelpful while appearing to help.
9) The Merchant grapples the Wizard and tries to drag him to the ground and choke him.