Marketing Channels

PRESENTED BY, Deepak Tyagi Shikha Gupta

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

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:-

• 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 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

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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

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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

CHANNEL MEMBERS AND THEIR ROLES
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.

ROLES OF CHANNEL MEMBERS
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

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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-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

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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

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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.

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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.

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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.

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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.