Distribution and Value Networks

08/27/21 1
 Marketing Channels

Marketing channel is a set of interdependent organizations

involved in the process of making a product or service
available for use or consumption.
 
These interdependent organizations, also called as
intermediaries. These are of two types:

 Merchants, such as wholesalers and retailers who buy, take

title to and resell the goods.

 Brokers, such as sales agents who represent the

manufacturers and search for the customers, negotiate on the
producers’ behalf but do not take title of the goods.

08/27/21 2
 Marketing Channels

The Importance of Channels

 Convert potential buyers into profitable orders

 Marketing Channels serve company’s markets
 Marketing Channels create markets

08/27/21 3
 Value Networks

Value Networks

A system of partnerships and alliances that

a firm creates to source, augment, and
deliver its offerings.

08/27/21 4
 The Role of Marketing Channels

Producers often delegate the job of selling and distribution to

intermediaries even at the risk of loosing some control over
how and to whom the products are sold. The following are the
reasons for doing so:

 Lack of Financial Resources to set up own distribution

channels
 More return on investment from the core competency
business.
 Not feasible to set up retail channels for just one product line.
 Intermediaries achieve superior efficiency in making goods
widely available and accessible to target markets through
their contacts, experience, specialization and scale of
operation.

08/27/21 5
 The Role of Marketing Channels
Channel Levels
A zero level channel consist of a manufacturer selling directly to the
final customer. Major examples are door to door sale, mail order.

A one-level channel contains one selling intermediary, a two-level

channel contains two selling intermediaries. These intermediates
could be retailers, distributors.

As the no. of levels increase the level of difficulty of information

sharing and coordination also increase. Channels normally describe
a forward movement of products from source to user.

Service Sector Channels

Marketing channels are not limited to distribution of physical goods.

Producers of services and ideas also need intermediaries to make
their services available to target populations. Travel agents, internet,
telecalling setups provide such distribution of services and ideas.
 

08/27/21 6
 The Role of Marketing Channels

08/27/21 7