Marketing Channels

PRESENTED BY, Deepak Tyagi Shikha Gupta

CONTENTSDefinition

Evolution of Market Channels.

Channels Member & Their Roles.

Designing Marketing Channels.

WHAT ARE MARKETING CHANNELS

A marketing channel is ‘an organized network of agencies and institutions which, in combination, perform all the activities required to link producers with users to accomplish the marketing task’ (Bennett ,1988).

A marketing channel is a process of making a product or service available to the end-user for use or consumption.

Also known as Distribution channels.

Evolution of Marketing Channels Marketing channels has evolved from

production-oriented to being customer-centric in nature & has passed through the following phases:-

1. The Production Era (In late 19th

&early 20th century):-More emphasis on production volumes, capacity expansions & plant efficiency.Salesperson job was not highly regarded.Salesmanship considered as a profession without prestige. Selling was considered as an art rather than a

field requiring skills & knowledge

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2. The Sales Era (Began in 1920s):-Industrialization & economic prosperity at peakMass production continuedElevation of the sales position in the eye of managementRealized that selling requires skill & knowledge & not merely the creation of goodwill.Term ‘Scientific salesmanship’ came into existenceSales force also used to recruit the Individuals

CONTD3. The Marketing Era (In 1950s):-

New Manufacturing processes & technology advancementWas thought as an essential link Between the seller and the prospective Buyer.Required to play the role of a problem-solver, educator & an empathizer.Responsibilities included was Planning, forecasting, setting goals and market developmentSalesperson was required to manage a market

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4. Relationship Marketing Era (At present):-Highly competitive marketFocus on customers – Existing & potentialRelationship marketing came into existenceSales person work was to understand the customer needs & offer them the relevant product at the appropriate time.

CHANNEL MEMBERS AND THEIR ROLESKey Constituent of Marketing Channel:• Manufacturer – The producer of the good

or services that is being sold.

• Intermediaries – They do not involve themselves with the title but only act as facilitators.

e.g., Warehouses, advertising agency, research agency etc.

• End Users – They receive the merchandise from the other members & are final Consumers.

ROLES OF CHANNEL MEMBERS1. Facilitate the search process of

buyers & sellers:-Lower the uncertainty among end-usersIn their absence, manufactures would also be confuse about how to approach customers

2. Sorting:-Channel members eliminate the differences in the collection of goods & services offered by company

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3. Making transactions routine:-Transactions involve ordering of goods or services, fulfilling orders & paying for goods & services purchased.

i.e., Manufacture-Wholesaler-Retailer-CustomerHelp in making transactions routine through standardizations & automations

4. Contractual efficiency:-Channel Intermediaries have to optimize the number of exchange relationships required to complete a transaction.

DESIGNING MARKETING CHANNELSDimensions to choose a channel design:

The channel length – Number of intermediaries between the producer and customers

The channel breadth – Number of outlets available to consumers

The cost involved in selecting a particular channel

CONTD. A channel decision depends on the

following considerations:-1. CHANNEL STRUCTURE:- It refers to the number of levels of

channels intermediaries (Distributor, Wholesaler, Retailer).

It depends on the number of intermediaries uses to distribute its product to end-usersThe channel levels are zero level, one level, two level & three level.

Man

ufac

ture

s Consum

ers Zero-level channel

Retailers

One-level channel

Wholesalers Retailers

Two-level channel

Wholesalers Agents Retailers

Three-level channel

CONTD.2. . CHANNEL INTENSITYCHANNEL INTENSITY:- It refers to the number of intermediaries present

in a distribution or marketing channel.

Intensive distributionProducers of products stock their goods in as many outlets as possible as possible by considering time & place utility.

Exclusive distributionProducers of some products limit the number of intermediaries handling their product to deliver maximum service quality to customers, try to develop a superior brand image for their product.

CONTD.Selective distribution

It is adopted when the manufacturer lacks the resources to adequately influences the policies of all the intermediaries who can carry a particular product.

The manufacturer distributes products only to specific retailers selected on the basis of defined criteria.

CONTD.3. TYPE OF CHANNEL INTERMEDIARIES AT EACH

LEVELManufacturer’s representatives

They sell the manufacturer's product to the wholesalers, retailers, other businesses & also to institutions such as hospitals, libraries & school.They may represent more than one manufacturer.Also called account executives or sales engineers.

Manufacturer’s sales forceIt comprises the salespersons who are on the company’s rolls & received a fixed salary.Devotes their entire time & effort to selling that product or service of that manufacturer.

CONTD.Industrial distributors

These are independent firms consisting of sales & support personnel.They differ from manufacturer's in that they take possession of the products they sell & have a partnership arrangement with the manufacturer.Examples: Norton, Pfizer & 3M.