Dear Reader in this first chapter I will introduce you to what are Marketing channel strategies and who are the key players. Imagine you are a brand manager in a famous company in the ready-to-eat food industry.
How will you sell your final product? Will the product delivery be the same to a supermarket as to an individual customer? Can there be multiple methods of delivery of the final product? All these questions will be answered
Definition: What is Marketing channel strategy
The final delivery of the product, from the producer to the customer, goes through various pathways before reaching the destination. These pathways are called Channels, and organizations' strategies to make the delivery efficient is known as the marketing channel strategy.
Before we deep dive into the nitty-gritty of the channel strategies and decisions involved in marketing channel strategies, in this section, we try to offer an overview of the topic.
Let us now look at the players who make up the key members of marketing channels.
Key players in the marketing channels
As mentioned above, a marketing channel has many stakeholders, from the manufacturer who produces the product to the customer who will be the end consumer of the product.
Every marketing channel also has a few intermediaries between the producer and the customer. They play a vital role in delivering the final product. A birds-eye view of these channel members can be seen below.
While most of the channel members or the intermediaries are someone we have known, interacted or heard at some time in our life, a short description of their roles is as follows:
- Retailers: in the above example of ready-to-eat food products, the supermarket is the retailer. They take temporary ownership of the product and sell it to the final customer. Other examples of retailers include chain stores like d-mart, local Kirana stores etc
- Wholesalers: The entities are usually involved in bulk procurement of the products from the producers and distribution to retailers for further sale. A few of the types of wholesalers are:
- Merchant wholesalers: they are the ones who buy directly from the producer, keep the product with them for a while and then sell it further to either retailers or sometimes to a customer now.
- Retailer wholesalers are the ones who are usually selling the product directly to the customer. They are involved with every aspect of the channel functions except for the service of the product.
- Limited-Service Wholesalers are the wholesalers who sell the products on a limited number of channels
- Specialized wholesalers are usually associated with a specialized product—for example, automobile sector wholesalers.
- Agents: If the product is being sold directly by a salesperson to the final customer, such an intermediary is known as an agent, where the role they play is not of a temporary owner but that of acting on behalf of the permanent owner. Brokers, commission agents, auctioneers are a few examples of agents.
- Facilitators: they neither take the ownership nor take the role of advocating for the owner but as an independent external agency making the delivery process smoother, for example, transportation companies.
Importance of Marketing channel strategies
Before delving into marketing channel strategies, a clear understanding of the significance of marketing channels is of utmost importance. As mentioned earlier, the final product can be delivered in multiple ways.
Each delivery pathway is a unique marketing channel. The set of channels a firm employ is known as the marketing channel system.
Marketing channels occupy a distinctive position in that they are not just delivering the final product. They are also establishing a path for the customer to reach the producer. Hence, the channels serve the market, but they also make the market.
Moreover, realize how vital a channel partner is for you. A customer may never meet or see you or anyone in your company. Their point of interaction will always be a channel you have chosen.
The medium between the endpoint and the start is the marketing channel. Without that, there is no sale happening. Hence Marketing channel strategy is of utmost importance to any firm that wants to make the most profit.
Marketing Channel Strategies to bring customer closer
The path which the channels chart out for the firm can be accessed by two strategies to reach customers. They are known as the push and pull strategy and are extremely important to marketing channel strategies.
The Push Strategy talks about how the product can be pushed onto the customers; this can be done by sales executives aggressively campaigning or directly reaching the customers.
The Pull Strategy is slightly indirect. The "in the customer's face" kind of advertising is not done. A rather subtle subliminal messaging is done to create a demand from the customer to access the product.
Companies usually employ both strategies in different ways to develop a holistic marketing channel strategy.
Examples of Various Marketing Channels
The popular marketing channels are given below. However, while I will be taking you through each of them in in-depth in the subsequent chapters, let me just introduce what their role would be
- Direct Sales: is the method in which goods and services are sold directly to consumers. Sales agents usually deliver the product to the end-user. The vacuum cleaner salespeople coming to the door of the customers is an example of direct sales
- Telemarketing: This is done through advertisements via TV channels. Naaptol is one example of a successfully implemented telemarketing channel strategy
- Retail Stores: they purchase the products from either the firm or wholesaler and get them closer to the customer for sale. Examples of this marketing channel can be D-mark or Spencer's.
- Internet (e-commerce and m-commerce): The most important of all marketing channels, it brings the products into the hands of the consumer. Flipkart and Amazon are examples of famous channels, and more about this will be dealt with in a separate chapter
- Distributor: A distributor is a person who distributes goods in a specific area. Distributors usually take permission from particular companies for a limited period. They gain for exclusive access to distributing a specific product or service in a location.
The marketing channels do not operate in silos. Simultaneous existence of two or more channels are usually seen in most firms. This is known as Multichannel Marketing which plays a crucial role in designing the marketing channel strategies.
What is Multichannel Marketing?
In today's world, companies rarely rely on one method for any endeavour, and the same holds for marketing channels. Companies usually have more than one marketing channel to reach customers in one market area. This method of approaching the customers in different ways is known as Multichannel Marketing.
Going back to the ready to eat food market business. Frozen food items can be sold to a multi-store retail outlet by telemarketing. It can be advertised directly in the newspaper and create a mechanism of pull strategy to attract customers. Making sure both the channels get the maximum reach depends on the channel strategies taken.
While multi-channel marketing might seem to work in most cases, academic research on the same showed that it's more effective on hedonic products. It seemed less effective on functional products . Read more about the difference between both here1
The profit maximization in an organization via multi-channel marketing can be because of the following advantages which the endeavour brings:
- Increased market coverage because customers can now shop for the organization's products in more than one place.
- Customers buying in more than one channel are more profitable than single-channel customers because of the repeated positioning.
- Increases the ability to deliver more customized selling via online mode
Channels should work in symphony and ensure that the various channels reaching the customer do not overlap and duplicate effort. Marketing channel strategies of selling on one channel are reflected in other marketing channel strategies of other channels as well.
Integrating the various channels and arriving at a coordinated methodology to increase the company's sales is known in technical jargon as Omnichannel Marketing and is one of the popular Marketing Channel Strategies
Conclusion
The primary aim of marketing is to make sure that the company's product is well seated in the customers' minds. Marketing channel strategies ensure that multiple channels work together to match customers' preferred way of shopping. They help to access the company's products with ease.
Alhamdullillah, the work is very good and self explanatory. Thanks alot