Marketing Channels
Marketing channels refer to the various pathways through which products or services move from the producer to the end consumer. These channels can include direct sales, wholesalers, retailers, and online platforms. Effective management of marketing channels is crucial for ensuring that products reach the right customers at the right time and in the most cost-effective manner.
8 Key excerpts on "Marketing Channels"
eBook - ePub- Sally Dibb, Lyndon Simkin(Authors)
- 2007(Publication Date)
- Routledge(Publisher)
...28: Marketing Channels Key definitions A marketing channel is a channel of distribution; a group of interrelated intermediaries that direct products to customers. Distribution is the ‘place’ ingredient in the marketing mix, involving the selection of a marketing channel or channels. A marketing intermediary is a ‘middleman’ who links producers to other middlemen or to those who ultimately use the product. Intensive distribution is the use of all available outlets or channels for distributing a product. Selective distribution is the use of only some available outlets or channels to distribute a product. Exclusive distribution is the use of only one outlet in a relatively large catchment to distribute a product. Key issues Marketers spend a great deal of time ensuring the ‘right’ product or service is offered to the target market. If the channel of distribution from supplier to customer is not properly determined and managed, however, marketers will not be successful in their endeavours. The marketing channel is the channel of distribution adopted within a marketing mix and is often referred to as the place ingredient of the ‘5Ps’ of the marketing mix, along with product, people, price and promotion. The marketing channel comprises intermediaries that direct products to the targeted customers. These intermediaries fall into two broad categories: (a) merchants that re-sell, such as wholesalers and retailers, and (b) agents, brokers or dealers that receive commission or a fee for expediting exchanges. There are also intermediaries that facilitate the physical distribution of goods, such as transportation, storage and warehousing, marketing services businesses, finance and insurance providers, trade shows and trade markets. Without intermediaries, five producers serving five customers would require 25 separate transactions...
eBook - ePub- Kusum L. Ailawadi, Paul W. Farris(Authors)
- 2020(Publication Date)
- Wiley(Publisher)
...CHAPTER 1 Distribution Channels Today 1.1 INTRODUCTION Marketers today must develop well-informed strategies for managing their distribution channels during times of significant change. Those strategies will include anticipating, minimizing, and addressing the channel conflict inevitably wrought by change. This book is about how firms can select metrics, design strategies, and implement policies that free them to adapt to the rapidly evolving landscape that combines physical and digital routes-to-market. Our book is primarily intended for marketers and those who train them, but marketers aren't the only ones paying attention to channel dynamics. Economists, regulators, and social psychologists are also interested in how distribution channels affect competition, efficiency, and consumer welfare. They want to understand the marketing challenges of distribution channels, the causes and consequences of channel conflict, and the approaches to managing that conflict. So, while our writing is rooted in marketing, we also incorporate these other perspectives. What is a distribution channel? By its simplest definition, it is the chain of distributors, retailers, and other intermediaries through which a supplier's product reaches end consumers, implying a unidirectional movement of goods along one route, from the point of production to the point of consumption. 1 Even simple distribution channels are delicate systems, where suppliers and their independent resellers struggle to balance a cooperative partnership against a desire for a bigger share of the total profit available in the channel. The partners need to cooperate in ways that create value for consumers, appropriate some of that value in the form of profit for the channel, and share the profit in a way that sustains the partnership. Modern, mainly digital, technology has complicated that partnership...
eBook - ePub- Chris Fill, Graham Hughes(Authors)
- 2012(Publication Date)
- Routledge(Publisher)
...They provide the means by which products and services are made available to end-user customers for purchase and consumption. They provide the means by which manufacturers become linked with their target markets. More importantly and more pertin ently, Marketing Channels are the means by which customers can access the products and services that they want, at a time that they prefer and at their convenience. The term ‘Marketing Channels’ should not be mistaken to mean media channels. There is a strong relationship between the two concepts, although the term ‘marketing (or distribution) channels’ has a distinct structural focus and should not be confused with the meaning commonly associated with communications. As we shall see later, the use of multichannel marketing is not restricted to the commercial sector. For example, the government has a clear policy to enable electronic communications in all the areas in which it operates. Insight: Changing Media Channel Structures In many business sectors, technology is playing a significant role in changing channel structures and affecting the very nature of the product and service being provided. This is very true in the categories which include media related businesses. Newspapers for example, were traditionally in a hard copy format, delivered through letter boxes, purchased at newsagents in various locations including rail stations whilst purchasers are travelling to work. This product format and its delivery/purchase channel are still prominent, but have become less so as a result of customers limiting or stopping actual purchase in favour of accessing editorial content on line, either from their preferred newspaper website or via another collective news channel. The Sun newspaper in the UK, the leading tabloid, is advertising on posters and TV its availability in ‘Print, online and mobile’...
eBook - ePub- Geoffrey Lancaster, Lester Massingham(Authors)
- 2017(Publication Date)
- Routledge(Publisher)
...The marketing channel is a ‘canal’ which contains the physical flow of products. Because of the complex array of intermediaries operating within a channel, which may be involved in one or all aspects of channel function, the channel may also be visualized as a chain-link arrangement where each intermediary unit is effectively a link. Manufacturers are dependent on the effectiveness of their intermediaries if their channels of distribution are to meet their marketing goals. Intermediaries of a channel specialize in more than one function. Their inclusion primarily depends on their superior efficiency in the performance of basic marketing tasks. Such intermediaries, through their experience, specialization, contacts and scale of operation, offer other channel members more than they can achieve on their own. However, this type of specialization leads to some important behavioural concepts. Position and role Each channel member chooses a position or location in the channel. ‘Role’ refers to the functions and degree of performance expected of the firm filling a position. Channel intermediaries perform the distribution function at a lower unit cost than the manufacturer, who is the intermediary most distanced from the consumer, and they balance the production efficiencies of the supplier to the purchasing needs of the customer. Another reason is to break down large volumes into smaller quantities, termed ‘breaking bulk’: for example, a furniture retailer places an order for 100 tables, but the individual buys only one. When we consider the selling process, the number of intermediaries can reduce the number of transactions contained within the selling process. Figure 6.3 shows four manufacturers and ten retailers who buy goods from each manufacturer. Here the number of contact lines amounts to 40 (i.e. 4 × 10). If all four manufacturers sell to ten retailers through one intermediary, the number of contacts is reduced to 14 (i.e. 4 + 10)...
eBook - ePub- D.G. Brian Jones, Mark Tadajewski, D.G. Brian Jones, Mark Tadajewski(Authors)
- 2016(Publication Date)
- Routledge(Publisher)
...The impact of distribution channels on consumers reflects the fact that marketing is a far more formative process than an adaptive one (Beckman and Davidson, 1967). In the long run but not necessarily in the short run, the acceptance of new or modified channel arrangements among members depends on the consumer. The nature of channel arrangements is determined from the ‘bottom up’ rather than from the ‘top down’, supporting what Tosdal (1957) and others have argued that any economy is organized from the bottom up. Some proposed channel definitions pertinent to this chapter: a loose coalition of business firms which have banded together for purpose of trade; the route taken by the product as it moves from points of production to points of consumption; the route taken by the title to goods and services as they move through various agencies toward buyers or consumers. The distribution channel has been a tough concept to define, understand and study, even more so from a historical perspective. Dixon (1982) was the first author in academic marketing to trace the historical origin of the term. Surprisingly, he found it in a seventeenth-century business handbook written by Jacques Savary (1675), millennia after the essence of marketing as buying and selling had been documented (Tamilia, 2011). Dixon (1982) credits Savary as being the first to suggest an Aldersonian view of a channel as an organized behaviour system, as stated above in the first definition. Shaw (1916) presented a list of five functions performed by middleman which were an integral part of the marketing process per se. Later, Beckman and Davidson (1967, 422) defined a marketing function as being a ‘distinctive economic activity which is inherent in the marketing process, pervades it throughout and … tends to become specialized’...
eBook - ePub- Paul Reynolds, Geoff Lancaste(Authors)
- 2013(Publication Date)
- Routledge(Publisher)
...9 Channels of distribution 9.1 Introduction This chapter investigates the routes marketing companies take when attempting to ensure that their goods and services reach the intended market or market segments. The term ‘distribution system’ refers to that complex of agents, wholesalers and retailers through which manufacturers move products to their intended markets. Marketing Channels are usually made up of independent firms who are in business to make a profit. These are known as marketing intermediaries or middlemen. Distribution outlets can include combinations of owned and independent outlets, or arrangements like franchising. Definition The term ‘distribution system’ refers to that complex of agents, wholesalers and retailers through which manufacturers move products to their intended markets. 9.2 Direct versus indirect systems In designing a distribution system, a manufacturer must make a policy choice between selling directly to customers and employing salespeople, and using intermediaries – i.e. selling through agents, wholesalers and retailers. Initially, the decision is usually based on cost factors. Distribution costs are largely a function of: the number of potential customers in the market how concentrated or dispersed they are how much each will buy in a given period costs associated with the practical side of the distributive operation (e.g. transport, warehousing and stockholding, all of which are dealt with in detail in Chapter 10). If the manufacturer has a large enough potential sales volume, there may be a strong case for selling direct and employing a sales force. Industrial goods manufacturers tend to use direct selling and often deliver direct to the user/customer, although in some cases wholesalers or ‘factors’ are used. Consumer goods manufacturers tend to use a network of marketing intermediaries because of the dispersion and large numbers of potential customers. Again, there are exceptions (e.g...
eBook - ePubStrategic Shopper Marketing
Driving Shopper Conversion by Connecting the Route to Purchase with the Route to Market
- Georg August Krentzel(Author)
- 2020(Publication Date)
- Routledge(Publisher)
...Indirect channels, especially for groceries, are often denominated at home and off-trade. In immediate and direct consumption channels, purchase and consumption are interrelated and often the shopper and the consumer are the same, although this does not need to be the case, e.g. eating out with family or friends. The success of sales channels is due to two main dimensions: meeting shopper needs, and providing marketing and operational advantages for manufacturers and suppliers. For example, the products of the clothing company H&M are found only in their own stores, and although there could be an interesting opportunity in selling through other points of purchase, this would be against the chosen route to market strategy. There are also important changes over time, as in the travel industry. Figure 4.8 Sales channel relevance Sales channel relevance matrix based on whether the channel has a marketing and operational advantage for the manufacturer, whether the channel meets the needs of shoppers and how it changes over time. Example from the travel industry. Source: Author The route to market can be the company strategy itself, as in the example of Airbnb, which has built a business model around the internet channel. In the example of travel, it is clear that there has been a development of sales channel usage, moving from travel agencies to internet sales. Much of the discussion has traditionally been about channel conflict, first between traditional and modern retail channels, and then with e-tail. With the emergence of the more shopper-oriented omnichannel view, the complementarity of channels to serve the shopper has moved into the center of the discussion...
- Bonita Kolb(Author)
- 2020(Publication Date)
- Routledge(Publisher)
...What they do not instinctively think of is the distribution of a product. Yet, distribution is the key to the success of a strategic marketing plan as it is how a product gets into the hands of the consumer. Direct versus indirect distribution—one or both, the choice is yours Direct distribution, the easiest method, is where the product is sold straight from the producer to the consumer. This may be face-to-face such as when the creator sells the product in their studio. It can also be when the creator sells at events and fairs. Even distribution from the creator’s website is considered direct even though there is no personal contact. It is fairly simple to integrate direct distribution methods so that the producer may use e-commerce on their website, maintain a studio, and also sell at events. However, using direct distribution limits the number of purchases as there are only so many consumers the producer can reach personally. In addition, it is a problem for the consumer as they must seek out the producer of the product in order to purchase. If the organization decides that it will distribute directly using e-commerce, it may need to find a logistics partner such as a shipping company. This company will not only deliver packages but can also advise on the packaging and the paperwork required on international shipments. In addition, they will provide monthly documentation on how many and where packages have been shipped. Indirect distribution uses channel intermediaries, or other people and organizations, to sell the product to consumers. This can greatly increase the number of consumers who have the opportunity to conveniently purchase the product. However, the intermediary will also need to make a profit on the sale of the product. Either the producer must sell the product more cheaply to the intermediary so that once it is marked up the price will still be the same as it was originally, or the final retail price will be higher...
