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Marketing

Channels
PRESENTED BY,
Deepak Tyagi
Shikha Gupta
CONTENTS
Definition

Evolution of Market Channels.

Channels Member & Their


Roles.
WHAT ARE MARKETING
CHANNELS
A marketing channel is ‘an
organized network of agencies and
institutions which, in combination,
perform all the activities required to link
producers with users to accomplish the
marketing task’ (Bennett ,1988).

• A marketing channel is a process of


making a product or service available to
the end-user for use or consumption.

• Also known as Distribution channels.


Evolution of Marketing Channels
Marketing channels has evolved from
production-oriented to being customer-centric
in nature & has passed through the following
phases:-

• The Production Era (In late 19th


&early 20th century):-
• More emphasis on production volumes,
capacity expansions & plant efficiency.
• Salesperson job was not highly regarded.
• Salesmanship considered as a profession
without prestige.
• Selling was considered as an art rather than a
field requiring skills & knowledge
CONTD.
2. The Sales Era (Began in 1920s):-
Industrialization & economic prosperity at
peak
Mass production continued
Elevation of the sales position in the eye of
management
Realized that selling requires skill &
knowledge & not merely the creation of
goodwill.
Term ‘Scientific salesmanship’ came into
existence
CONTD
3. The Marketing Era (In 1950s):-
New Manufacturing processes &
technology advancement
Was thought as an essential link Between
the seller and the prospective Buyer.
Required to play the role of a problem-
solver, educator & an empathizer.
Responsibilities included was Planning,
forecasting, setting goals and market
development
Salesperson was required to manage a
market
CONTD.
4. Relationship Marketing Era (At
present):-
• Highly competitive market
• Focus on customers – Existing &
potential
• Relationship marketing came into
existence
• Sales person work was to understand
the customer needs & offer them the
relevant product at the appropriate
CHANNEL MEMBERS AND
THEIR ROLES
Key Constituent of Marketing Channel:
• Manufacturer – The producer of the good
or services that is being sold.

• Intermediaries – They do not involve


themselves with the title but only act as
facilitators.
e.g., Warehouses, advertising agency,
research agency etc.

• End Users – They receive the


merchandise from the other members &
are final Consumers.
ROLES OF CHANNEL
MEMBERS
1. Facilitate the search process of
buyers & sellers:-
Lower the uncertainty among end-users
In their absence, manufactures would also
be confuse about how to approach
customers

2. Sorting:-
Channel members eliminate the
differences in the collection of goods &
services offered by company
CONTD.
3. Making transactions routine:-
Transactions involve ordering of goods or
services, fulfilling orders & paying for
goods & services purchased.
i.e., Manufacture-Wholesaler-Retailer-
Customer
Help in making transactions routine
through standardizations & automations

4. Contractual efficiency:-
Channel Intermediaries have to optimize
the number of exchange relationships
required to complete a transaction.
DESIGNING MARKETING
CHANNELS
Dimensions to choose a channel design:
• The channel length – Number of
intermediaries between the producer
and customers

• The channel breadth – Number of


outlets available to consumers

• The cost involved in selecting a


particular channel
CONTD .
A channel decision depends on the
following considerations:-
• CHANNEL STRUCTURE:-
It refers to the number of levels of
channels intermediaries (Distributor,
Wholesaler, Retailer).

It depends on the number of


intermediaries uses to distribute its
product to end-users
The channel levels are zero level, one
level, two level & three level.
Zero-level channel

One-level channel
Retailers
Manufactures

Consumers
Two-level channel

Wholesalers Retailers

Three-level channel

Wholesalers Agents Retailers


CONTD.
2. CHANNEL INTENSITY:-
INTENSITY
It refers to the number of intermediaries present
in a distribution or marketing channel.

Intensive distribution
Producers of products stock their goods in as
many outlets as possible as possible by
considering time & place utility.

Exclusive distribution
Producers of some products limit the number of
intermediaries handling their product to deliver
maximum service quality to customers, try to
develop a superior brand image for their product.
CONTD.
Selective distribution
It is adopted when the manufacturer
lacks the resources to adequately
influences the policies of all the
intermediaries who can carry a
particular product.

The manufacturer distributes products


only to specific retailers selected on the
basis of defined criteria.
CONTD.
3. TYPE OF CHANNEL INTERMEDIARIES AT EACH
LEVEL
Manufacturer’s representatives
They sell the manufacturer's product to the
wholesalers, retailers, other businesses & also to
institutions such as hospitals, libraries & school.
They may represent more than one manufacturer.
Also called account executives or sales engineers.

Manufacturer’s sales force


• It comprises the salespersons who are on the
company’s rolls & received a fixed salary.
• Devotes their entire time & effort to selling that
product or service of that manufacturer.
CONTD.
Industrial distributors
• These are independent firms
consisting of sales & support
personnel.
• They differ from manufacturer's in
that they take possession of the
products they sell & have a
partnership arrangement with the
manufacturer.
• Examples: Norton, Pfizer & 3M.