Evolution of Distribution Channels

31/08/2020 0 By indiafreenotes

The channel structure in a primitive culture is virtually nonexistent. The family or tribal group is almost entirely self-sufficient. The group is composed of individuals who are both communal producers and consumers of whatever goods and services can be made available. As economies evolve, people begin to specialize in some aspect of economic activity. They engage in farming, hunting, or fishing, or some other basic craft. Eventually, this specialized skill produces excess products, which they exchange or trade for needed goods that have been produced by others. This exchange process or barter marks the beginning of formal channels of distribution. These early channels involve a series of exchanges between two parties who are producers of one product and consumers of the other.

With the growth of specialization, particularly industrial specialization, and with improvements in methods of transportation and communication, channels of distribution become longer and more complex. Thus, corn grown in Illinois may be processed into corn chips in West Texas, which are then distributed throughout the United States. Or, turkeys raised in Virginia are sent to New York so that they can be shipped to supermarkets in Virginia. Channels do not always make sense.

The channel mechanism also operates for service products. In the case of medical care, the channel mechanism may consist of a local physician, specialists, hospitals, ambulances, laboratories, insurance companies, physical therapists, home care professionals, and so forth. All of these individuals are interdependent, and could not operate successfully without the cooperation and capabilities of all the others.

Based on this relationship, we define a marketing channel as sets of interdependent organizations involved in the process of making a product or service available for use or consumption, as well as providing a payment mechanism for the provider.

This definition implies several important characteristics of the channel. First, the channel consists of institutions, some under the control of the producer and some outside the producer’s control. Yet all must be recognized, selected, and integrated into an efficient channel arrangement.

Second, the channel management process is continuous and requires continuous monitoring and reappraisal. The channel operates 24 hours a day and exists in an environment where change is the norm.

Finally, channels should have certain distribution objectives guiding their activities. The structure and management of the marketing channel is thus in part a function of a firm’s distribution objective. It is also a part of the marketing objectives, especially the need to make an acceptable profit. Channels usually represent the largest costs in marketing a product.

Think back to when you were a kid. Before tablets, smartphones, social media, virtual and augmented reality, and even the internet, things were much simpler – especially for marketers.

In the ‘80s, marketers had only a few channels in which to communicate their messages. Today, it’s more challenging than ever to know where to spend your money and keep a consistent brand message throughout. So how do you choose the marketing channels that are right for your brand?

Stick to your brand message

One of the major challenges brands face is maintaining a consistent brand message across all channels. Choosing the right marketing channel requires you to take a step back and think about your brand’s core message and where your customers absorb information. This is the single most important thing you can do when determining which channels are right for your brand.

Invest in consumer research

It’s easy to say the single most important thing is the brand and to put yourself in your customers’ shoes. But often companies are making assumptions about what they THINK customers want, which may not be reality. Primary and secondary research can give you insights into which channels your target audience is using and more importantly, how they interact with those channels. We dive deeper into methods of research here.

Do it with a purpose

Too often, brands lose sight of their message and end up wasting time and money on marketing that could be more efficiently spent elsewhere. When Pinterest first came on to the scene, for example, marketers hopped on board. But the reality is, unless you’re in the food, home improvement and goods, fitness or fashion industries, Pinterest can be a waste of valuable resources.

Create an omni-channel experience

Every channel demands a unique approach, but it is important to make sure that your brand is communicated consistently across all platforms, and the customer has the same brand experience regardless of the touch point. For example, a television advertisement will have a different strategy than a podcast, but you want them to feel the same way about the brand regardless of where they engage with the brand.

It’s okay to take risks

With so many tried-and-true methods of marketing, it can be daunting to try new media. However, if you don’t stay current or even ahead of media consumption trends, you risk falling behind or even becoming irrelevant.

A great example of this is traditional taxi companies versus the Ubers and Lyfts of the world. Using a mobile-first approach to delivering and marketing a product was a risk that has to this point paid off. Fortunately, the integration of data and digital in today’s environment means that most marketing executions are measurable. Try, learn, evolve.

Flip your marketing mindset

Long gone are the days where you have an idea, produce a product, find a distribution channel, and then market your product to sell it. Startups are now taking their idea, marketing it first, then figuring out the production and distribution once a sales funnel has been established.

  • Old “sell what we make” model: build → sell → market

  • New collaborative approach: market → sell → build