This creates an interesting relationship, similar to the retail relationship in traditional channel marketing, whereas certain digital storefronts are highly valuable strategic partners. For example, if the channel member is an exclusive dealer, he may have to comply with all the manufacturer’s terms, even if he does not want to. Consumer goods category includes huge array of products. However, small manufacturers can take help of agents to sell in geographically dispersed markets. Again, both models can work, but clarity in that is very, very important. Goods that have a high unit price and a high margin are delivered directly by the manufac­turers. Multi-channel marketing occurs when a single organisation uses two or more marketing channels to reach the same or more than one market segment. Finally, some manufacturers find it feasible to use different channels in different parts of the country. 3. (a) Exclusive distribution – Here the distributor has an exclusive relation with the producer and is not allowed to keep competitors’ products and brands. The channel manager must be very specific in describing the tasks, and must define how these tasks will change depending upon the situation. Sales tax variations from state to state may have been taken into consideration while deciding on retail out­lets or showrooms for certain products for which the tax variation is large. Considering the vastness of the internet, however, being found by consumers who are not yet aware of your product becomes difficult. The channel must be flexible and efficient. In short, many channels and high volume. In order to decide on the types of retailers to include in its marketing channel, a firm must first understand the buying specifications of its consumers and the retailers themselves. Selecting the best marketing channel is critical because it can mean the success or failure of your product. For example, if the manufacturers prefer to have lower prices and larger volumes whereas the dealers want higher prices and medium volumes, it can lead to a conflict. A marketing channel mainly performs the task of moving goods from the producers or manufacturers to the final users. Cues to reach the goal may be situational (available at that point of time and place) or in memory (residing in memory). That is why manufacturers of consumer durables, like fans and refriger­ators, use sales representatives for institutional buyers and a dealer network for individual buyers. Exclusive distribution works off the idea that scarcity can add value. What are Marketing Channels? Improved transportation facilities have helped many compa­nies to avoid or reduce a number of intermediaries. Convenience goods such as salt, sugar, cookies, etc., are good examples of products suitable for this type of distribution. Once you have completed the test, click on 'Submit Answers for Grading' to get your results. Online vendors, such as Amazon, or a good example of non-store retailers. Marketing channels can make the services “available” and “accessible” to the target customers. 3.1 (b) three producers contacting three consumers through one distributor. Marketing channels must not just see markets but they must also make markets as one of the chief roles of marketing channels is to convert potential buyers into profitable customers. Types of retailers include department stores, chain stores, discount houses, franchises, and non-store retailers. We will look at the changing channel dynamics with regards to the recent channel developments like the Vertical, Horizontal and Multi-channel Marketing Systems. But when the level of sales increases above the level X1, the company’s sales force will be more economical. Hence intermediaries are not much useful. Big companies like Brooke Bond and Bata have direct distribution facilities. In this way we can see that intermediaries reduce the work of the producers. It is short and simple. Generally speaking, there are three ways to frame the distribution intensity decision: This is the highest in both number of channels and volume within each channel. Mostly direct channel, i.e., zero level is used. Marketing channels from the soul of the marketing function. (c) Manufacturer – Manufacturers’ Agents – Consumers – 1 Level, (d) Manufacturer – Large retailer/consumer cooperatives – Consumer – 1 Level. In cases when a company is just getting started, or an older company is trying to carve out a new market niche, the channel objectives may be the dominant force on channel choice. An intensive distribution approach will take advantage of as many sales outlets, distributors, and direct selling opportunities the organization can identify and justify (at a given volume). Strength and weakness of intermediaries. Purchaser willing to go to some inconvenience (time and distance) to locate the most acceptable brand. They keep changing with regards to their structures, functions, and their business arenas. The choice of the channel to use is a fundamental decision for the manufacturer where a number of factors and objectives have to be considered as a basis for such decision. Amazon, for example, sells a huge number of brands on their website. 3.1 (a) depicts three producers, each using direct marketing to reach three consumers. Although many retailers prefer to buy directly from the manufacturers, this is not always the case. All sizes | Walmart | Flickr - Photo Sharing!. Growth in sales – by reaching new markets and/or increasing sales in existing markets. There are many different kinds of retailers, including: In order to decide on the types of retailers to include in its marketing channel, a firm must first understand the buying specifications of its consumers. The immediate and ultimate customers may be identical or quite separate, depending on the type of product, functions performed in the channel, and location in the channel. Lifetime Value of the Customer . A marketing channel is the series of interdependent marketing institutions that facilitate transfer of title to a product as it moves from producer to ultimate consumer or industrial user. Vending machines are used in the developed countries to sell a number of products. Wholesaling includes all activities required to market goods and services to businesses, institutions, or industrial users who are motivated to buy for resale or to produce and market other products and services. In addition channel decisions include relatively long-term commitments with other firms as well as a set of policies and procedures. Of particular importance is the question, “from whom do my retail outlets prefer to buy? It has to periodically evaluate the performance of individual channel members against their own past sales and other channel members’ sales. Generally shorter channels are observed. A few are extremely large, having sales of $500,000 or more on a single day. Thus, it is a red good which needs a very extensive distribution network. Similarly, in order to be seen or heard by the consumers in the market-place, the cue should be stronger than that of com­petitors. Wholesalers: an example of a num­ber of products suitable for this purpose, marketing channels are observed for products. Of ) potential buyers, competitors and environment easiest thing to do advantages and disadvantages both. Other in selling to the final consumer, credit facilities, short lead-time i.e... 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