by A marketing channel consists of the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption. It is the way products get to the end-user, the consumer; and is also known as a distribution channel. A marketing channel is a useful tool for management, and is crucial to creating an effective and well-planned marketing strategy.
Another less known form of the marketing channel is the Dual Distribution channel. This channel is a less traditional form that allows the manufacturer or wholesaler to reach the end-user by using more than one distribution channel. The producer can simultaneously reach the consumer through a direct market, such as a website, or sell to another company or retailer that will reach the consumer through another channel, i.e., a store. An example of this type of channel would be franchising.
Marketing channels are the ways that goods and services are made available for use by the consumers. All goods go through channels of distribution, and marketing depends on the way goods are distributed. The route that the product takes on its way from production to the consumer is important because a marketer must decide which route or channel is best for his particular product.
Stern & El-Ansary define marketing channels as; “Sets of independent organisations involved in the process of making a product or service available for use or consumption.”
Roles of marketing channel in marketing strategies
- Links producers to buyers.
- Influences the firm’s pricing strategy.
- Affecting product strategy through branding, policies, willingness to stock.
- Customizes profits, install, maintain, offer credit, etc.
Function:
- Promotion: Persuasive communication is disseminated through the channels to the customers. The channels also often help in the design of these communication messages.
- Information: The marketing channels perform the task of collecting and disseminating of marketing information about customers, competitors as well as potential customers and other market forces.
- Negotiation: The channel members are the ones who negotiate with other channel members and customers to facilitate the transfer of ownership.
- Risk taking: The channel members assume the risk for carrying out the channel work.
- Physical possession: The channel members also take the responsibility of storage of goods during the successive stages to the final consumers.
- Financing: The marketing channels work towards the acquisition and allocation of funds required to finance inventories at different levels of the marketing channels.
- Ordering: This function is with regards to the communication of channel members regarding the intention to purchase.
- Title: The channel members facilitate actual transfer of ownership from one organisation or person to the other.
- Payment: The channel members also assume responsibility for the buyers honouring their payments to the sellers through banks and other financial instruments.
Reasons:
- Many organisations lack the resources (financial as well as other resources), to carry out direct marketing and reach out to their many customers without the help of any intermediary. For this purpose, marketing channels are used to take the products from the manufacturing organisations to the final consumers.
- For many smaller products, direct marketing may not be feasible considering that exclusive retail outlets for small products may not work, and having to stock other products might end up in having just another grocery or food outlet which would not serve the purpose. Setting up exclusive retail stores for marketing of small products like chocolates would not be a feasible idea.
- Given the lower return on investments in the retail business, organisations would be better off investing their money in their main business rather than taking up retailing or other channel functions.
As such, the use of intermediaries is mainly to make the goods available and accessible to target markets. Intermediaries, because of their specialisation, experience, and scale of operations, are able to achieve more than what the organisation can in terms of reaching to the target markets.
