The marketing channel is how a company may distribute its products from one person to another via various media. In Plain English, it’s about “linking a business to consumers.” It’s the path by which a product reaches the customer, and it’s also known as a Distribution channel.
Marketing channels are beneficial in managing and, more importantly, developing a successful and strategic marketing plan. There are several marketing channels that businesses may implement in their company. This article will help you understand more about the essential types of marketing channels, their goals and objectives, and the various factors to consider when selecting a marketing channel for your business.
1. Direct Selling
It is the most common marketing channel where businesses sell their products directly to consumers without any intermediaries. This type of distribution is that companies have more control over their product and can easily track consumer behavior.
An example of a direct selling channel is how Amazon.com sells Kindle products on its website. Apple also utilizes this approach to sell iPhones from its retail stores. Direct selling can be done in various ways, including brick-and-mortar shops, internet storefronts, street sales, telemarketing, and so on.
According to the United States Direct Selling Association (DSA), direct selling had a retail sales value of $35.4 billion in 2018. Furthermore, there were 6.2 million direct sellers and 36.6 million customers in 2018.
Using the direct selling method includes better control over your products, increased transparency, and improved customer service. Also, customers usually have a higher level of trust for brands that they purchase products from directly.
On the other hand, as the company expands, so will its distribution requirements. Business owners may wish to use additional distribution methods to reach a more extensive client base to stay competitive. When you don’t have a solid distribution plan, it’s tough to sell large quantities of your products.
2. Selling through Intermediaries
The second distribution channel is through intermediaries. It’s also known as a distribution channel that employs intermediaries. It is when a firm contract with wholesalers and retailers to bring its goods onto the market. Wholesalers and merchants risk selling poorly if they buy the product from the manufacturer and sell it to clients.
One of the most significant factors to keep in mind about wholesalers is that they will purchase your goods at a reduced price than the retail value. Wholesalers are rarely the final consumer of a product. A wholesale buyer would typically store and warehouse vast amounts of your item before selling them off in small quantities for a profit to other intermediaries or direct to the public.
The advantage of using wholesalers is that they can reach a larger market than the manufacturer could on its own. And, as the middleman, they can offer your products at a lower price than if you were to sell them yourself. The disadvantage of this marketing channel is that you have less control over your product and how it’s priced.
3. Dual Distribution
The third marketing channel is dual distribution, a mix of direct selling and using intermediaries. In this type of distribution, businesses use both wholesalers/retailers to sell their products and sell directly to consumers.
An example of a company that uses dual distribution is Nike. Nike sells its products to wholesalers and retailers and has stores where it sells products directly to consumers.
Through dual distribution, manufacturers delegates some of their tasks to intermediaries but still have some control over their product. The advantage of this type of distribution is that businesses can reach a larger market and have more control over their product than if they were to use only one distribution channel.
4. Reverse Channels
The flow is the common feature shared by all four channels, as you may have learned from reading about the previous three. Each one flows from producer to middleman (if there is one) to customer.
Another flow has now become feasible thanks to technology. This one goes in the other way around, and it may be completed in three steps: beginning with the consumer, moving through an intermediary, and ending with a beneficiary. Consider earning money by reselling a product or recycling old items.
You have to be a customer who buys products (or materials) in the first place. After that, you can become an intermediary by selling what you don’t want or need anymore. Finally, the last step is finding a beneficiary for what you’ve sold.
The most common type of reverse channel is recycling, which has environmental and social advantages.
What is the primary goal of any Marketing Channel?
The primary goal of any marketing channel is to reach potential customers to sell products or services. They ensure that items make it to customers and communicate information. To be more successful, most companies use a variety of marketing channels, including websites, blogs, social media sites, email marketing, and content creation.
A well-planned marketing campaign uses a variety of marketing channels to increase interaction and achieve key business objectives. Various channels assist in the transmission of relevant information, the promotion and selling of a product, and the offering of assistance following the transaction.
Marketing channels allow businesses to save time and money by spreading the correct information to customers and marketing it themselves. Many people look for knowledge on social media, allowing a firm to grow popular and attract consumers without putting out any effort. Customers will become free promoters if a product is excellent. As a result, the number of leads and clients will rise.
Which Marketing Channel sells products directly to customers?
The direct selling channel is the one that sells products directly to customers. Peddling is the most ancient type of direct selling. Modern direct selling includes demonstrations, personal contact agreements, and internet sales for sales.
According to The World Federation of Direct Selling Associations (WFDSA), 59 regional member organizations earned more than US$114 billion in retail sales in 2007, based on the activities performed by over 62 million independent sales agents.
What factors should be considered when selecting a Marketing Channel for a business?
There are four essential factors to consider when choosing the best marketing channel for your business. These are consumer preference, cost, brand, and localization.
- Consumer preference – The consumer’s habits and actions have a more significant impact on channel strategy. If all of an organization’s customers like to shop at Walmart, it might be worth considering beginning to stock Walmart shelves with items. Consumers will search for a specific product in a particular channel if they are looking for it.
- Cost – There are numerous costs to consider. Some platforms will be more expensive than others. Low-cost items perform best in low-cost stores. Even better, selling straight to the consumer eliminates the middleman and results in higher profits.
- Brand – Organizations establish strategic partnerships to create pathways for customers, and these relationships will be seen in both companies’ branding efforts. Users of an online store that sells a particular type of product will connect the two companies. It might have an impact on how those people perceive both firms.
- Localization – The company’s target market should be considered when selecting a marketing channel. If the product is only available in certain areas, it will limit the potential customer base.
How much do you pay for Business Marketing Channels?
The cost of marketing channels can vary greatly depending on the type of channel and the size of your business. Many businesses use free and paid channels to reach their target market.
Some standard costs associated with marketing channels include:
- Paying for ads
- Creating and designing marketing materials
- Hiring channel partners or agencies
- Training employees on how to use the channel
Ideally, businesses should prepare to spend 3-5% of their total revenue on marketing expenses. However, if you make less than $5 million per year in gross sales, you should plan to spend 7% to 8%.
Is it possible to promote a business through Marketing Channels?
Yes, businesses can use marketing channels to promote their products or services. Companies can reach a wider audience and generate more leads by using different channels. Businesses need to carefully select the proper channels and create a well-rounded marketing strategy to succeed.