What is channel marketing?

Channel Marketing includes a specific route that products obtain from the manufacturer to the end user. This could include a distributor, wholesaler or retailer, but usually not by direct sale. In connection with the channel marketing, the term marketing refers to logistics that brings a product or service to the market - ie customer - as well as promotion and advertising in the traditional sense. This sets a string that can be as simple as the manufacturer> the seller> the customer or can be more complicated. The channel marketing concept covers all decisions and options that are made when setting such a string.

There are several reasons why the manufacturer would like to use channel marketing. Some are purely logistical: the demand for the product may be so high that the manufacturer cannot produce enough units before distribution to meet demand without getting into logistics problems such as storage. Sale to wholesalers canCompanies to allow products from their factories to get quickly after production.

In some cases, an intermediary, such as a distributor, can offer marketing benefits that manufacturers are not available. Sometimes it can be savings of scope, such as a magazine distributor, which can work more efficiently in presenting multiple titles to newspaper stands than one publisher. In other cases, this may include the expertise of a particular audience. It can be a large scale like a specialized distributor marketing product abroad. It can also be on a small scale, such as an agent for a cosmetic company selling products to friends, family and collaborators, and thus benefit from an existing relationship.

There are also financial consequences on the marketing channel. Each link in the chain will want to take part of the end selling price. The manufacturer must be in negotiating this ratiou consider two factors. The first is what cost savings he receives using an intermediary. The second is how many total sales revenue as a result of an intermediary.

Another potential problem is the conflict between different channels or different parts of the channel. One example would be a manufacturer who used a distributor, but also sold directly to some clients. The manufacturer could usually offer a lower price because they may not share revenues. This could cause problems if the distributor believes he is subordinate.