Everything you need to know about marketing channels. There is a wide variety of marketing channels. They perform a variety of tasks. Their functions or scope of work may differ from nation to nation. They act as an interface between the manufacturers and their customers. There is a two-way transaction flow and there has to be a two-way communication.
The main role of marketing channel is to carry goods from producers to consumers.Intermediaries with their exposure, experience, expertise and scale of operations enable wide availability and access to merchandise for target markets.
Marketing Channel – Definitions: Eminent Writers and Organizations
Marketing channels refer to an organized network of interconnected organizations and agencies involved in the process of providing a product or service to consumers.’
Marketing channels are independent business organizations. They are also known as middlemen, middlemen. There are different forms of these intermediaries. They have different names. They act as an interface between the firm and its customers. They facilitate producers and ensure a smooth flow of products/services to the customers.
Philip Kotler defines a distribution channel as “a group of independent organizations involved in the process of making a product or service available for use or consumption”.
The American Marketing Association defines it as “the structure of intra-company organization units and additional company agents and dealers, wholesale and retail, through which a commodity, product or service is marketed”.
Cundiff and still are of the view that “it is traced in the direct and indirect transfer of title to a product as it transfers from the manufacturer to the end consumers or industrial users”.
Richard M. Clavet’s views are – “It is the pipeline through which a product flows on its way to the consumers. The manufacturer puts his product in the pipeline or marketing channel and the various marketing people take it to the consumers at the other end of the channel.” .
Bowersox and Cooperation define the channel, “as a system of relationships between businesses participating in the process of buying and selling products and services. This means that channels include each member responsible for specific tasks.
Marketing Channel – Why is a channel needed? top 10 reasons
When manufacturers want to reach out to the customers in the market, there are two options available to them. Option I is direct marketing, that is, they interact directly with their customers without any interface. Option II is indirect marketing, i.e., they take the help of some intermediaries to reach the market. Both options have some merits and demerits and no system is perfect.
when manufacturers use middlemen and delegate some responsibility of selling to them, they lose the opportunity to actually interact with and understand their customers and also lose their grip and control. Sometimes one hears the cry “Get rid of middlemen; whatever they do, they raise the price.” Still they use middlemen, why?
The reasons for the need for channels are given below:
1. Intermediaries bring buyers and sellers together, making transactions simple and convenient.
2. Intermediaries are independent business organizations. These are private and commercial institutions with the aim of making profit. Hence, it is easy and economical to operate through their wide and established network.
3. Intermediaries create time, place, form and business utilities by making products/services available to customers in a convenient, timely and convenient manner.
4. Every time the producers may not deal directly with the end consumers especially when the consumers are scattered over a wide geographical area.
5. Many manufacturers deal with the financial resources and expertise to do direct marketing. That’s why they prefer marketing channels.
6. For small producers with very limited budget for promotion, it is quite difficult to create awareness, interest and willingness to buy the products among the customers. In this case, intermediaries can effectively promote and sell products by being close to customers and interacting directly and regularly with them. They can sell unpacked commodities more effectively and economically than producers.
7. Through their contacts, experience, expertise, infrastructure, relationships and relationship with customers in the market, intermediaries can make selling activities more profitable than those undertaken by the producers on their own.
8. If producers delegate distribution to middlemen, they can increase their investment and focus more on their core business activities.
9. Intermediaries play a vital role in bridging the gap between the quality, quantity and various expectations of the customers and the offerings of the producers.
10. Intermediaries reduce the number of transactions thereby reducing the effort and cost.
Marketing Channels – Top 11 Functions: Facilitation, Information, Promotion, Negotiation, Transfer of File and Ownership and Certain Other Functions
There is a wide variety of marketing channels. They perform a variety of tasks. Their functions or scope of work may differ from nation to nation. They act as an interface between the manufacturers and their customers. There is a two-way transaction flow and there has to be a two-way communication.
The important functions of channels are as follows:
1. Facilitation – Bringing buyers and sellers together and facilitating both the parties in closing the deal.
2. Information – To give information about the products/services to the customers.
3. Promotion – Promotion of product/services, i.e., creating and promoting the brands of the producers.
4. Negotiation – Negotiation on behalf of the manufacturer with customers on price, terms of delivery, etc.
5. Transfer of Title and Ownership – They help in transfer of title or ownership from one party, i.e. seller to another party, i.e. buyer.
6. Holding Inventory and Sharing Risk – Channels keep stock of finished products with them, thus sharing the risk and cost associated with holding the inventory.
7. Finance – Channels deposit with manufacturers, book orders in advance, and stock finished products. Thus they reduce the financial burden of the manufacturers.
Providing pre-sales and after-sales services – Channels provide pre-sales and after-sales services, maintenance services, etc. to customers on behalf of producers as they cannot reach the individual customer.
9. Change Agent – Channels inform customers about changes in product and price. They tell customers about new or additional features offered. They can create a positive, favorable opinion about these changes among customers, because they are close to the customers and they interact directly and regularly with their customers. Thus, they act as ‘change agents’.
10. Warehousing and Transportation – Provides channel warehousing facilities and arranges transportation facility from warehouse to markets/retailers or end users.
11. Market Feedback and Intelligence – Channels provide manufacturers with valuable and authentic information about customers, competitors, market changes and trends and market conditions. They also maintain sales records and database of customers, which can be useful for manufacturers in making future decisions.
Marketing Channels – Top 3 Types of Intermediaries/Channels: Merchants, Agents and Facilitators
Intermediaries can be broadly classified into three categories based on criteria such as ownership and possession of goods.
These are intermediaries who take title to the goods and resell the goods, usually having physical possession of the goods. Some of these types of middlemen are wholesalers and retailers. They sell goods and make profit.
These are intermediaries, sales agents, brokers, auctioneers etc., who may or may not have possession of the goods, but in no case shall have title to the goods. They are intermediaries who find buyer and seller together, bring buyer and seller together or may negotiate sales transactions on behalf of the seller.
These are the middlemen who assist in the process of distribution of goods. In this process, they may have physical possession of the goods or may not have physical possession of the goods in some cases, but will not have title to the goods or negotiate a purchase or sale transaction in any case. Transport companies, independent warehouses, banks, advertising agencies, insurance companies, etc. are some of the middlemen in the category.
Marketing Channel – 3 Key Roles: Functions of Intermediaries, Channel Flow and Channel Level
The main role of marketing channel is to carry goods from producers to consumers. Intermediaries with their exposure, experience, expertise and scale of operations enable wide availability and access to merchandise for target markets.
In addition, it also eliminates time, space and occupation gaps, which separate the goods and services that are needed or needed. Thus, the various functions performed by the intermediaries provide synergistic effect to the firm, i.e., more freely than the manufacturers and producers can actually achieve.
Role #1. Functions of Intermediaries:
Intermediaries, such as traders and agents, collect various information about potential and current customers, competitors and other actors and forces in the marketing environment that are of vital importance to producers and suppliers of various products.
This information is also of equal importance and sought by the potential consumers of the target markets, which in the absence of middlemen will become a hectic session of surfing for the particular product and product related information.
Intermediaries not only collect information, but also develop and disseminate such persuasive communications to encourage purchases to other interested groups, ultimately serving the purpose of being middlemen and gathering information.
Ultimately, the gathering of information serves its purpose of meeting the sales target of the goods, if and when such information is disseminated when the relevant information is sought by sources authorized to flow.
The role of intermediaries like agents and auctioneers is to negotiate by finalizing the sale transaction, constrain the finalization of the sale transaction on price and other related terms, thus, aiding the actual transfer of ownership or possession. may be the case.
Intermediaries, wholesalers and retailers buy goods from manufacturers in bulk and in small quantities, respectively, and resell the production to potential consumers in target markets. With this service provided by the middlemen, it helps the potential consumers to get and reach the required product without having to route the purchase orders directly to the manufacturers.
Like the wholesalers, the middlemen also get the necessary funds for the purchase of the produce, the inventories at various levels in the marketing channel through banks and other financial institutions.
Intermediaries such as insurance companies, banks, Del Credier agents and others ultimately assume the risks involved in the delivery of products from another destination or party to the flow of production movement. Thus, intermediaries smooth the flow of goods by controlling the degree of uncertainty involved in distribution.
Necessarily intermediaries wishing to stock the produce in bulk have to be equipped with well structured godowns. Intermediaries should assure orderly storage and movement of physical products, for which various wholesalers as well as independent warehouses perform an active function for the same.
Various banks and financial institutions enable the payment of bills and the movement of currencies from one party to another. Not only the above mentioned intermediaries, but also some wholesalers, assist in purchase/sale transactions, facilitating credit and providing installment mode of payment to the manufacturers, or wholesalers or retailers or end buyers. users.
Role # 2. Channel Flow:
The different key functions performed by the different intermediaries constitute the components of the sales transaction as well as the different flows of production. All in all, it results in forward flow, backward flow as well as two-way flow.
Backward flow refers to the flow of activity from customers to the company, while forward flow refers to the flow of activity from the company to the customer and, two-way flow refers to the flow of activity from both the directions, i.e., receiving from the company. for customer as well as from customer to company.
The tasks, that is, physical, title and promotion, constitute a forward flow of activity from the company to the customer, while some of the other functions, namely, orders and payments, constitute a backward flow from the company to the customers, and the tasks Information, negotiation, finance and risk taking occur in both directions. These flows can be understood individually and not just from a diagram as it increases the complexity.
These five flows are discussed below:
I. Physical Flow:
A manufacturer selling physical goods would need at least three to four intermediaries mentioned above. Since it is not possible to move physical goods from one place to another without the support of any transport services, the role of this intermediary is mentioned in the physical flow of goods at all points from which the movement of physical possession it occurs. Goods included.
In addition, generally, goods physically from suppliers, through transport to manufacturers, are processed, transport from manufacturers and go to dealers as finished products through warehouse services, which are further processed by customers. Let’s do the same step for, again transportation services.
ii. Title Flow:
When goods are physically moved from one party to another, this physical movement of goods does not necessarily coincide with the movement of title to the goods. Title to goods is transferred when goods are purchased by one party to another which is from supplier to manufacturer, manufacturer to dealer and dealer to customer.
Other intermediaries such as transporters and warehouses mentioned in the physical flow may physically hold the goods, but in no case shall the goods be owned by them.
iii. Payment Flow:
The movement of goods physically involves different parties, intermediaries, but the movement of title involves a ‘payment flow’ between the parties involved, connecting each party to the other party through the flow of payment of banking services. Help.
Here, payment flow refers to the movement of payment only between the parties having the right of ownership for the delivery of goods.
iv. Information Flow:
The movement of information between intermediaries takes place in two ways, i.e. in forward as well as backward direction. Information relating to various aspects of intermediaries flows from different parties to other parties, with each party having some important information to share with the other party involved in the sales transaction.
v. Promotion Flow:
The manufacturer often makes various promotional efforts to promote production in the market, attracting a large number of potential consumers by attracting a large number of middlemen in order to make the product lastly available. The producer may adopt a ‘push strategy’ or a ‘pull strategy’.
Promotion push strategy refers to influencing and persuading middlemen to carry the company’s product, to carry more of the company’s product, thus protecting the shelf-space for the company’s products.
Whereas, the ‘pull strategy’ focuses on the first level communication about the product related information and promotional campaigns directly to the customer, and the customers themselves inquire about the product from the dealers for its purchase.
Channels generally describe the forward movement of products from source to user, but there are also reverse-flow channels.
These are important in the following cases- (1) for reusing products or containers (such as refillable chemicals – carrying drums); (2) to refurbish products (such as circuit boards or computers) for resale; (3) to recycle products (such as paper); and (4) to dispose of products and packaging (waste products), many intermediaries play a role in reverse-flow channels, including manufacturers’ release centers, community groups and traditional intermediaries such as Softrink middlemen, waste-collection specialists, recycling centers Are included. , garbage-recycling brokers, and central processing warehouses.
A manufacturer selling physical products and services may need three channels—a sales channel, a distribution channel, and a service channel. The different functions of channels have some common characteristics, they use scarce resources, their performance can be increased by specialization and they can be transferred among other channel members.
In addition, the cost and prices of the producer are lower when the producer transfers some of the functions to the intermediaries, but the intermediary adds a fee for performing its function, as applicable. In the case when, the intermediary is more efficient than the producer, the consumers get lower prices, generally.
Also, if consumers do some work themselves, they should be provided with the opportunity to enjoy lower prices. Thus, the change in channel institutions primarily reflects the search for more efficient ways to combine or separate economic functions providing an assortment of goods to target customers.
Role # 3. Channel Level:
Producer and end customer are part of each channel. We will use the number of intermediary levels to designate the length of a channel.
A zero-level channel (also called a direct marketing channel) consists of manufacturers selling directly to the end customer. Main examples are door-to-door sales, home parties, mail order, telemarketing, TV selling, Internet selling and manufacturer-owned stores, Eureka Forbes sales representatives sell their products door-to-door; Tupperware reps sell kitchen items through House Parties; Otto Burlington sells its products through mail order; ICICI Bank uses the telephone to prospect new customers or sells enhanced services to its existing customers; Asian Sky Shop sells products through TV commercials or now through “infomercials”; Amazon and India Times sell their products online; and Bata and Indian Oil/Bharat Petroleum sell the product through manufacturer-owned stores and petrol pumps respectively.
A level channel has a selling intermediary, such as a retailer. A two-level channel has two intermediaries. In consumer markets, these are usually a wholesaler and a retailer. A three-level channel has three intermediaries.
An industrial-goods remanufacturer may use its sales force to sell directly to industrial customers; or it may sell to industrial distributors, who sell to industrial customers; Or it may sell directly to industrial customers through manufacturer’s representatives or its own sales branches, or indirectly to industrial customers through industrial distributors. Zero-, one- and, two-level marketing channels are quite common.
Service Sector Channels:
Marketing channels are not limited to the distribution of physical goods. Manufacturers of services and ideas also face the problem of making their production available and accessible to the target population. For example, schools develop “educational-dissemination systems” and hospitals develop “health-delivery systems”, thus spreading across an area, locating agencies and places to reach populations.
Marketing channels keep changing in personal marketing as well. In addition to live and programmed entertainment, entertainers, musicians and other artists can reach potential and existing fans online in a number of ways by creating online and social community sites such as MySpace and third-party websites.
Services industries such as banking, insurance, travel and stock buying and selling are flourishing and brimming with new channels, and the development of the Internet and other advance technologies.
Marketing Channel – 4 Critical Steps: Establishment of channel objectives and constraints and analyzing desired service output levels of customers along with some other steps.
The process of designing marketing channels involves four major steps.
1. Analysis of customer’s desired service production levels;
2. Establishment of channel objectives and constraints;
3. Identifying key channel options;
4. Evaluation of major channel options.
Let us go through all these steps in detail:
Step # 1. Analysis of Customers Desired Service Output Levels:
Marketing begins with identifying the needs of the customers. The same is true for marketing channels. Understanding how customers buy, why they buy a particular product, and what their expectations are when they buy is the first step in designing a marketing channel.
The service outputs delivered by marketing channels are generally classified into five types:
I. Lot Size – The number of units a specific customer is allowed to buy in a marketing channel is called lot size. Basically, consumers prefer that intermediaries allow them to buy the quantities they want. This could be a lot the size of a car for a consumer buying a home, or a lot size of 20 for a corporate entity buying a car for its executives. The smaller the size, the higher the expected level of service output.
ii. Waiting Time – This is the time for which customers generally have to wait for the delivery of goods. Customers expect and prefer fast distribution channels.
iii. Spatial Facilitation – One of the major functions of marketing channel is to provide time and place convenience. Customers will love channels that make it easy for them to buy products.
iv. Product Diversity – The breadth of assortment offered by a channel member reflects the variety of products that the channel member offers to the customers. Most of the customers prefer a position where more variety is available as it facilitates better choice.
v. Service Backup – Service backup usually deals with services like installation, repair, credit card payment, and free delivery. More service backup is the priority for more channels.
Although higher service output levels are desirable by customers, one has to take into account the fact that higher service output levels translate into higher pricing for consumers. At times, consumers may be willing to accept lower service levels when it translates into lower prices.
Step # 2. Establishment of Channel Objectives and Constraints:
As mentioned in point (i) above, some customer segments are sometimes willing to accept lower service output levels with respect to the channel, if this translates into lower prices. Different customer segments will desire different levels of service output. Effective channel planning will require the organization to determine which market segments to serve, and based on that, decide the most appropriate channels.
The objectives of the channel will also vary commensurate with the product characteristics. Risky products will require more direct marketing channels because of the risks associated with delays. Heavy products require channels that reduce the number of handling and shipping distances.
Channel design should also take into account the strengths and weaknesses of the different types of channel members. For example, a manufacturer’s representatives are able to build a better rapport with customers. However, the cost of visits to each individual customer is high, and the exercise of covering all customers is also time-consuming.
While designing the channel, the organization should also keep in mind the channels of the competitors. The channel design must be adapted to the larger environment in terms of economic conditions, legal regulations and restrictions.
Step # 3. Identifying the Major Channel Option:
After deciding on the target market and establishing objectives, it is time for the organization to decide on channel options.
When selecting a channel option, three elements should be kept in mind:
I. types of business intermediaries available,
ii. the number of intermediaries needed, and
iii. Positions and responsibilities of each channel member.
Let’s take a detailed look at these elements:
I. Types of Intermediaries:
The organization should identify the type of intermediaries available to carry out the work of its channel.
Some examples of channel options could be:
a. The organization’s own sales force.
NS. Manufacturer’s Agency Industrial Distributors – Finding and appointing distributors in various regions who, in addition to selling products, will also hold stock to facilitate quicker uptake.
C. OEM Market – Original Equipment Manufacturers (OEMs) are organizations that buy products from other organizations, incorporate the same into their own products, and further sell it.
NS. Dealers and Distributors – The organization may also consider dealers and distributors as channel alternatives.
ii. Number of Intermediaries:
The organization has to decide the number of intermediaries to be used at each channel level.
There are three strategies an organization can use to decide the number of intermediaries:
a. exclusive distribution:
Special distribution involves limiting the number of intermediaries handling the organization’s goods and services to just one. It involves a contract in which the intermediary agrees not to carry competing brands.
This is usually done when the organization wants to have more control over the service level and the inputs given by the channel members.
NS. Selective Distribution:
A channel structure of this type is related to more mediators; However, the number is less than the number of intermediaries willing to carry a product.
The rationale is that the organization can establish good relations with a select few middlemen and expect better results. It is a structure that enables the organization to have greater coverage and control with less cost in case of intensive distribution.
C. intensive distribution:
Here, the manufacturing organization keeps its goods in as many outlets as possible. This is done especially for those products where the consumer looks for a great deal of convenience while buying, such as in the case of daily use items, snacks, toiletries, bakery items etc.
iii. Terms and Responsibilities of Channel Members:
Channel members are an important component of the overall marketing mix, and therefore, it is essential that the organization establishes long-term relationships with the channel members. When developing relationships, it is essential for the organization to define the rights and responsibilities of each channel member, and ensure that they are given opportunities to conduct a profitable business. It’s a business-relationship mix.
The key elements of the business-relationship mix are:
a. Price Policy – Here, the organization has to establish a price list as well as an indicative list of discounts which are considered fair and justified by the channel member.
NS. The demarcation of the territorial jurisdiction of the distributor is the function that is of utmost importance in the mix of business-relationships. It is only appropriate that organizations inform intermediaries of the terms and conditions under which they will apply to other intermediaries, and allocate them commissions or profits on sales in their territory, even if this is not done directly by them .
C. Interpersonal Services and Responsibilities – This should be clearly and clearly mentioned so as to avoid any ambiguity and conflicts later. The policy of the organization with respect to such areas of manufacturing, promotional support, training and recruitment of staff and other cooperatives should be mentioned.
Step # 4. Evaluation of Major Channel Options:
Having identified the key channel options, it is now necessary for the organization to evaluate these options.
There are three major criteria that are used to evaluate the options available:
I. Economic criteria:
Economic criterion involves comparison and evaluation of expected cost and expected sales under various alternatives. Let’s say there are two options, which is selling through the organization’s own sales force as against selling through an external sales agency. First, the organization must determine whether the organization’s own sales force will be able to obtain better sales vis-a-vis an outside sales agency.
The next step is to establish the internal sales force’s cost of sales, as opposed to the sales being made by the sales agency, and the final step involves a comparison of sales and costs under both options. Decide which one is more profitable.
ii. Control Criteria:
Another important criterion that must be considered is the control over channel members. There is certainly a risk of loss of control when dealing with external agencies against dealing with the organization’s own sales force.
iii. Adaptive Criteria:
In a fast and dynamic market scenario, a channel member’s willingness to adapt to the changing policies and increased demands should be considered.
Marketing Channel – Structure: Zero-Level Channel, One-Level Channel, Two-Level Channel and Three or More Level Channels
1. Zero-Level Channel:
Manufacturers sell products directly to consumers to eliminate middlemen. This composition is suitable for luxurious and exclusive products. Companies with sound financial position can sell their products directly through their outlets or specialized showrooms. On the other hand, even small manufacturers who cannot use channels and target only the local market can also use direct marketing. Agricultural products which are highly perishable in nature also use the direct channel.
2. One-Level Channel:
There is only one middleman between the manufacturers and their customers.
(a) Manufacturer – Dealer – Consumer – eg, Automobile
(b) Manufacturers – Large retailers – Consumers – eg, supermarkets
(c) Manufacturer (Franchisor) – Franchisee – Consumer – eg, food products, designer jewellery, garments, etc.
(d) Service provider – agent – consumer – eg, life insurance
(e) manufacturer – agent of manufacturer – consumer – eg, personal computer
3. Two-Level Channel:
There are two layers.
(a) Manufacturer – Wholesaler – Retailer – Consumer – eg, all FMCG
(b) Producer – Broker – Retailer – Consumer – eg, agricultural products, food grains
4. Three or more level channels:
(a) Manufacturer – C&F Agent – Stockist – Retailer – Consumer – eg, Drugs, Medicines
(b) Manufacturer – C&F Agent – Redistribution Stockist – Retailer – Consumer – eg, HLL Products
In Japan, food delivery may involve up to six levels.
Marketing Channels – Non-Traditional Channels or Supplementary Channel Formats: Door-to-Door, Consumer Co-Operations, Automated Vending Machines and some others
Some complementary channel formats are discussed below:
Today, the term multilevel marketing (MLM) is familiar to everyone, which is an altered version of traditional door-to-door selling. Even though it is not a new format, there were many changes in this format. Initially limited types of small priced products to be distributed through this format.
However, today, even higher priced and unique products are distributed. Major changes are seen in the products distributed through this format, e.g., milk, newspapers, encyclopedias, vacuum cleaners, cleaning materials, cosmetics, Tupperware, general merchandise, etc.
2. Consumer Co-operation:
A group of consumers can buy in bulk directly from manufacturers or wholesalers and retail to their members. Since they are bypassing one or more channels, they can save cost and the products can be made available at a reasonable price.
Generally, they work on no profit loss basis. These shopping groups can bypass retailers if they are not providing good services to customers or following unethical practices. The number and importance of consumer cooperatives is expected to increase in the coming days due to the increasing awareness of consumers.
3. Automatic Vending Machines:
Automated vending machines are a disorganized form of retailing in which money or credit card operated machines provide products or services. It is operated by inserting a coin and then the buyer can get the items automatically. In India, automatic sewing machines (ATMs) and PCOs are common examples of vending machines.
4. Vending Kiosk:
This is different from the vending machine. Customers can buy items through vending machines, whereas through vending kiosks they can only get information and place orders. In India, this form has not yet been established. It is used to get necessary information about the company and products/services. However, in developed countries, through interactive video, on-line ordering technology, customers can find information about products and services as well as book orders.
5. Catalog Marketing:
Exclusive, exclusive and ethnic products can be sold through catalog marketing. Catalogs are sent to potential and repeat customers and orders are booked by mail, phone or online. Some cosmetics companies, boutiques and jewelers in India use this form.
6. Company Sponsored Sales:
Employers enter into contracts with companies to purchase products and services for their employees. The vendor gets access to the employee database. This form is used when the employer partially or fully sponsors its employees or wants to give these items as a special occasion gift.
The employer wants these goods in large quantities so he expects a good (affordable) package from the seller. Normally, the seller also does not mind offering a discount as he is receiving bulk orders. For example, cars or two-wheelers, insurance policies, health care services, loans, financial services, electronic goods etc. In India, employers use this form while giving gifts to their employees on Diwali or some special occasions.
Marketing Channels – Channel Development
A new firm typically begins a local operation of selling goods in a fairly limited market, using existing intermediaries. The number of such intermediaries is usually limited to sales agents of some manufacturers, some wholesalers, many established retailers, some trucking companies and some warehouses.
For such firms, deciding the best channels may not be a problem, but the problem is faced in convincing the available intermediaries to carry and handle the business line of the firm. Thus, the success of firms on this front will assist the firm in determining whether the firm can branch out into new markets and use different channels in different markets.
The variety of channels followed by a firm may gradually change from one market to another, from one region to another, from one product category to another, from one country to another. The firm can sell directly to retailers in smaller markets and through distributors in larger markets.
Firms in rural areas may work with general merchandise traders while dealing with limited line traders in urban areas. In one part of the country, it may offer exclusive franchises; In another, it may sell through all the stores ready to handle the goods. In one country, it may use international sales agents; In another, it may partner with a local firm.
For international players, the criticality of the decision increases as the buying habits of customers change by countries. The channel design of many retailers exemplified that it is similar. When entering a new market, retailers, Germany’s Aldi, United Kingdom’s Tesco and Spain’s Zara, have somewhat redefined their channel distribution strategy, adapting their image to local needs and wants.
However, there are also retailers in the global market who stick to the same selling formula despite geographic differences, although sometimes finding it difficult to enter new markets such as Eddie Bauer, Marks & Spencer and Wal-Mart. have to do.
Thus, the channel system of any firm evolves as a function of local opportunities and conditions, emerging threats and opportunities, the company’s resources and capabilities, and other factors.
In the current scenario many companies have started using such hybrid channels, with many successful companies multiplying the number of “go-to-market” or hybrid channels in a single market segment. By adopting hybrid channels, the company must assure its efficient working all together and whether it matches the preferred way of doing business of each target client.