What is marketing channels, functions and structure?

Marketing channels and functions

A marketing channel is a set of interdependent organisations involved in the process of making or manufacturing a product or providing service available for end user consumption or use.

There are four level of channels:

Zero-level Channel: Producer → Customer
One-level Channel: Producer → Retailer → Consumer
Two-level Channel: Producer → Wholesaler → Retailer → Customer
Three-level Channel: Producer → Agent/Broker → Wholesaler or Retailer → Customer

There several reasons to manage them:

Channel is a gatekeeper between the manufacturer and the end users,
It is an important asset in the company's overall marketing and positioning strategy,
The channel experience strongly the end users overall perception of brand's image.

The two factors affect the development of channels and provide the reasons to change through time.

1. Demand side : Consumption, Investment, Government spending or exports

2. Supply side :

Marketing flows are the elements of work that are done by members of marketing channel. A channel member cab be eliminated from channel, but the flows performed by that member typically cannot be eliminated, thus, before eliminating a channel, the channel manger should consider the cost of replacing the performance of that member’s channel flows.

The key members of marketing channels are:

Manufacturers

Intermediaries (Wholesaler, Retailer) &
End-users(Customer, Consumer)

Analysis of Channel Framework Process

Channel Design &

Channel Implementation

It is crucial to help the channel manager to create effective and efficient routes to market, whose members continue to be willing to perform the channel flows designed for them to perform though time.

The goal of the channel manager is to achieve channel coordination,a state where channel members act to further the goals of the channel,rather than their own independent goals.

Segmentation for Marketing Channel Design

An end users' channel preference decision about :

Where to purchase a product or get a service

What the end user is buying

How the end-user wants to buy it

Service Outputs:

How the product and service bought are called service outputs.Service outputs are the productive output of the marketing channel,over which end user have demand and preference.

A general list service outputs, customisation to particular marketplace context, is:

Bulk Breaking:Break their bulk to sell to individuals or retailers
Spatial convenience: Customer satisfaction by reducing transportation cost and search cost
Waiting & delivery time :it is the time between the actual processes of action/service
Variety and assortment:Breadth and depth of the merchandise
Customer Service: Assistance before/after sales/service both
Information procedure:Accountability

End users stop trading between different combinations, before their final purchase decisions

a). Product attributes
b). Price and
c). Service that offered by sellers

Service output demands:
Segmenting the market by service output demands is a useful tools for channel design, because the resulting groups of end users are similar in terms of the channel the serve their needs.

Cost
Competitive
Ease of entry and
Compensatory

The service output demand analysis to a assess segment attractiveness,target a subset of the segments identified,and customise the marketing channel system solution used to sell to each targeted segment.

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Reference:Marketing Channels(Pearson),Marketing Management: (Pearson)