PAPER

MARKETING MANAGEMENT
“MARKETING CHANNEL”

COMPILED BY:
Ryan Hidayat
Mely Shadini Hazri
Sikin Sahira
Nordiana
Risma Br Silaban

CLASS OF INTERNATIONAL BUSINESS ADMINISTRATION 3C

LECTURER:
M. FUAD ASROFILLAH M.M

DEPARTMENT OF ADMINISTRASI NIAGA

STATE POLYTECHNIC BENGKALIS
2022/2023
 FOREWORD

Praise and gratitude are extended to Allah SWT who has bestowed His grace and
guidance. Thanks to His grace and guidance as well as various efforts, the task of Marketing
Management, and topic is “Marketing Channel”.
In preparing this paper, the author realizes that this paper is still not perfect. For this
reason, various constructive inputs are expected for its perfection.
Finally, I hope this paper can be useful for readers.

Bengkalis, September 21

Group 5

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 TABLE OF CONTENTS

FOREWORD.................................................................................................................................................................i

TABLE OF CONTENTS.............................................................................................................................................ii

CHAPTER I..................................................................................................................................................................1

INTRODUCTION.........................................................................................................................................................1
A. BACKGROUND................................................................................................................................................1
B. PROBLEM FORMULATION............................................................................................................................2
C. PURPOSE.........................................................................................................................................................2

CHAPTER II.................................................................................................................................................................3

DISCUSSION................................................................................................................................................................3
A. DEFINITION OF MARKETING CHANNELS..................................................................................................3
B. MARKETING CHANNEL FUNCTIONS AND CHANNEL FLOWS.................................................................4
C. COORDINATED CHANNEL MARKETING.....................................................................................................7
D. TYPES OF MARKETING CHANNELS.............................................................................................................8
E. WAYS IN MARKETING CHANNELS...............................................................................................................9
F. CASE STUDY..................................................................................................................................................11

CHAPTER III.............................................................................................................................................................14

CLOSING....................................................................................................................................................................14
A. CONCLUSION................................................................................................................................................14
B. SUGGESTION.................................................................................................................................................14

Reference.....................................................................................................................................................................15

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 CHAPTER I
INTRODUCTION

A. BACKGROUND
One of the main goals of any company is to obtain the maximum possible profit. Whether
or not a company succeeds in achieving its goals does not depend solely on the ability to produce
goods and services. The product and the market will not be able to meet automatically but there
absolutely must be a line connecting it. Such paths are components of the marketing system and
cannot be separated from each other in relation to the activities carried out to achieve marketing
goals.
Marketing channels are one of the very important elements in marketing. A company
needs to carry out marketing functions because marketing is one of the processes in the company
in depositing goods or offerings of its products to the market. And marketing can be interpreted
as a marketing activity that seeks to facilitate and facilitate the delivery of goods and services to
consumers so that their use is in accordance with what is needed (type, quantity, price, place, and
when needed).
A marketing channel for an item is a channel used by producers to distribute the goods
from the producer to consumers or industrial users. The marketing process is a marketing activity
that is able to create added product value through marketing functions that can realize the
usefulness or utility of the form, place, time, ownership, and smooth flow of marketing channels
(marketing channel flow) physically and non-physically. In the implementation of marketing
activities, the company must be faced with an intermediary or what is commonly called a
midleman. And in marketing distribution, the company must have the right strategies so that the
product offering to the market runs smoothly and in accordance with what the company expects.
It's important to know how your goods get to customers so that you have an overview of
your items from the beginning of being made to being sold. For example, breakfast cereals. The
groove begins with a wheat field where this ingredient is the main ingredient for producing
cereals. Then the wheat goes to the grain processing site continued to the cereal factory after
which it is sent to the distributor until it is finally on the shelves of the shopping center. The end
point of this groove is when cereal is served in a person's breakfast bowl. This flow covers every
point through which the cereal is a marketing channel for breakfast cereals.

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B. PROBLEM FORMULATION
To limit the problems that will be discussed in this paper, the following questions become
the formulation of the paper :
a. What is the meaning of a marketing channel?
b. Marketing channel function and channel flow?
c. What is coordinated channel marketing?
d. Types of marketing channels?
e. What are the ways in the marketing channel?

C. PURPOSE
The purpose of making this paper is,
a. Knowing and understanding the meaning of marketing channels.
b. Knowing the functions of marketing channels and marketing channel flows.
c. Knowing coordinated marketing.
d. Knowing the types in the marketing channel.
e. Knowing the ways in the marketing channel

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 CHAPTER II
DISCUSSION

A. DEFINITION OF MARKETING CHANNELS

Marketing is an activity that aims to improve and develop the marketing activities of a
product, we must consider marketing channels that can be used to distribute products from
producers to consumers.
Marketing channels are a group of organizations that are interdependent, have various
functions and are involved in making products or services that are provided for use or
consumption. Most manufacturers need marketing channels to sell their products or services to
the end user.
a. According to Kotler, Marketing Channels are a group of organizations that are
interdependent and involved in the process of creating products or services that are
provided for use or consumption.
b. according to Basu Swastha (1999) a marketing channel is a channel used by producers
to distribute these goods from producers to consumers or industrial users.
c. According to Kartasapoetra (1986) the length and shortness of marketing channels are
determined by: (1) the distance between producers and consumers. The longer the
distance between producers, the more panjanf the marketing channels traveled by the
commodity. (2) The nature of the product. Products that are fast or easily damaged must
be accepted immediately by consumers so that they want a short and fast channel. (3)
Production Scale. If production takes place in small sizes, the amount of product
produced is small, so it will be unprofitable if the manufacturer directly sells to the
market. This means that it requires the presence of intermediary traders and the channels
through which the commodity passes will tend to be long. (4) The financial position of
the entrepreneur. Producers whose financial position is strong tend to shorten marketing
channels because they can perform more of the function of refining compared to traders
whose financial position is weak. In other words, traders who have strong capital tend to
shorten their marketing channels.
An item can move through several hands from the manufacturer to the consumer. A
marketing channel system is a group of specific marketing channels used by a company and the

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 decision about this system is one of the most important decisions faced by management. One of
the main roles of the marketing channel is to turn potential buyers into profitable customers.
Marketing channels not only serve the market, but they must also form a market.
The chosen channel influences all other marketing decisions. The pricing of the company
depends on whether the company uses mass swords or high-quality boutiques. Channel decisions
include fairly long-term commitments with other companies as well as a number of policies and
procedures. In managing its intermediaries, the company must decide how much effort is made
to carry out a push or pull targeting strategy.
The push strategy uses sales force, trade promotion money, or other manufacturer advice
to encourage intermediaries to bring, promote, and sell products to end users. The push strategy
is appropriately used if brand loyalty in one category is low, the choice of brand is made in the
store, the product becomes an implus item, and the benefits of the product are well understood.
 
In the Pull strategy manufacturers use advertising, promotion, and other forms of
communication to convince consumers to ask for products from intermediaries so as to
encourage intermediaries to order the product. The Pull strategy is appropriately applied when
there is high brand loyalty and high engagement in the category, consumers are able to shout the
differences between brands and consumers have already chosen the brand before going to the
store.

B. MARKETING CHANNEL FUNCTIONS AND CHANNEL FLOWS

1. Marketing channels serve to move goods from producers to consumers. Marketing
channels address the time, place, and ownership gaps that separate goods and services
from those who need or want them. Members of the marketing channel carry out a
number of key functions.
2. Gather information about customers, competitors, and actors, and other forces that exist
today and potential in the marketing environment
3. Develop and disseminate persuasive communication to stimulate purchases
4. Reaching final agreement on prices and other conditions so that ownership transfers can
be made
5. Placing an order to a manufacturing company

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 6. Obtaining funds to finance inventory at different levels of marketing channels
7. Bear the risks associated with the implementation of the functions of the marketing
channel
8. Regulates the continuity of storage and movement of physical products from raw
materials to the final customer.
9. Regulate the repayment of buyers' bills through banks and other financial institutions
10. Oversees the actual transfer of ownership of an organization or person to another
organization or person.

There arefive marketing channel streams that are divided into three groups, namely:
 The flow of information and promotion occurs in two directions
 Flow in the form of physical, property rights and also in the form of promotions in the
form of companies to customers,
 Flow with the form of payment from the customer to the company.

In addition, there are three examples of marketing channels, including:

1. Consumer Marketing Channels
This channel is a common type of channel between companies and consumers. This type of
channel is divided into several intermediate levels:
 Zero-level channel. As the name implies, companies that implement zero-level
channels sell their goods directly to consumers. These sales can be made through door-
to-door promotions, advertisements on TV (home shopping), the internet, etc.
 Level one channel. Companies that implement tier one channels sell their goods not
directly to consumers, but rather to retailers.
 Second-level channel. Companies that implement tier one channels sell their goods
retailers and wholesalers.
 Level three channel. Companies that implement tier one channels sell their goods to
retailers, wholesalers and wholesalers.

2. Industry Marketing Channels

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This channel is almost the same as the consumer marketing channel, except that those who act as
consumers are industrial customers. Who are the industrial customers? Industrial customers are
factories that will later process goods from the company into finished goods. The marketing
channels of the industry are divided into four levels, including:
 Zero-level channel. This channel distributes goods produced by manufacturers directly
to industrial customers.
 Level one channel. This channel distributes goods produced by manufacturers to
industrial customers with distributors as intermediaries.
 Second-level channel. This channel distributes goods produced by producers to
industrial customers with representatives of manufacturers and industry distributors as
intermediaries.
 Level three channel. This channel distributes goods produced by manufacturers to
industrial customers with sales branches, industry representatives, and industry
distributors as intermediaries.

3. Service Sector Marketing Channels

In addition to physically distributing goods, marketing channels can also carry out service
distribution. In this case, manufacturers of services and problem-solving ideas are available and
accessible to a specific population in need.
Before determining the type of marketing channel that you will apply to your business, it's a
good idea if you choose a distribution strategy first. Distribution strategy is a strategy designed
by the company in accordance with the purpose of making the product. The following are three
types of distribution strategies:
1. Exclusive Distribution
This strategy is carried out by limiting the number of product intermediaries to
maintain product exclusivity, so that product prices remain high. Companies that
implement an exclusive type of distribution are characterized by the presence of an
exclusive agreement between the manufacturer and the main intermediary as the
licensee. In addition, the sales system is also carried out by maintaining the image of
the product so that the price does not fall.

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 2. Selective Distribution
This strategy is carried out by involving several intermediaries who have a wide
marketing reach (network) to work with the company. Thus, companies do not need to
set up outlets everywhere because they are inefficient and reduce prices.
3. Intensive Distribution
Different from the previous two strategies, the intensive distribution strategy targets
increasing product sales as a goal. That is why the manufacturing company involves
many intermediaries in the marketing of products. The risk of implementing this
strategy lies in the magnitude of the possibility of price wars between outlets because
each outlet competes with each other for customers with the same product. We can
find this strategy in supermarket franchises such as Alfamart and Indomaret.

C. COORDINATED CHANNEL MARKETING

Brands conduct online and offline advertising on behalf of channel partners to help them
generate sales of their branded products. Such online and offline marketing initiatives can be
separated or coordinated to inform each other. Examples are apple orchards: Apple orchards>
Transportation> Processing plants> Packaging> The final product to be sold> Apple pie is eaten
An alternative term is distribution channel or 'route-to-market'. It is a 'path' or 'pipeline' in which
goods and services flow in one direction (from vendor to consumer), and the payments generated
by them flow in the opposite direction (from consumer to vendor).
Marketing channels can be as short as direct from vendor to consumer or may include
several interconnected intermediaries (usually independent but interdependent) such as
wholesalers, distributors, agents, retailers. Each intermediary receives an item at one price point
and moves it to the next higher price point until it reaches the final buyer.
Marketing Channels can be long-term or short-term. Short-term channels are influenced
by such market factors as: business users, geographically concentrated, extensive technical
knowledge and necessary routine services, and large orders. Short-term products are influenced
by such factors as: perishable, complex and expensive. The short-term manufacturer factor
includes whether the manufacturer has sufficient resources to perform channel functions, a wide

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product line, and important channel control. Short-term competitive factors include:
manufacturing is satisfied with the performance of marketing intermediaries in promoting
products.
Long-term market factors include consumers, geographically dispersed, little technical
knowledge and routine servicing is not required, and orders are small. Product factors for long-
term marketing channels are: durable, standardized and inexpensive. The manufacturer factor is
that the manufacturer does not have sufficient resources to perform the function of the channel,
the product line is limited, and the control of the channel is not important. The competitiveness
factor is: manufacturers are dissatisfied with the performance of marketing intermediaries in
promoting products

D. TYPES OF MARKETING CHANNELS

Determining the "route" to which the product will be distributed is important, and marketers
must determine which channel to use to market their products. Here are the types of Marketing
Channels.
1. Manufacturer Directly to Customer
Manufacturers make goods and sell them to consumers directly without intermediaries,
such as wholesalers, agents or retailers. Goods come from the manufacturer to the user
without intermediaries or intermediaries. For example, a farmer can sell some products
directly to customers. For example, a bakery can sell cakes and pies directly to
customers.

2. Manufacturer to Retailer to Consumer

Purchases are made by retailers from the manufacturer and then retailers sell the
merchandise to consumers. This channel is used by manufacturers who specialize in
producing groceries. For example, clothes, shoes, tableware, or furniture, which are
distributed to consumers through department stores or convenience stores.  
3. Manufacturer to Agent to Wholesaler to Retailer to Customer
Distribution involving more than one intermediary, using a designated agent to
intermediary and assist in the sale of goods. The agent receives a commission from the

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 manufacturer. These agents are useful when the goods have to move quickly to the
market as soon as the order is placed.
For example, in the fishing industry, when they want to market a large catch of seafood;
because the fish is easy to wither, not fresh anymore, or spoiled, it must be sold quickly.
It took a long time for the fishing company to contact many wholesalers across the
country so that it contacted the agent. The agency distributes fish to wholesalers.
Wholesalers sell to retailers and then retailers sell to consumers

E. WAYS IN MARKETING CHANNELS

The first step in creating a marketing channel plan is to identify very potential partners in
the pipeline. It involves a careful analysis of the products sold, the products of competitors, and
the market engaged in. The analysis should be thorough, technical, and comparing market data is
difficult to find the right pair.
Once you know who your partner is, they must be sure that the cooperation will benefit
both parties. Manufacturers should market their products according to the needs of retailers as a
company tries to meet the needs of consumers. After the agreement is reached, both parties will
draft and sign a binding contract. It is very important that every contingency carried out is
recorded. The only way for the partnership in the flow to work well is to record all the most
relevant details that have been agreed in the contract before the cooperation begins. With the
contract, the two parties can begin to exchange goods and services. For the duration of the
contract, the role of the manager of both parties will be required so that during that duration can
be maintained smoothness and concerns from problems that may arise. Even the most thorough
contract cannot cope with every possible problem, so both parties must maintain a productive
business relationship. At the conclusion of the contract, the terms can be renegotiated or the
partnership can be cut.

In addition, there are 4 ways that you can do so that there is an efficient product
distribution that you can adjust to your marketing strategy. The 4 ways are:

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 1. Direct Selling

Direct selling is the marketing and sale of products directly to consumers away from
fixed retail locations. Direct selling is the oldest form of direct selling. Modern direct sales
include sales made through party plans, one-on-one demonstrations, personal contact
arrangements as well as Internet sales.The formal definition is: "Personal live presentations,
demonstrations, and sales of products and services to consumers, usually in their homes or at
their jobs."
Direct sales are different from direct marketing. Direct selling is about individual sales
agents looking for and dealing directly with clients while direct marketing is about business
organizations that seek relationships with their customers without going through
agents/consultants or retail outlets.Direct sales often, but not always, use multi-level marketing
(sellers are paid to sell and for sales made by people they hire or sponsors) rather than single-
level marketing (sellers are paid only for the sales they make).
In this way you will directly interact with consumers and the most important advantage is
that your relationship with customers will be stronger and of course it will greatly help the
branding process and trust of the customer.

2. Selling Through Intermediaries

A marketing channel where intermediaries such as wholesalers and retailers are utilized
to make products available to customers is called an indirect channel.

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 The most indirect channels you can use are (manufacturer-> agent-> wholesale-> retailer-
> consumer). This channel is used when there are many small manufacturers and retailers and
there are agents used to help coordinate the large supply of the product.

3. Dual Distribution

Dual distribution describes a variety of marketing settings where manufacturers or

wholesalers use more than one channel simultaneously to reach the end user. It is possible for
you to sell directly to the end user as well as sell to other companies for resale. But sometimes
using two or more channels to attract the same target market can lead to channel conflicts. An
example of dual distribution is the franchise business format, in which the initial owner grants
permission to operate several units for franchisees at the same time owning and operating several
units of their own under the same shade.
4. Reverse Channels

If you have noticed the other three channels, you will see that they have one thing in
common which is the flow. Each of them flows from the producer to the intermediary (if any)
then to the consumer.
Technology has allowed it to flow in the other direction. Like how to make money from
resale products or recycling. There is another difference between the inverse channel and the

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more traditional one that is the introduction of beneficiaries. In the reverse current, you will not
find the manufacturer. You'll only find the user or recipient. Those were the 4 ways that you can
use to streamline your marketing channel so that your products can be spread everywhere and of
course increase your profits.

F. CASE STUDY
The Pepsi International case study provides evidence of the situation the company faces
when its distribution strategy in international supply chain management is, in fact, ineffective
and inappropriate! Pepsi Cola International accessed the Ukrainian market through exports in
1968 and has since been trying to maintain its position in the market. It exports its concentrate,
via routes to the country that it is occasionally exchanged, to 12 local bottling companies who
then sell it to distributors, who then ship it to retail stores. Despite the fact that supply chain
management has brought Pepsi to gain local fame and popularity, it is not cost efficient which
reduces the company's ability to earn higher profits Differences in supply and demand, conflicts
between channel members, environmental impacts and theft along the way are very detrimental
to the profitability of the company. With Cola Cola entering the market, Pepsi needed to redefine
and redesign its supply chain strategy to meet the challenges facing the market and maintain its
position in the country. These challenges are discussed in detail to provide an enabling solution
for companies to improve their supply chains and marketing channels based on the existing
literature, theory and marketing channel models and logistics.

CHALLENGE : GAP IN DEMAND AND SUPPLY

One of the two major challenges facing Pepsi is the supply and demand gap. This is
mainly due to Pepsi's lack of presence in the market and its heavy dependence on outsourced
distribution. Demand gaps exist in the supply chain when companies fail to meet demand
through distribution. Irregular delivery of quantities results in this. The supply gap exists due to
the lack of expertise of channel members in the distribution process. Efficient supply chain
management has been widely advocated in the literature on marketing channels and logistics.
Evidence that there is an efficient and effective supply chain strategy comes from
customer satisfaction and the quality of customer service provided. In the case of Pepsi Cola

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International, entire rural customer segments were excluded from distribution, indicating the lack
of focus given to customer service in the supply chain.
As much as PepsiCola International would like to blame local distributors for this, the
main responsibility lies in its own head for developing distribution strategies without proper
consideration of the existing customer segments in the country and for not hiring managers to
control supply chain operations in the country, which would instill efficiency, in the supply
chain. Pepsi Cola International has two consumer segments in Ukraine that are not yet well
segmented. So far, Pepsi's focus has been on the urban consumer. This case study highlights the
increasing demand for Pepsi in rural areas, which is not surprising since recent studies of the
world's developing economies have found that the largest and fastest growing customer segment
is the rural population. However, their variable income and therefore their purchasing power
differ from that of urban consumers. This has resulted in marketers generally ignoring rural
populations and focusing primarily on urban consumers, as Pepsi did in Ukraine. There is a very
wide geographic spread and this, together with the lack of proper infrastructure, prevents large
companies from building customized marketing channels to target these customers. Ignoring
rural consumers could be disastrous for Pepsi in terms of losing access to a larger market share in
the country.

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 CHAPTER III
CLOSING

A. CONCLUSION
For companies both engaged in industry and services, promotion is a way to introduce the
products that have been produced to consumers. And it is also one of the measuring milestones
for the success of a company in obtaining profits for the development of its products and the
continuity of its business.
After the company has succeeded in creating the goods or services needed and setting a
decent price, the next stage determines the method of delivering the product/service to the
market through effective routes until it arrives at the right place, with the hope that the
product/service will be in the midst of the needs and desires of consumers who are hungry for the
product/service.
What should not be ignored in the steps of activities to facilitate the flow of goods/services is
to choose a distribution channel (Channel Of Distribution). The problem of choosing a
distribution channel is an influential problem for marketing, because mistakes in choosing can
hinder and even hinder the business of distributing products/services from producers to
consumers.

B. SUGGESTION

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 It is highly recommended the reason why industrial companies have to do marketing
channels because in their operations marketing cannot run effectively without channels that act
as supporting factors. This also has an impact on the company's sales results and the continuity
of the company. Therefore, a company should have an intermediary (channel/ channel) in
carrying out its business. Because the role of marketing is very important and has an impact on
the continuity of the company.
The need to design a marketing channel begins with finding out what consumers want from the
channel. Do consumers want to buy from a nearby location or are they willing to travel to a more
distant and centralized location? Do customers prefer to buy on their own, over the phone, or
online? Do they value the breadth of the assortment or do they prefer specialties? Do consumers
want a lot of additional services (delivery, installation, repair), or will they get these services
elsewhere? The faster the delivery, the more assortment is provided, and the more additional
services are provided, the greater the level of service of the channel.
Reference

 https://www.coursehero.com/file/21960804/Saluran-Pemasaran
 https://dosenekonomi.com/ilmu-ekonomi/definisi-dan-contoh-saluran-pemasaran
 Shusterman, Jared. "Coordinating Your Channel Marketing Initiatives" .
www.sproutloud.com . Retrieved 22 January 2014 .
 Armstrong, G. (2009). Marketing: an introduction ([ed. to Europe). Harlow, UK:
Financial Times Prentice Hall.
 https://kamus.tokopedia.com/s/saluran-pemasaran
 https://idmanajemen.com/marketing-channel
 https://cerdasco.com/konflik-saluran
 http://artikelbaden.blogspot.com/2012/06/mengelola-saluran-pemasaran.html,

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