2. What Is a Marketing Channel?
A marketing channel system is the
particular set of interdependent
organizations involved in the process of
making a product or service available for
customers.
3. FUNCTIONS OF CHANNEL
INTERMEDIARIES
• Contact between producer and consumers
• Function of distribution
• Performing promotional activities
• Function of financing
• Gathering information
• Risk taking
• Provide for storage
In short, creating time, place and possession utility
6. Reverse-Flow Channels
Reverse-flow channels are important to:
(1)reuse products or containers (such as refillable
chemical-carrying drums);
(2)refurbish products for resale (such as circuit
boards or computers)
(3) to recycle products (such as paper)
7. Channel-Management Decisions
• Selecting channel members
• Training channel members
• Motivating channel members
• Evaluating channel members
• Modifying channel members
8. Factors affecting selection of
marketing channels
1) Product Considerations
2) Market Considerations
3) Company Considerations
4) Middlemen Considerations
Most producers do not sell their goods directly to the final users; between them stands a set of intermediaries performing a variety of functions. These intermediaries constitute a marketing channel (also called a trade channel or distribution channel). Formally, marketing channels are sets of interdependent organizations participating in the process of making a product or service available for use or consumption. They are the set of pathways a product or service follows after production, culminating in purchase and consumption by the final end user.
A zero-level channel, also called a direct marketing channel, consists of a manufacturer selling directly to the final customer. The major examples are door-to-door sales, home parties, mail order, telemarketing, TV selling, Internet selling, and manufacturer-owned stores. Traditionally, Eureka Forbes sales representatives sell vacuum cleaners and water purifiers door-to-door, AllSchoolStuff sells through online catalogs, ICICI Lombard sells insurance through telemarketing and the Internet, Elvy sells gifts online, and Fabindia sells garments and furniture through its own stores. Many of these firms now sell directly to customers in more ways than one, via the Internet, catalogs, etc. A one-level channel contains one selling intermediary, such as a retailer. A two-level channel
contains two intermediaries. In consumer markets, these are typically a wholesaler and a retailer. A three-level channel contains three intermediaries. In the meatpacking industry, wholesalers sell to jobbers, essentially small-scale wholesalers, who sell to small retailers. In Japan, food distribution may include as many as six levels. Obtaining information about end users and exercising control becomes more difficult for the producer as the number of channel levels increases.
Channels normally describe a forward movement of products from source to user, but reverse-flow channels are also important: (1) to reuse products or containers (such as refillable chemical-carrying drums); (2) to refurbish products for resale (such as circuit boards or computers); (3) to recycle products (such as paper); and (4) to dispose of products and packaging. Reverse-flow intermediaries include manufacturers’ redemption centers, community groups, trash collection specialists, recycling centers, trash-recycling brokers, and central processing warehousing.
After a company has chosen a channel system, it must select, train, motivate, and evaluate individual intermediaries for each channel. It must also modify channel design and arrangements over time. As the company grows, it can also consider channel expansion into international markets.
