What is a marketing channel that has no intermediary levels?
A business is most profitable when it develops its marketing mix to meet its needs and that of its target market. One of the most important elements of this marketing mix is the marketing channel. It is the path that goods or services take from the point of production to the end-user. Show
But what exactly is a marketing channel, what are its functions, and why is it important? Contents What Is A Marketing Channel?A marketing channel is the path or the route a company’s products and services take from the point of production to the end-user. It is created through a series of relationships between middlemen, or intermediaries, who sell the product or service on behalf of the company. The marketing channel includes a mix of people, organisations, and activities that enable the company to bring its product or service to market. Often, this mix includes retailers, agents, wholesalers, brokers, transportation companies, and others. Types Of Marketing ChannelsMarketing channels can be categorised into direct and indirect channels depending on the structure of the channel. The indirect channels are further divided into three types: one-level, two-level, and three-level channels based on the number of intermediaries present. Direct Channel or Zero Level ChannelProducer → Customer A direct or zero-level channel is one in which the manufacturer sells directly to the end-user with no intermediaries involved. This type of channel is often used by businesses that produce perishable goods, expensive goods, or whose target market is small and concentrated. An all-new D2C model in which the manufacturer sells directly to the customer through its online branded channels is being followed by a lot of companies these days. Indirect ChannelProducer → Intermediaries → Customer When the manufacturer takes the help of one or more intermediaries to reach the end-user, it is known as an indirect channel. One-Level ChannelProducer → Retailer → Consumer A one-level channel has only one intermediary – the retailer – between the manufacturer and the end-user. In this type of channel, the manufacturer sells directly to a retailer, who then sells the product to the consumer. This type of channel is often used for shopping goods like clothes, food, and home furnishings. Two-Level ChannelProducer → Wholesaler → Retailer → Customer A two-level channel has two intermediaries – the wholesaler and the retailer – between the manufacturer and the end-user. In this type of channel, the manufacturer sells to a wholesaler who, in turn, sells to the retailer who then sells to the consumer. The wholesaler’s role is to break the bulk and deliver the product to the retailer. The retailer’s role is to reach the end consumer. Goods that are sold in two-level channels are usually durable, have a long shelf life, and target an audience that isn’t limited to a confined area. These include goods like home appliances, FMCG products, and automobile parts. Three-Level ChannelProducer → Agent/Broker → Wholesaler or Retailer → Customer A three-level channel has three intermediaries – the agent, the wholesaler, and the retailer – between the manufacturer and the end-user. In this type of channel, the manufacturer sells to an agent whose role is to break bulk for a wholesaler or retailer. The agent then sells to the wholesaler throughout the country or region. The wholesaler’s role is to distribute the product to the retailer who sells it to the consumer. The agent in this channel often provides services like credit, financing, and market information. The main advantages of this type of channel are that it allows manufacturers to reach more markets faster and build relationships with multiple retailers at a time. Products that are sold in three-level channels include agricultural produce, raw materials, and commodities. Importance Of Marketing ChannelsMarketing channels are the tangible links between a company and its customers. They are the enablers of business that allow companies to deliver their products or services to the final customer. They are important for the business as they:
Moreover, marketing channels are not only important for businesses wanting to reach customers and generate revenue, but also for consumers as they enable them to have access to different products or services in a convenient manner at competitive prices. Functions Of Marketing ChannelsMarketing channels play a very important role in the success of a business. Some of the key functions of marketing channels are:
Factors Affecting The Choice Of Marketing ChannelsEvery business has to carefully consider the factors that affect their marketing channels in order to ensure that they make the best decisions. Some of these essential factors include: Product CharacteristicsThe type of product or service being offered by a business plays an essential role in determining which channel would be most suitable for it. For instance, a brand goes for a short channel for its product if the product is:
That is, perishable products like food items or flowers that need to reach the customer as soon as possible use shorter channels. Similarly, complex products like industrial goods that require more explanation and demonstration before purchase, and expensive products like jewellery where customers need time to think and decide before making a purchase also rely on shorter channels to work better. Market CharacteristicsThe market in which a business is operating also has a big impact on the choice of marketing channels. For example, a brand chooses shorter marketing channels if:
Similarly, a brand uses a longer marketing channel when it sells shopping goods to individuals in a geographically dispersed market. Competition CharacteristicsThe choice of marketing channels is also influenced by the nature of competition in that market. The channels that the competitors use play a vital role in this decision. If a brand sees that its competitors are using shorter marketing channels, it would be wise of them to follow the same path so as not to lose out on potential customers. In a market with low competition, a brand might choose to use a longer marketing channel so as to create a more differentiated offering for its customers. Company CharacteristicsThe company’s financial resources and objectives are also major factors that come into play while deciding on marketing channels. For example, if a company has limited financial resources, it might not be able to afford to set up its own distribution network and would instead have to depend on other intermediaries to reach its target market. Similarly, if a company’s objective is to build a strong relationship with its customers, it might choose a shorter marketing channel so that more personal touch can be added to the product/service. Marketing Channels ExamplesEvery company in existence use one or more marketing channels to reach their target customers. Some of the most common examples include: NikeNike is a famous shoe manufacturer that sells its products to customers through both online and offline channels. The company uses a mix of both direct and indirect channels where it sells its products directly using its websites and franchise model, and indirectly on online marketplaces and offline retailers using intermediaries. AppleAs one of the most popular technology companies in the world, Apple sells its products through both online and offline, direct and indirect channels. The company sells its products directly using its own website and physical stores, and indirectly through intermediaries such as online marketplaces and offline retailers. As of 2018, 29% of Apple’s net sales come from direct channels, and 71% come from indirect channels. Go On, Tell Us What You Think!Did we miss something? Come on! Tell us what you think about our article on marketing channels in the comments section. Aashish Pahwa A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing. Which marketing channel has intermediary levels?By contrast, a channel that includes one or more intermediaries—say, a wholesaler, distributor, or broker or agent—is an indirect channel. In an indirect channel, the product passes through one or more intermediaries. That doesn't mean the producer will do no marketing directly to consumers.
What is a 0 level channel?As the name suggests, a direct channel or zero level is a distribution level through which an organisation directly sells its products to the customers with the involvement of any intermediary.
What is a marketing channel and intermediary?These intermediaries, such as middlemen (wholesalers, retailers, agents, and brokers), distributors, or financial intermediaries, typically enter into longer-term commitments with the producer and make up what is known as the marketing channel, or the channel of distribution.
What are the 4 types of marketing channels?Broadly, the four main types of marketing channels are paid, free, digital, and traditional channels.
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