Marketing Channels

Have you noticed the role of marketing channels in your daily life? Have you ever thought about how much they influence our purchase behaviour? Not only do marketing channels influence our purchase decisions, but they also make our lives easier in many ways. Wondering how? Read along to find out how!

Marketing Channels Marketing Channels

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Table of contents

    Marketing Channel Definition

    Marketing channels make our lives easier by informing us about new products in the market and bringing them closer to us. They bring the products we desire as close to us as possible from the manufacturing site. Although not all businesses require a specific marketing channel, most companies use an intermediary to facilitate the availability of products.

    Marketing channels are a group of entities that facilitate the promotion and availability of a good or service for customers.

    A company's marketing channel also affects other facets of a product. How and where a product is sold will affect its price; for example, if the product is sold at a discounter, it cannot be very high-priced. The brand's reputation and value may also determine where a product is sold.

    A marketing channel can be as simple as the transaction between the producer and the buyer. It can also pass through many channels from the producer before it reaches the buyer. These channels are also called intermediaries. Marketing channels or intermediaries enhance the efficiency in making the products available to the target customers.

    Marketing Channel Types

    Different marketing channel types make it easier for companies to reach more customers in less time. Organisations must communicate marketing messages and deliver products. Marketing channels fulfil all these functions.

    Vertical Channels

    In a vertical marketing channel, the producers, wholesalers, and retailers act as a single unit to bring the products to the target customers, in contrast to the conventional distribution channels. No channel member has much control over the other members as no formal roles are established. As a result, it can be difficult to resolve conflict. There are three vertical distribution channels - corporate, contractual, and administered.

    Conventional distribution channels are marketing channels with independent producers, wholesalers, and retailers. Thus, no members have control over the others.

    • Corporate Vertical Channel - common ownership and integration of different levels of production and distribution stages.

    • Contractual Vertical Channel - firms operating at different levels of production and distribution function together under a contractual agreement.

    • Administered Vertical Channels - different stages of production and distribution collaborate due to the size and dominance of one of the parties.

    Horizontal Channels

    Two or more organisations working at the same level join to function as one. Different companies may have the upper hand in different marketing, financial, or production facets, making this union beneficial for all the involved parties. This union may be between competitors or non-competitors. Such companies benefit from synergies, and this channel also works well globally.

    Apple partnered with Nike and helped athletic customers of both brands improve or measure their performance using an iWatch.

    Multi-channels

    Multi-channels involve creating multiple marketing channels to reach one or more customer segments and increase sales. This benefits companies by reaching customers through many channels - expanding customer reach. Multi-channel marketing may be a fast method for increasing sales, as more customers are aware of the products through the different channels.

    Starbucks sells its products at its cafés, webshops, and grocery stores.

    Functions of Marketing Channels

    The various functions of marketing channels prove to be advantageous for companies. However, giving away the distribution function also means letting go of a certain level of control.

    Marketing channels make products available to the target group quickly and efficiently (compared to if they were distributed directly by the manufacturer). This is because these channels have the resources, contacts, experience, and scale that help them function efficiently. They help not only producers but also customers.

    Marketing channels reduce the chaos and hassles of distributing and purchasing a product. Multiple manufacturers can work with one distributor to distribute the products from all the manufacturers to all the customers.

    When buying a new television, you can visit an electronics store to see your options. The electronics store will present you with various options from many companies. Here, the electronics store is the distribution channel. Imagine how much more work you would have had to do if there were no distribution channels like the electronics store. You would have had to contact every company you were interested in through their different contact channels to compare your purchase options.

    As outlined in the example, the various channels buy supplies from multiple manufacturers in large quantities, which allows them to present customers with a wide variety of products in smaller quantities. This makes it easier for customers to choose and make a purchase.

    Not only do marketing channels distribute products to customers, but they also perform other significant functions. Spreading awareness about products and promoting them to target customers are vital functions of marketing channels.

    The different channels understand their customers' needs and see the product gaps clearly as they work directly with customers. This also helps them identify the appropriate market for the right product.

    Risk-taking, financing and negotiating are a few additional functions of marketing channels.

    Cross Channel Marketing and Cross Marketing

    Cross-marketing and cross-channel marketing are two essential concepts of marketing. Let us take a look at them both in detail.

    Cross Marketing

    When two or more businesses work together to promote their products and increase sales, it is called cross marketing. As a result of cross-marketing, brands can provide something new to their customers.

    Cross-marketing is the union of businesses (usually two) to improve promotion and sales and provide a better experience for customers.

    Although cross-marketing aims to increase sales and fulfil business goals, it can only be possible if the target market, their wants and needs, social status, income, and other demographics are similar for all the involved parties. The following are the steps followed by companies that plan to market their products using cross-marketing channels:

    • Setting objectives,

    • Analysing the target audience,

    • Looking for potential partners,

    • Creating a partnership agreement

    Spotify and UBER collaborated and marketed their services using cross marketing. UBER users could create Spotify playlists to listen to during their ride while waiting for the cab.

    Cross-channel Marketing

    As you may have guessed, a cross-channel marketing strategy uses different channels to reach its customers.

    Cross-channel marketing provides different channels for customers to connect with a brand.

    Companies mainly provide two or more channel options to reach their customers, ensuring more customers can interact with the brand. Providing more channels also allows customers to connect with their preferred or trusted channels. Different communication channels include e-mail, SMS, social media, brand websites, phone, etc.

    Zara offers their customers to shop with them via their physical stores, mobile app, or company website. Customers can choose their most convenient method of shopping to make a purchase.

    Marketing Channels Examples

    Marketing channels perform many tasks, promotion and distribution being the main ones. Some marketing channel examples are outlined below.

    Promotion Channels

    Marketing channels used to promote a product:

    These are different channels that raise awareness of a product among the target group. Marketers can use each channel to reach different audiences.

    Distribution Channels

    Distribution channels are used to get the products or services from the producer to the customer. The different channels that may be used are as follows:

    • Wholesaler

    • Retailer

    • Dealer

    • Agents

    • Internet

    • Sales Team

    • Value-Added Reseller

    • Consultant

    Therefore, marketing channels make the manufacturers' and end-users' lives easier by acting as a medium to promote and distribute goods and services. They play a crucial role in our day-to-day lives and businesses.

    Marketing Channels - Key takeaways

    • Marketing channels are a group of entities that facilitate the promotion and availability of a good or service for customers.
    • In a vertical marketing channel, the producers, wholesalers, and retailers act as a single unit to bring the products to the target customers.
    • There are three vertical distribution channels - corporate, contractual, and administered.
    • In horizontal channels, two or more organisations working at the same level join to function as one and benefit from synergy.
    • Setting up multiple marketing channels to reach one or more customer segments and increase sales is called multi-channel marketing.
    • Efficient distribution and promotion of products, understanding customers and product gaps to serve the right market, risk-taking, financing and negotiating are some functions of marketing channels.
    • Cross marketing is the union of businesses (usually two) to improve promotion and sales and provide a better experience for customers.

    Test your knowledge with multiple choice flashcards

    In a _______ marketing channel, the producers, wholesalers, and retailers act as a single unit

    When different stages of production and distribution collaborate to function together, but the control is given to the dominant member, it is a(n) 

    Two or more organizations working at the same level join to function as one, and this is a _______ channel.

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