Marketing channel is a system which ensures the distribution of the merchandise from the producer to the consumers by passing it through multiple levels known as middlemen. It is also known as channels of distribution. Every product is different from one another and so are their channels of distribution.
Types of Marketing Channels
• Direct Marketing Channel / Zero-Level Channel
• Indirect Marketing Channels: One-Level Channel; Two-Level Channel; Three-Level Channel
Factors Determining the Marketing Channels
There are certain factors related to the product, the company, the competitors, the market and the environment which determines the selection of an appropriate channel of distribution for a particular product.
• Product-Related Factors
• Company Related Factors
• Competitive Factors
• Market-Related Factors
• Environmental Factors
Functions of Marketing Channels
Marketing channels initially aim at the availability of products or services to prospective customers. Intermediaries are the people or organisations which acts as a link between the manufacturers and the customers. They perform multiple functions to facilitate both, the companies as well as the customers.
These functions are explained in detail below:
• Sorting: The middlemen purchase goods from multiple manufacturers and segregate the products which are similar in quality, features, size, etc.
• Accumulation: Marketing channels ensure regular supply and circulation of goods in the market since the middlemen involved in the process are responsible for maintaining the required stock in ample quantity.
• Allocation: The goods are manufactured in bulk quantities whereas the customers prefer to buy very less quantity. Here comes the role of the middlemen who breaks the volume into small packages according to the customers’ requirement.
• Assorting: The customers can avail a large variety of products since the middlemen buy goods from the manufacturers or suppliers located in different regions and make them available to the customers at one single place.
• Product Promotion: The middlemen involved in the channel of distribution sometimes directly or indirectly promotes the sale of a particular product through a special display, loyalty programmes, additional discounts, organising sale, etc.
• Negotiation: The middlemen is the person who bargains with the manufacturer as well as the consumer for the product’s price, proportion, quality, after-sale service, guarantee, etc.
• Risk-Taking: The middlemen, i.e. the wholesalers and the retailers have to bear the risk related to products like expiry, breakage, spoilage, damage, etc. These risks are even born at the time of transportation and warehousing.