Most producers do not sell their products directly to the final users; between them stands a set of intermediaries performing a variety of functions. These intermediaries constitute a marketing channel also known as Trade Channel or Distribution Channel.
Marketing Channels are set of interdependent organizations involved in the process of making a product or service available for use or consumption. They are set of pathways a product or service follows after production, culminating in purchase and use by the final end users.
The intermediaries include wholesalers, retailers, merchants, brokers, manufacturers’ representatives, sales agent. While transportation companies, independent warehouses, banks and advertising agencies are facilitators who assist in distribution process.
MARKETING CHANNEL SYSTEM
A marketing channel system is the particular set of marketing channels a firm employs and decisions about it are among the most critical ones management faces. The channel members of any marketing channel collectively have earned margins that account for 30% to 50% of the ultimate selling price. The more the channel members, more would be the selling price.
The channels chosen affect all other marketing decisions. The company’s pricing depends on whether it uses mass merchandisers or high- quality boutiques. The channel decision needs long term commitments with other firms as well as a set of policies and procedures. The channel choices depend on company’s marketing strategy with respect to segmentation, targeting, and positioning. CHANNEL LEVELS
The producer and the final customers are part of every channel. There are different levels that a company would follow. They are: •Zero Level Channel : consists of a manufacturer selling directly to the final customer. •One Level Channel : contains one selling intermediary, such as retailer. •Two Level Channel :contains two intermediaries- a wholesaler and a retailer. •Three level Channel : contains three intermediaries.
CHANNEL DESIGN DECISIONS
In designing the marketing channel, the marketer must understand the service output levels its target customers want. Marketers should state their channel objectives in terms of targeted service output level. Under competitive conditions, channel institution should arrange their functional tasks to minimize total channel costs and still pr0vide desired levels of service output.
Effective planning requires determining which market segments to serve and choosing the best channels for each. A number of other factors affect channel objectives, like while entering a new market the firm may closely observe what other firms from their home markets are doing in those markets.
•Establishing Objectives and Constraints
•Identifying and evaluating major channel alternatives
•Evaluating the Major Alternatives
CHANNEL MANAGEMENT DECISIONS
After a company has chosen a channel system, it must select, train, motivate and evaluate individual intermediaries for each channel. It must also modify channel design and arrangements over time.
To customers, the channels are the company. In case the outlets of the company appear dirty, inefficient or unpleasant then it would affect the company’s image. The following are certain steps the company needs to follow:
•Selecting Channel Members
•Training and motivating Channel Members
•Evaluating Channel Members
•Modifying Channel Design and Arrangements
Introduction of the Wagh Bakri group
Wagh Bakri started Tea Company in the yr 1892, which then was represented by small company retail shop at kalupur Ahmadabad, Gujarat. Since then the growth of the endeavor has been phenomenal and presently Wagh Bakri Tea Company has an employee base of more than 400 professional managers and skilled personals with ever increasing space for more, to tend to the expanding group enterprise in India and abroad.
Wagh Bakri tea...