Distribution Channels and Marketing Channels

Distribution Channels

Building relationships with important suppliers and resellers in the organization's supply chain is essential for the production of any good or service and making it accessible to clients. Partners in this supply chain from upstream to downstream are included. The group of businesses that provide the raw materials, components, information, parts, money, and experience necessary for the production of a good or service are considered to be upstream from the organization. Traditionally, marketers have concentrated on the downstream portion of the supply chain—on the customer-facing marketing channels. Retailers and wholesalers are important links in the company's downstream marketing route, connecting it to its clients. The phrase supply chain may be overly restrictive because it adopts a make-and-sell perspective of the industry. According to the downstream marketing channel, market strategy must start with raw materials, productive inputs, and factory capacity. Demand chain would be the most appropriate word because it produces a sense-and-respond view of the market. According to this perspective, planning starts with recognizing target customers' demands, to which the company responds by setting up a series of resources and activities with the aim of generating customer value.

The Nature and Importance of Marketing Channels

Few manufacturers sell their goods to consumers directly. The majority of producers employ middlemen to get their products to market. They frequently create a marketing channel—a collection of interconnected businesses that aids in making a good or service accessible to the consumer or business user. Every every marketing choice made by a company is directly impacted by its channel choices. Pricing varies depending on whether the business uses large national discount chains, premium specialized shops, or sells to customers directly online. Depending on how much persuasion, inspiration, training, and support the company's channel partners require, it makes judgments about its sales force and communications strategy. The degree to which a product fits the competencies of the channel members will determine whether a company creates or acquires new items. Because of the retailer's on-the-floor sales team and their capacity to inform the consumer about the economics of paying a higher initial printer price but cheaper long-term ink costs, Kodak, for instance, initially only sold its Easy Share printers in Best Buy stores. The company frequently pays little attention to its distribution networks, which occasionally has negative effects. To get an advantage in the marketplace, the majority of businesses have implemented creative distribution strategies. By establishing rental locations away from airports, Enterprise transformed the vehicle rental industry. Apple completely altered the retail music industry by offering music for the iPod through the Internet on iTunes. And FedEx is a frontrunner in express delivery because to its innovative and powerful distribution system.

The marketing channel's participants carry out a variety of tasks. Getting some assistance with transactions:

• Information: In order to plan and facilitate interchange, it refers to gathering and disseminating marketing research and intelligence data about the dynamics and actors in the marketing environment.
• Promotion: Creating and disseminating compelling messages about a proposition.
• Contact: Locating and contacting prospective customers.
• Matching: It has to do with molding and tailoring the offer to the demands of the buyer and includes diverse processes like production, grading, assembly, and packaging.
• Negotiation: It refers to settling on a price and other aspects of the offer in order to transfer ownership or possession.

Others help to fulfill the transactions that are completed:

• Physical distribution: Transporting and storing goods.
• Financing: It refers to acquiring and using funds in order to cover the costs of the work of the channel.
• Risk taking: Assuming the risks of carrying out the channel work.

Distribution Channel Selection Factors

Your company's direct sales team, retailers, distributors, and the internet make up the distribution channel. The proper distribution channel makes sure that customers can purchase the items and receive the proper level of service from the business from many places around the nation or the world. We must take into account a channel's potential benefits, including location and reach, management expenses, skills and resources, and degree of control, in order to choose the best distribution channel for the firm.

Because clients can choose some of the channel options on their own, the internet has become a very successful marketing channel. As long as people have access to the internet, they may practically shop for any goods in the world whenever and whenever they want. Additionally, they have a choice in the shipping method.

Types of Customer

The internet may not always be the optimal distribution medium for a certain product. For instance, what if we carefully inspect the fruits and vegetables we purchase to ensure they are not overripe or too ripe? Then the consumer might not want to shop online. It is obvious that the channel you choose will depend on how your clients wish to purchase your goods.

Consumers and business customers typically want to be sold to in quite different ways. To buy toilet paper, the majority of customers will visit a grocery or convenience shop. The hospital's manager would also purchase a lot more toilet paper than a typical consumer and would do so from its distributor, but perhaps only occasionally.

Type of Product

The business firm's choice of marketing channels will also depend on the kind of products it sells. Compared to products with longer shelf life, perishable goods frequently need to be promoted through shorter marketing channels. For instance, fragile and expensive goods also have shorter marketing axes. Instead of going through wholesalers, automakers typically sell their vehicles directly to automotive merchants (dealers).

Channel Partner Capabilities

Channel decisions may be influenced by the capabilities of different sorts of businesses that use marketing channels. A massage therapist is perfectly capable of giving their service directly to their client. Any business that creates downloaded goods, such as audiobooks or music, might market those goods directly to clients online.

The Business Environment and Technology

The choice of marketing channels for items could also be influenced by the standard business environment, such as the economics. What occurs, for instance, when the dollar's value falls in comparison to other currencies. In comparison to goods produced and sold in the United States, goods imported from other nations are more expensive to purchase when the value of the dollar declines. Products that are "produced in China" grow more expensive, which makes them less desirable. Some companies as a result start looking locally for their products and channel partners.

The marketing channel is also impacted by technological changes. As is well known, the internet has altered how goods are purchased and sold. As much as customers enjoy purchasing things online, so do many businesses. Internet sales channels give businesses more control over how and at what prices their items are offered than if they leave the task to another channel partner like a shop. A company that conducts online sales keeps a digital record of what customers view or click on on its website. It is beneficial to suggest goods to them, target them with promotions, and even adjust prices for items they seem to be interested in.

Competing Products’ Marketing Channels

The marketing channels are impacted by how the rivals promote their goods. In order for its laptops to compete with other brands on shop shelves, Dell now sells them to businesses like Best Buy.

However, businesses aren't necessarily required to select the channels that their rivals like. An illustration is Netflix. By developing a new marketing channel that better satisfies the demands of varied consumers, it upended the video rental industry.

Reference

http://catalog.flatworldknowledge.com/bookhub/2030?e=fwk-133234-ch08_s04

Kotler, P., & Armstrong, G. (2013).Principles of Marketing.Chennai: Pearson India Education Services Pvt Ltd