MANAGEMENT OF MARKETING CHANNELS
Faculty : Kerena Anand
1. Define a Marketing Channel?
A Marketing channel (also called distribution channel or trade channel) is defined as a set of interdependent organisations that make a product or service available to customers for use. In other words, the link b/w the manufacturers and customers is the channel of distribution. The marketing logistics (also called physical distribution) consists of delivering the completed products to customers & channel intermediaries. To assist in performing the tasks of storing and moving their goods & services, the industrial firms have to engage the services of ware houses and transportation companies.
2. Explain the nature of business maketing channels
Business marketing channels are quite different from the channels used for customer goods and services. The distinctive nature of business channels can be understood from the factors discussed hereunder. 3. What are the factors affecting the nature of business marketing channels? Geographical distribution: Industrial intermediaries (such as distributers or dealers) are highly concentrated geographically. They are found where industrial market exists, i.e., in large cities or towns with industrial estates. For instance, Mumbai, Delhi, Calcutta, Chennai, Bangalore, Ahmadabad, Hyderabad, are some of the cities that have large number of industrial organisations. Channel size: Industrial channels are short and involve a type of intermediary for selling handling the products. Sometimes the channels are direct from the manufacturers to the customers, without intermediaries. The reason for the shorter channels in industrial markets is that the organisational buyers expect product availability, technical expertise and servicing capabilities. Characteristics of intermediaries: industrial intermediaries are often technically qualified and have close relationship with the industrial organisations. The types of intermediaries used by industrial marketers are also different from the wide variety of wholesalers and retailers used by marketers of consumer products. Industrial markets use industrial distributors, manufacturers’ representatives, or brokers to reach customers. Mixed system: Some industrial marketers use a mixture of direct and indirect channels in order to meet the requirements of different market segments, or when the company has resource constrains. The industrial firm may use its own sales force for a large volume customers, and independent distributors or dealers to cover small scale organisations.
Electronic channels (e-channels) are a part of e-commerce, about which there is a separate chapter in this book. Many business marketing organisations are using e-channels for (1)providing information,(2)online buying /selling, and(3)improved supplier-customer relationships. 4. What are the alternative structures of business channels? Industrial channels can be structured in various ways as shown in Fig.9.1. Some channel structures are direct and some are indirect. Direct channels: In direct channels structures, the manufacturers perform all the functions or the tasks necessary to create sales and to deliver the products industrial customers. These tasks include contacting potential customers, negotiating, communicating, selling, financing, product storage, transportation and servicing. The examples of direct channels are direct sales through the company’s sales force, and direct marketing through direct mail, telemarketing, and electronic business through computers (i.e. online marketing). The direct distribution (or direct channels) approach is viable when (a) the value of each transaction is large, (b) the selling includes extensive technical and commercial negotiations at various levels, including top management, (c) the buying process is lengthy, and (d) the industrial...