What are Marketing Channels?
Marketing channels refers to the ways in which products move from the manufacturer to the distributor to the end user. Also called distribution channels, the number and efficiency of a company's marketing channel can have a strong impact on the company's success. If a company does not have enough channels through which to market their goods, or if the channels are inefficient and expensive, it can be difficult for a company to locate customers for its products and/or to make a profit on sales of its products.
Some companies, often referred to as direct marketing companies, sell the product directly from the manufacturer to the end user, or consumer. In such cases, the companies do not create or establish marketing channels. Instead, the consumer orders directly and the item is shipped to him, reducing costs for marketing and distribution. It can be difficult, however, for a manufacturer to locate customers using this form of marketing, since it may be less convenient if there is no storefront for a customer to go to or no local retailer a customer can interface with; the Internet, however has reduced this problem somewhat and given rise to more direct selling.
Most often, however, products do not go directly from the manufacturer to the end user. Instead, the products are first sent to a distributor or retail outlet. The retail outlets and distributors that a product is sent to can be referred to marketing channels. For example, a company that produces clothing may have multiple marketing channels: it may send its clothing to boutique stores throughout the country and to large chain stores and department stores as well.
The manner in which the product gets from the manufacturer to the distributor or store selling its product is a part of the marketing channel. The clothing may move from the clothing designer to the plant that creates the design to the shipping company that moves the design to all of the boutiques to the boutiques themselves. This is one particular marketing channel. A different channel may be used to send the items to the department stores; for example, perhaps a different shipping company is used or a different manufacturer to produce the items sold to the larger stores.
Usually, the more steps in the marketing channels, the higher the end cost is to the consumer. This phenomenon occurs because each of the people involved in the channel, or each of the "middle men," must be paid a premium, or fee. Thus an item sold in a direct sale may cost far less than the same item which had to be sent through several distribution steps before it reached the consumer.
@Latte31 - I agree. I love the shopping channels especially during the holidays. I do my shopping that way and avoid the stores.
I also have to say that a company has to use business marketing channels that include the internet. Pay per click search engine marketing also addresses millions of potential customers because the internet is so widely used.
I really think that using multi channel marketing works best because you can access more customers that way.
@Bhutan - I have to say that I like shopping at my department stores. I love the sales and usually take advantage of them. However, I think that direct marketing in the form of infomercials is also very effective.
Whenever I watch an infomercial for an extended period of time, I start to become convinced that I need the product. The shopping channels are another form of this because they pretty much conquer every objection you have for not purchasing the item and even provide live product testimonials as well as convenient payment plans.
They also offer a counter that shows you how many items are being sold so that you get the impression if you don’t buy now, you will miss out on the opportunity.
I think that this particular marketing channel is really an act of genius because the only thing that I have to do is call a toll free number and place my order. I also believe that the shopping channels provide more legitimacy than a regular infomercial does because although the marketing is direct, the approach is more interactive with the customer.
@Suntan12 - I know what you are saying but many of these companies do offer business opportunities for people that can’t work traditional jobs, but it does take a lot of work.
I wanted to add that I noticed recently that a designer of a bedding line may have one line upscale line in a higher end department store and then offer a more moderately priced bedding line in a big box retailer. While the brand is the same, the quality is different.
For example, in the big box retailer that sheets might be 200 thread counts, but in the upscale department store, the thread count might be 300 or more, and the price difference is huge. I think that it is smart to offer the brand in a strategic marketing fashion like this because the company gets to take advantage of the consumers in the lower end of the market as well as the higher end of the market.
I think that if you are buying this brand from a big box retailer and know that the brand is also sold in high end stores it tends to offer more perceived value even though the quality might not be the same.
What I find interesting is when a company decides to go the direct marketing route and offer the product through a sales representative or a distributor and they then sell the product directly to the consumer.
These multi level marketing companies have the sales person act as a business owner and directly market to their customers. I think that companies that involve merchandise that can be demonstrated on the customers and is not too expensive work best.
Many cosmetics companies choose his marketing distribution channel because the representatives can demonstrate the products on their prospects and entice them to buy.
The sales representative will use their home or someone else’s home in place of a storefront. I think it is a great idea and it saves the company money because their sales representatives are the ones with the burden of marketing the product and the company usually earns about 50% of the profits that the representative sells.
I think that the only drawback to this method is that the direct sales companies often have a lot of turnover because it requires a lot of initiative to get a business off the ground and many people give up before they ever make any money. I know that I would not want to work in this type of a business, but I have no problems selling in a store or a company location.
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