Marketing channels
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This document discusses marketing channels and their evolution. It describes how marketing channels link producers to buyers, influence pricing strategies, and customize services. It then outlines the historical development of marketing channels from agricultural to industrial systems and the rise of independent intermediaries. Finally, it categorizes possible channel formats that are product-driven, seller-driven, or service-driven and lists the functions performed by marketing channels.
Marketing channels
- 1. It is a set of practices or activities necessary to transfer the ownership of goods, from the point of production to the point of consumption Role of marketing channel in marketing strategies: •Links producers to buyers •Influences the firm’s pricing strategy •Customizes profits, offer credit etc. •Affect product strategy through branding, willingness to stock.
- 2. Evolution  Agricultural products produced as per physical reach  Industrial Revolution brought assortment, transportation etc. which brought ‘traders’ into the system.  Concept of branding and economies of scale was significant. Distribution was relevant only for the ‘place’ part of the marketing mix  Effort put on selling brought a host of independent intermediaries in the form of retailers and wholesalers.  Two major developments in the US impacted the distribution networks automobile & highway systems  Early 1950’s are credited with laying the foundation of the marketing concept which means each channel member had to meet the needs of his customers.  Relationship marketing
- 3. Channel Formats Possible ï‚— Product Driven 1. Company owned Retail outlets:- 2. Consignment selling agents:-The company passes on the physical stocks to the intermediary who pays the company only after products have been sold. 3. Brokers:- The intermediary contacts the user and sells the product on behalf of the company without taking any physical possession of goods. He takes a commission when the sale is consummated. 4. Franchisees:- product and merchandising are decided by the company and the franchisee has to pay from the company to sell
- 4. Channel Formats Possible ï‚— Seller driven 1. Existing retailers: These people are established in the markets and are used by end-users. 2. Supermarkets: They are much bigger retailers who not only sell a large number of branded products but also sell other grocery, stationery and clothing items. 3. Specialty stores:-They are retailers who sell only one type of merchandise only 4. Discount stores: These stores sell the same products and brands as the supermarkets but at much lower prices
- 5. Channel Formats Possible ï‚— Service Driven 1. Transporters: They provide service on contract for companies to reach their ultimate customers. 2. Warehouse owner: They provide space for storage of products closer to consumer markets and reach them with minimum waiting time. 3. Couriers: It is similar to C&FA but handle much smaller packets 4. C&FA: They are on contract and provide both time and place utility- both storage and transport.
- 6. Channel levels  Zero – level channel Customer Manufacturer
- 7. Channel levels  One – level channel Manufacturer Retailer End-user
- 8. Channel levels ï‚— Two level Channel Manufacturer C&FA Wholesaler Retailer End-user
- 9. Functions ï‚— Physical Distribution ï‚— Keep contact with the company customers. ï‚— Helps build long term relationships. ï‚— Market feedback to a company ï‚— Company rules, promotions etc. are communicated to the customers. ï‚— Negotiates price with the company and its customers. ï‚— Handles risks for price fluctuations. ï‚— Handles final stage product assembly. ï‚— Provides after sales service