What Are Marketing Channels and How Are They Used?
Marketing Channels refer to the ecosystem needed for getting products from production to consumption. Channel Management is a process where the company develops various marketing techniques and strategies to reach its customer base.
Marketing channels are sometimes referred to as Distribution Channels, which is a more focused term that refers to the chain of middlemen which the product goes through until it reaches the consumer.
With the advances in technology, there is a mix of channels with new features constantly being developed that allow for various forms of partnerships. This area continues to grow in complexity, resulting in a tier of specialized affiliate management agencies.
Strategic channel marketing and distribution is about getting the product to the end consumer in the most efficient way possible. Depending on the product and the market, there are several middlemen involved.
For example, there are distributors who would take the product directly from the manufacturer, and then use their distribution network to supply the retailers. The product would travel from manufacturer to distributor, the retailer and finally the consumer. Larger businesses may sometimes skip the use of a distributor. Finally, a small-scale operation, run from a home, for example, may use the simplest method which is manufacturer to consumer.
See If It Fits
Many channel variations exist, and one strategy may not work for all businesses. Some may purchase goods directly from a manufacturer and then distribute within their network. Resources such as delivery trucks as well as the relationships with the retailers are what lend to an efficient billing and collection process.
It is also possible to have a mix of distribution channels. For example, a computer company can use its own sales force to sell accounts, its outbound telemarketing team to sell to smaller sized businesses, and an internet sales team for the end consumer. Affiliate partners can also be used to add to the channel ‘mix’. A manufacturer may need various channel strategies, which could include the delivery channel, a service channel, and a sales channel.
Having an efficient channel strategy is a dynamic and usually complex process. With automation and enhanced control now possible, vertical marketing systems are becoming easier to use. A VMS enables the producer, wholesaler, and retailer to act as an integrated system. An example of this would be a food retailer that may want to ensure that its produce is organic and farmed sustainably. It may require that the products remain in cold storage from the beginning of the process until it gets to the shelf. The retailer would either own the channels or have a contract with them to ensure the consumer gets what is promised.
The Consumer Perception
There are numerous factors one must consider when creating a marketing channel. The end consumers expectation must be taken into consideration.
If the customer expects to purchase at a retail location, then the product would require mass distribution to make it as widely available as possible for convenience. If it is acceptable for the customer to wait a few days, then direct online sales would be possible.
Other factors include:
How big is it? Does the consumer expect to buy a single item, or would it require a broker who specializes in that type of sale?
Is service required? Service capability needs to match the location of their targeted customer base.
Will it save the customer money? Consumers are usually willing to make sacrifices in exchange for cost savings.
And the list goes on…
As technology advances, the future for distribution is a disorderly one. A consumer may soon be able to purchase on Amazon and within a few hours have a drone bring the order to their door. Digitization of products such as movies, music, and video games have already disrupted various channels of distribution. Progress is changing the world, and access to products will never be the same again.
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