Types of Channels in Marketing
Channel levels
Most businesses use third parties or intermediaries to bring their products to market. They try to forge a "distribution channel" which can be defined as
"all the organisations through which a product must pass between its point of production and consumption"
Why does a business give the job of selling its products to intermediaries? After all, using intermediaries means giving up some control over how products are sold and who they are sold to.
The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried run a sales operation itself.
Channel levels consist of consumer marketing channels or the industrial marketing channels. A factor common among both channel levels is that both include the producer as well as the end customer.
1) Zero Level channel / Direct Marketing Channel – Consists of a manufacturer directly selling to the end consumer. This might mean door to door sales, direct mails or telemarketing. Dell online sales is a perfect example of a zero level channel marketing.
2) One Level channel – As the name suggests, the one level channel has an intermediary in between the producer and the consumer. An example of this can be insurance in which there is an insurance agent between the insurance company and the customer.
3) Two level Channel – A widely used marketing channel especially in the FMCG( fast moving consumer goods are products which are sold at a relatively low cost and are sold quickly) and the consumer durables industry which consists of a wholesaler and a retailer.
4) Three level channel – Again observed in both the FMCG and the consumer durables industry, the three level channel can combine the roles of a distributor on top of a dealer and a retailer. The distributor stocks the most and spreads it to dealers who in turn give it to retailers.
Most businesses use third parties or intermediaries to bring their products to market. They try to forge a "distribution channel" which can be defined as
"all the organisations through which a product must pass between its point of production and consumption"
Why does a business give the job of selling its products to intermediaries? After all, using intermediaries means giving up some control over how products are sold and who they are sold to.
The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried run a sales operation itself.
Channel levels consist of consumer marketing channels or the industrial marketing channels. A factor common among both channel levels is that both include the producer as well as the end customer.
1) Zero Level channel / Direct Marketing Channel – Consists of a manufacturer directly selling to the end consumer. This might mean door to door sales, direct mails or telemarketing. Dell online sales is a perfect example of a zero level channel marketing.
2) One Level channel – As the name suggests, the one level channel has an intermediary in between the producer and the consumer. An example of this can be insurance in which there is an insurance agent between the insurance company and the customer.
3) Two level Channel – A widely used marketing channel especially in the FMCG( fast moving consumer goods are products which are sold at a relatively low cost and are sold quickly) and the consumer durables industry which consists of a wholesaler and a retailer.
4) Three level channel – Again observed in both the FMCG and the consumer durables industry, the three level channel can combine the roles of a distributor on top of a dealer and a retailer. The distributor stocks the most and spreads it to dealers who in turn give it to retailers.