Marketing Channels

PRESENTED BY, Deepak Tyagi Shikha Gupta

Definition Evolution of Market Channels. Channels Member & Their Roles.


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:-

• 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

2. The Sales Era (Began in 1920s):Industrialization & economic prosperity at peak Mass production continued Elevation of the sales position in the eye of management Realized that selling requires skill & knowledge & not merely the creation of goodwill. Term ‘Scientific salesmanship’ came into existence

3. The Marketing Era (In 1950s):New Manufacturing processes & technology advancement Was thought as an essential link Between the seller and the prospective Buyer. Required to play the role of a problemsolver, educator & an empathizer. Responsibilities included was Planning, forecasting, setting goals and market development Salesperson was required to manage a market

4. Relationship Marketing Era (At present):• Highly competitive market • Focus on customers – Existing & potential • Relationship marketing came into existence • Sales person work was to understand the customer needs & offer them the relevant product at the appropriate

Key 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.

1. Facilitate the search process of buyers & sellers:Lower the uncertainty among end-users In 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

3. Making transactions routine:Transactions involve ordering of goods or services, fulfilling orders & paying for goods & services purchased. i.e., Manufacture-Wholesaler-RetailerCustomer Help 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 CHANNELS choose a channel design: Dimensions to
• 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

CONTDdecision depends on the . A channel

following considerations: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-users The channel levels are zero level, one level, two level & three level.

Zero-level channel

One-level channel Retailers Manufactures Consumers

Two-level channel Wholesalers Retailers

Three-level channel Wholesalers Agents Retailers

2. CHANNEL INTENSITY:INTENSITY It refers to the number of intermediaries present in a distribution or marketing channel. Intensive distribution Producers of products stock their goods in as many outlets as possible as possible by considering time & place utility. Exclusive distribution Producers 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.


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.

3. TYPE OF CHANNEL INTERMEDIARIES AT EACH LEVEL Manufacturer’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 force • It 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.


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.