FUNCTION OF

MARKETING
CHANNEL
WHAT IS THE WORK OF MARKETING
CHANNEL?
• to carry inventory
• to generate demand through selling activities
• to physically distribute product; to engage in
after-sales service
• and to extend credit to other channel members
or to end-users.
 10 Most Important Functions of Marketing
Channel
1) Information Provider
2) Price Stability
3) Promotion
4) Financing
5) Title
6) Help in Production Function
7) Matching Demand and Supply
- The matching process is undertaken by
performing the following functions
i) Contractual
ii) Merchandising
iii) Pricing
iv) Propaganda
v) Physical Distribution
vi) Termination
8) Pricing
9) Standardizing Transactions
10) Matching Buyers and Sellers
CHANNEL DESIGN
MARKETING CHANNEL
- A marketing channel is a set of
practices or activities necessary to
transfer the ownership of goods, and
to move goods, from the point of
production to the point of
consumption.
TYPES OF MARKETING
CHANNEL

 Direct marketing channel

Indirect marketing channel
 DIRECT MARKETING CHANNEL

This type of channel has no

intermediaries, in this distribution
system, the goods go from the
producer directly to the consumer.
 INDIRECT MARKETING
CHANNEL
 CHANNEL DESIGN
It refers to those decisions involving
the development of new marketing
channels where none had existed
before, or to modification of existing
channels.
 CHANNEL DESIGN DECISIONS
o Customer wants and needs
o Objectives and constraints
o Identifying and Evaluate alternatives
 MEMBERS IN
MARKETING CHANNEL
• MERCHANTS – buy, take, title to and resell
merchandise.
• AGENTS - search for customers and may
negotiate on the producers behalf, but do not
take title to goods.
• FACILITATORS - assisting distribution, but do
not take title to goods nor do negotiate
purchases or sales.
 STEPS OF DESIGNING A
CHANNEL
ANALYSIS OF CUSTOMERS DESIRED SERVICE OUTPUT
LEVELS

ESTABLISHING CHANNEL OBJECTIVES

IDENTIFYING MAJOR CHANNEL ALTERNATIVES

EVALUATING THE MAJOR ALTERNATIVES

1. ANALYSIS OF CUSTOMERS
DESIRED SERVICE OUTPUT LEVELS
•Analyzing customer needs
•Waiting time
•Product variety
•Service backup
2. ESTABLISHING CHANNEL
OBJECTIVES

-Each channel alternatives provide a

different level of sales, costs.
Example: internet, telemarketing, retail
stores, distributors.
3. IDENTIFYING MAJOR CHANNEL
ALTERNATIVES
 Company Sales Force
Dealer
Value Added Resellers
Merchants
Carrying and Forwarding Agents
Intensive Distribution
4. IDENTIFYING MAJOR CHANNEL
ALTERNATIVES
 Wholesaler
Retailer
Distributor
Middlemen
Agent or Broker
5. EVALUATING THE MAJOR
ALTERNATIVES
- Once the list of alternative channels is
selected, the marketing manager should
evaluate each channel alternative to arrive at
a final decision.
 FACTORS AFFECTING CHANNEL
CHOICE
1. MARKET FACTOR
 Customer Preferences
Organizational Customers
Geography
Competitors
2. PRODUCT FACTOR
 Life Cycle
 Product Complexity
 Product Value
 Product Size and Weight
 Consumer Perception
3. MANUFACTURER FACTOR
 Company Objective
 Company Resources
 Desire for Control
 Breadth of Product Life