The term channel is derived from Latin word canalis, which means canal.
Formerly known as PLACE in the marketing mix
Marketing channels (channel of distribution, place) * Can be viewed as a large canal or pipeline through which products, their ownership, communication, financing and payment, and accompanying risk flow to the consumer. * It is a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer. * Marketing channel decisions are among the most important challenge faced by marketing managers. A company’s channel decisions directly affect every other marketing decision. * Companies often pay too little attention to their distribution channels. * Distribution channel decisions often involve long-term commitments to other firms. * Choosing the best route or way
Channel members * Many different types of organizations that participate in MKTG channels * They are ‘intermediaries, resellers, middlemen’ that negotiate w/ one another, buy & sell products, and facilitate the change of ownership towards the final consumer.
Why are marketing intermediaries used? * The use of marketing intermediaries results from their greater efficiency in making goods available to target markets. Through their contacts, experiences, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own. * From the Economics’ point of view, the role of marketing intermediaries is to transform the assortments of products made by producers into the assortments wanted by customers. Intermediaries play an important role in matching supply and demand. * Producers produce narrow assortments, but consumers want broad assortments. * Intermediaries buy large product quantities of many producers and then break them down into the smaller quantities preferred by consumers.