What are marketing channels?
Jan. 15, 2019, 4:26 p.m.
Marketing channels are paths which products take to reach end customers. They are composed of people, activities, and organizations that take part in delivering goods from their point of origin to consumers. For example, a manufacturer sells products to a retailer who then sells them in his store.
Companies often use multiple channels, each specifically fitted to their products. Here are examples of such channels.
#1 Manufacturer to consumer
It involves direct contact with the consumer, without using an intermediary. For example, bakeries and small farms often use this method. It saves money but isn’t feasible for large-scale operations. The exception would be a situation where your company owns its own network of retail or service providing locations. New technologies also allow breaking the boundaries of the traditional model. The Internet gives you the ability to sell goods online or providing services such as teaching or art design to customers all over the world.
#2 Manufacturer to a retailer to consumer
The most adopted channel in most industries. Lifting the burden of distribution, allowing your company to focus on production and giving it access to a potentially worldwide base of customers. It allows you to sell in much higher quantities. The obvious downside to this method is the cost associated. Retailers, especially big ones, can demand a significant cut, which will hurt your margins.
#3 Manufacturer to wholesaler to retailer/consumer
Wholesalers buy products in very large quantities, limiting your need for storage and transport. They then sell in bulk to either retailers or consumers. It’s a good choice if you don’t want to make tens or hundreds of deliveries to different retail locations.
You can use the services of various agents. For a commission, they will use their network of contacts to move your goods to wholesalers. It allows for quick and flexible distribution, which can be important when time restrictions are a factor.