What Are Marketing Channels?

Marketing channels are a unified consortium of suppliers, producers, wholesalers and retailers. The marketing channel process includes: physical process (logistics), ownership process, payment process (payment stream), information and promotion process. US marketing authority Philip Kotler: "Marketing channels are all businesses or individuals who acquire or help transfer ownership of a good or service when it moves from producer to consumer.

Marketing channels

Characteristics of marketing channels:

1. The starting point is the producer, and the ending point is the consumer (life consumption) and the user (

1. Only through technological innovation can companies remain competitive in the market.

2. The resources created by the marketing channel system can make up for the development of manufacturers.

(I) Channel operation: centering on the construction of the terminal market

(II) Channel support: from mechanization to all-round

(3) Channel structure: from simplification to diversification

(IV) Channel Structure

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Steps in designing a marketing channel system

Definition of channel member functions

Channel member responsibilities include the following:

sell;

Channel support;

Logistics

Product correction

After-sales service and risk-taking.

Selection and motivation of channel members

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Pros and cons of channel conflict

Conflicts between manufacturers and manufacturers, manufacturers and middlemen, middlemen and middlemen, and even manufacturers and their direct sales offices are inevitable. But everything has advantages and disadvantages, and benefits:

1. It is possible that a new channel operation model will replace the old channel model. In the long run, this innovation is beneficial to consumers.

2. For manufacturers without channel conflicts and customer collisions, their channel coverage and market development must be flawed.

3 The intensity of channel conflicts can also be a "checklist" to determine the strength of the two parties to the conflict and whether the products are selling well.

Basic types of channel conflicts

There are three main types:

The first is the same channel battle between different brands.

The second is the contention of channels within the same brand.

The third is the dispute between upstream and downstream of the channel.

The problem of channeling goods

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Marketing channels can create the following three effects in the marketing process:

1.

1.

I. Channel members Broadly speaking, any component that constitutes the IT industry chain is a channel member. Therefore, manufacturers, agents, distributors, and users are all channel members and basic channel members because they own the IT products or services and bear substantial risks accordingly. In addition to the members of the basic channels, such as advertising companies, public relations companies, market research institutions, transportation companies, etc., they do not own the ownership of IT products or services, and they do not bear the corresponding market risks. The process of transferring to users has a stimulating effect, so this type of channel member is attributed to a special channel member.

Compared with special channel members, basic channel members play a more critical role in the healthy development of the industry chain system. Therefore, basic channel members are the main focus of marketing channel management.

Not only does such a marketing channel member and relationship exist in the IT industry chain, there are similar marketing channel members and relationships in any other industry chain, but the channel members are called differently. Therefore, abandoning the specific industry chain and extracting the commonalities of many members of the marketing channel of the industry chain can summarize the basic channel members and relationships.

Channel structure The structure of marketing channels can be divided into three types: length structure, that is, hierarchical structure; width structure and breadth structure. The three channel structures constitute the three major elements of channel design or channel variables. Furthermore, the length, width and breadth variables in the channel structure completely describe a three-dimensional channel system.

1. Length structure (hierarchical structure)

The length structure of marketing channels, also known as the hierarchical structure, refers to a channel structure defined by the number of channel intermediaries (purchasing and selling links) it contains, that is, the number of channel levels. Generally, a marketing channel can be divided into zero-level, first-level, second-level, and third-level channels according to the number of channel levels.

Zero-level channels, also known as direct channels, refer to a channel structure without the involvement of channel intermediaries. Zero-level channels can also be understood as a special case of a distribution channel structure. In a zero-level channel, a product or service is sold directly by a producer to a consumer. The zero-level channel is the main channel adopted for the sales of large or valuable products and products with complex technology and special services. In the IT industry chain, some well-known IT companies at home and abroad, such as Lenovo, IBM, HP and other companies set up large customer departments or industry customer departments, etc. belong to the zero-level channel. In addition, DELL's direct sales model is a typical zero-level channel.

The primary channel includes a channel broker. In the industrial market, this channel intermediary is usually an agent, commissioner or distributor; in the consumer goods market, this channel intermediary is usually a retailer.

Secondary channels include two channel intermediaries. In the industrial products market, these two channel middlemen are usually agents and wholesalers; in the consumer goods market, these two channel middlemen are usually wholesalers and retailers.

Tertiary channels include three channel middlemen. This type of channel mainly appears in daily necessities with a wide range of consumer products, such as meat products and packaged instant noodles. In the IT industry chain, some small retailers are usually not the service objects of large agents. Therefore, a first-level professional dealer is derived between the large agents and small retailers, resulting in a three-level channel structure.

2. Width structure

The channel width structure is a channel structure defined according to the number of channel intermediaries at each level. The width structure of the channel is affected by factors such as the nature of the product, market characteristics, user distribution, and corporate distribution strategy. The width structure of the channel is divided into the following three types.

An intensive distribution channel, also known as an extensive distribution channel, is a type of channel where manufacturers use as many channel intermediaries as possible to distribute their products on the same channel level. Intensive distribution channels are more common in consumer goods, such as toothpaste, toothbrushes, and drinks.

Selective distribution channel (selective distribution channel) refers to a channel type that selects a small number of channel intermediaries to distribute goods at a certain channel level. In the IT industry chain, many products use selective distribution channels.

Exclusive distribution channel (exclusive distribution channel) refers to a channel type that selects the only channel intermediary at a certain channel level. In the IT industry chain, this channel structure mostly appears at the level of general agent or general distribution. At the same time, the launch of many new products also chooses the exclusive distribution model. After the market has widely accepted the product, many companies have shifted from the exclusive distribution channel model to the selective distribution channel model. Such as Toshiba's notebook product channels, Samsung's notebook product channels and so on.

3 Breadth structure

The breadth structure of channels is actually a diversified choice of channels. In other words, many companies actually use a combination of multiple channels, that is, a mixed channel model for sales. For example, some companies target large industry customers, and set up a major customer department to sell directly within the company; for a large number of SME users, use a wide range of distribution channels; for consumers in some remote areas, they may use mail order and other methods to cover .

In a nutshell, channel structure can be broadly divided into two categories: direct sales and distribution. Direct sales can be divided into several types, such as the major customer department directly established by the manufacturer, the industrial customer department or the sales company and its branches directly established by the manufacturer. In addition, it includes direct mail order, telemarketing, company online sales, and more. Distribution can be further subdivided into two types of agency and distribution. Both agency and distribution may choose intensive, selective and exclusive. Figure 3 outlines the structure of marketing channels.

Channel Control In a nutshell, channel control refers to the comprehensive control of the entire channel system through a series of measures including channel management, assessment, incentives, and channel conflict resolution. The establishment of the channel system by the company is only the first step to achieve the distribution goals. To ensure the successful completion of the company's distribution goals, the channel system must be controlled in a timely manner.

Channel control forms the core content of marketing channel management. Channel structure and channel construction is relatively easy, and channel control runs through the entire life cycle of the channel system.