Today, most producers use marketing intermediaries to sell their products to the market. These marketing intermediaries make up a marketing channel. It is also called trade channel or distribution channel.
Marketing channels are sets of independent organizations involved in the process of making a product or services available to consumers.
The use of intermediaries stems from their superior efficiency in making good widely available and accessible to target market. The intermediaries, through their contacts, experience, specification, and scale of operations offer the firm what it cannot achieve on its own.
Channel Design Decisions
In designing marketing channels, manufactures have to decide on what is feasible, ideal and what is available. Deciding on the channel to be used is not really a problem. The problem is convincing the intermediaries to carry a particular product line.
Choosing market channels means the producer should be consistent with the size of the market, location of the target market, and local opportunities and conditions.
Designing channel system means analyzing customer’s needs, establishing channel objectives, identifying and evaluating major channel alternatives.
Function Of Marketing Channels
- Information – Marketing channels often help in the collection and dissemination of marketing research information about potential and current customers, competitors, and other forces in the marketing environment.
- Promotion – Channels aid in the development and dissemination of persuasive communication to attract customers.
- Negotiation – Agreement on price and other terms to facilitate transfer of ownership or possession done by marketing channel.
- Ordering – Marketing intermediaries communicate to the procedures to the customer’s intention to buy.
- Financing – Marketing channel oversee the acquisition and allocation of funds required to finance inventories at different levels marketing channel.
- Risk Taking – The intermediaries assume risks at making the channel work.
- Physical possession – Marketing channel facilitate the storage and movement of physical products to the final consumer.
- Payment – Marketing channel help buyers in paying their bills through banks and other financial institutions to sellers.
- Title – Helps in the transfer of ownership from one organizations or person to another.
Distribution of channels is not just collection of firms tied together by a variety of flows. They are complex behavioral systems in which people and companies interact to accomplish individual, company and channel goals.
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