Marketing Channels Structure And Functions Pdf
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A marketing channel consists of the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption. It is the way products get to the end-user , the consumer ; and is also known as a distribution channel.
- Marketing Channels and Economic Development: A Literature Overview
- Distribution Channels in Marketing
- Distribution Channels – Definition, Types, & Functions
Marketing Channels and Economic Development: A Literature Overview
All these factors are addressed in the section on selecting Distribution Channels. According to W. A channel of distribution or trade channel is the path or route along which goods move from producers to ultimate consumers or industrial users. It is the distribution network through which a producer puts his products in the hands of actual users. Introduction to Distribution Channel 2. Meaning and Definitions of Distribution Channel 3. Characteristics and Role 4. Functions 5. Selecting Distribution Channel.
Selecting, Motivating and Evaluating the Channel Members 7. Steps Involved in Designing a Channel System 9. Activities Involved Factors Needed Types Factors Affecting Managing Distribution Channels. Also referred to as distribution channels, they are indeed like the great feats achieved by the Kings of yore who built unimaginable irrigation systems to carry out the management of the scarce resource — water for cultivation.
The large tanks reservoirs collect and store water during rain and it is then distributed through canals to the paddy fields and other agricultural land where irrigation is required, when there is no rain. The distributor or wholesaler is like the tank whilst the canals are the retail trade, through which goods flow to customers.
The vital links between the manufacturers, marketing intermediaries and customers are the channels of distribution through which goods will flow. The individual product may need a specific distribution system and it may be similar to another group of products. For example frozen foods require reefer trucks and a slightly different system of distribution, as they need to be transported to the trade outlets as quickly as possible avoiding double handling.
Pasteurised milk and Soybean curd will also need similar attention, as their shelf life is only a few days. The distribution channel for frozen food is the retail shop networks that has deep freezers and is willing to stock and sell frozen food. All outlets that have refrigeration are suitable for pasteurised milk and Soybean curd. How would a manufacturer of biscuits and similar confectionery items choose their channels?
The manufacturer will have its own distribution or out-source a distributor who will cover wholesalers and the retail trade whilst retail trade will also purchase from the wholesalers depending on their needs. This is known as the distribution pipeline. Supermarkets are often served direct by manufactures due to bigger margins required by them and their strategic importance to most FMCG. The manufacturer invoices their products direct to the Distributor and transfers ownership to them. Manufacturer also pays an allowance to transport goods from the factory to their warehouse or transports themselves and a further allowance per day is granted for transport to carry out re-distribution.
The distributor has to provide his staff to carry out re-distribution. In addition to all the allowances paid the company also provides a company Sales Representative to carry out re-distribution. The distributor would have to provide a suitable vehicle to carry the product portfolio, a driver, a cash collector and a porter to deliver the goods.
The company Sales Representative will do the actual selling and some merchandising. The Sales Representative, who has a pre-determined itinerary approved by his superior the Area Sales Manager, will work the outlets within the area mix given in the plan each day. Other confectionary manufacturers such as — the snack food manufacturers and cake manufacturers use similar channels. However, when it comes to cosmetics two other types of outlets will be prominent — the textile and fancy goods shops, particularly for ladies.
Manufacturers and suppliers of pharmaceuticals have the Chemists and Partial Chemists network to focus. Similarly the hardware importers and manufacturers have the Hardware outlets network in every town. There are the small groceries in housing schemes and densely populated residential areas often located in dwelling houses that are outside the shopping complexes, which are a very important network to place products. Many who live around the vicinity go for their low value day to day items to them.
Therefore adding them to the call list and visiting them will be beneficial. They may not depend on the pipeline and may not visit the wholesaler for goods and may only serve the goods that are brought to their doorstep. In the circumstances, the entrepreneur who ignores such outlets will lose an opportunity. The latter is becoming very popular among the big names.
Just like the Hardware shops there are shops selling Electronic goods, they too carry a large product portfolio Liquor shops are also specialised outlets that only sell liquor and often tobacco products under licence. When it comes to industrial products the approach is direct marketing and personal selling — there is nothing better than this.
If possible demonstrations, direct mail, gift and meal vouchers, concert tickets, emails are ideal to provide support, some may choose media. A little pub, which serves the pints, soft drinks, sweets and snacks in a cinema complex, is a winner. A courier service located in the heart of the business city, a freight forwarder located besides import and export offices, a floor shine service in a busy business area, will provide them place utility, which is the ultimate goal of distribution. It is the pipeline through which products flow during their journey to the market.
A trade or marketing channel consists of the producer, consumers or users and the various middlemen who intervene between the two. The channel serves as a connecting link between the producer and consumers. By bridging the gap between the point of production and the point of consumption, a channel creates time, place and possession utilities.
The downward flow includes information on new products, new uses of existing products, etc. The upward flow of information is the feedback on the wants, suggestions, complaints, etc.
The objective of manufacture is to deliver the product so manufactured to the consumer. In this age of technology in which production is made on large scale, a manufacturer cannot complete such work himself. The manufacturer receives services of several middlemen and then only the product is reached to the ultimate consumer.
Some main definitions of distribution channels are as under:. According to Richard M. The manufacturer puts his product into pipeline or marketing channel and various marketing people move it along to the consumer as the other end of the channel. According to John A. According to William J. It is concluded as a result of analysis of the definitions that:.
Thus, distribution channel is a route for transfer of products title in which those institutions only are included that assist in the act of title transfer and these deliver the products to ultimate user or industrial users without making any charge there upon. Producers normally use a number of marketing intermediaries for taking their products to users.
All such intermediaries constitute the distribution channel. The channels of distribution, thus, add the following characteristics in marketing:.
Convenience Value — As they bring goods to the consumers in convenient shape, unit, size, style and package;. Possession Value — As they make it possible for the consumers to obtain goods with ownership title;. Marketing Tools — As they serve as vehicles for viewing the marketing organization in its external aspects and for bridging the physical and non-physical gaps which exist in moving goods from the producers to the consumers; and. Supply-Demand Linkage — As they bridge the gap between the producers and consumers by resolving spatial geographical distance and temporal relating to time discrepancies in supply and demand.
Channels supply products in required assortments, combination of products of different manufactures and help in assembling also. Channels provide salesmanship word of mouth by being physically close to customers. Helps merchandising the products at retail shop by display, selling effort, awareness etc. Helps in implementing price mechanism setting price level from both sides making a bridge between user and manufacturer.
Financing the stock, risk bearing, warehousing, storage of products etc. A Functions that Help to Complete Transactions:.
Information — Gathering and distributing Marketing Research and intelligence information about factors and forces in the marketing environments needed for planning and aiding exchange.
Promotion — Developing and spreading persuasive communications about an offer. Contact — Finding and communicating with prospective buyers. Matching — Shaping and fitting the offer to the buyers needs including activities such as manufacturing, grading, assembling and packaging.
Negotiation — Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred. Physical distribution — Transporting and storing goods. Financing — Acquiring and using funds to cover the costs of the channel work. Risk bearing — Assuming the risks of carrying out the channel work. All the function has three things in common :. Thus, products which have a larger consumer market, which are purchased with a relatively high degree of frequency and involve a minimum of technical knowledge in selling to the final user, can be sold through retailers dealing in the particular class of goods concerned, or from automatic vending machines, or direct to the customer door-to-door or through mail order.
Cigarettes, books and magazines and sugar and chocolate confectionery are sold through a multiplicity of different types of retail outlets to meet the convenience of the customer. Such efforts are easier when large conglomerations of consumers are readily accessible in terms of their physical location, and the degree to which they can be influenced directly by the manufacturer to buy his product. Direct contact between a consumer goods manufacturer and his retail customers enables the former to gauge his distribution levels more accurately, to keep stock levels at a maximum and to apply additional stock pressure when necessary.
While selecting intermediaries, the company should determine what characteristics distinguish the better ones. The selection of intermediaries is essentially a matching process. The producer must identify the specific channel members who can perform the functions needed and convince them of the mutual benefit that will accrue of the relation.
The selection decision should examine the following characteristics in the intermediary:. Commitment and ability to deliver sales results from the essential characteristics required from a channel member. In a multilevel channel, the producer must look beyond the first level of contact.
Distribution Channels in Marketing
Channels of distribution are basic to the marketing strategies of firms, and have been shown to be a key element in the marketing mix. The author here undertakes a comprehensive review of channels literature, primarily to identify and assess the adequacy of the various mainstream conceptual schemes which have emerged. The author concludes that whereas every conceptual approach reviewed has added something to our cumulative knowledge, no single approach has yet reached a point of adequate conceptualisation based on his own basic criteria. As yet channels literature is mainly descriptive, and has virtually no predictive power. Gattorna, J. Report bugs here. Please share your general feedback.
Distribution Channels – Definition, Types, & Functions
Each channel structure includes different organizations. Generally, the organizations that collectively support the distribution channel are referred to as channel partners. The direct channel is the simplest channel.
All these factors are addressed in the section on selecting Distribution Channels. According to W.
Distribution channel s are a key element in all the marketing strategies that revolve around the product. They help you reach the customer in a way to maximise your revenue and brand awareness. A distribution channel also called a marketing channel is the path or route decided by the company to deliver its good or service to the customers.
The distribution channel simply refers to the path or route through which product moves from producer to ultimate customer.