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7.0 MARKETING CHANNEL
The nature and importance of marketing channel, marketing channel definition, the functions of marketing channel and the direct and indirect marketing channel
7.1 Identify the nature and importance of marketing channel
7.1.1 Define marketing channel
7.1.2 Discuss the functions of marketing channel
7.1.3 Identify the major channel alternatives a. Direct marketing channel b. Indirect marketing channel

• DEFINITION OF MARKETING CHANNEL

Members of the marketing channel perform many key functions:
 Information: gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.
 Promotion: developing and spreading persuasive communications about an offer.
 Contact: finding and communicating with prospective buyers.
 Matching: shaping and fitting the offer to the buyer's needs, including activities such as manufacturing, grading, assembling, and packaging.
 Negotiation: reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred. Others help to fulfill the completed transactions:
 Physical distribution: transporting and storing goods.
 Financing: acquiring and using funds to cover the costs of the channel work.
 Risk taking: assuming the risks of carrying out the channel work.

DIRECT MARKETING CHANNELS
FOR CONSUMER MARKET
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A direct distribution channel is where a company sells its products direct to consumers.
•
Producers do not use intermediaries to deliver the product to the consumer.
•
Direct marketing activities use different forms of technologies and include:-
Telemarketing
Mail Order and catalogue shopping
Online shopping and shopping-at-home television network.
•
Dell sells its computer directly to the consumers by sending catalogues to home or through its website.

DIRECT MARKETING CHANNELS
FOR BUSINESS MARKET
•
Direct channels are most common in business market as compared to consumer goods.
•
A direct channel is more suitable when buyers are large, when selling requires many negotiation, when the price per unit is high and when the products need good service.
• Example:- Manufactures buy large quantities of raw materials and major equipment and supplies directly from other manufacturers.

FOR CONSUMER MARKET
• Indirect sales channel activities are those conducted by third-party companies. Include one or more intermediaries in the route.
• Retailer Channel:- Includes retailers who stand between the producers and the customers.
- In other words, the products move from the producers to the retailers and finally to the consumers.
-Normally, the retailers are large with chain of stores, able to perform their own wholesaling functions and form efficient logistical alliances with the producers. This choice of route is suitable for specialty goods. Example;- Toys-R-Us and Parkson.
• Wholesaler channel:- Wholesaler channel is the most common route for consumer products.
The wholesaler channel has both wholesalers and retailers in the channel.
-The goods move from the producers to the wholesalers, to the retailers and finally to the consumers.
- Suitable for low-cost and frequently used items
- Many convenience stores and supermarkets will use this channel choice.

FOR BUSINESS MARKET
1) Business distributor channel
 Companies that sell standardized items of moderate or low value frequently use industrial distributor
 Business distributors are:- wholesaler intermediaries who serve business market.
 They provide variety of services & strong promotional support for industrial products,
2) Agent/broker
 Small manufacturers could not afford to employ their own sales force to sell their products.
 Rely on agents/brokers to sell to either industrial distributors /industrial users.
 Agents provide warehousing in their area and ship the products to business distributors/customers.

• Channel 1 Channel 2 Channel 3
PRODUCER PRODUCER PRODUCER
WHOLESALER s
CONSUMERS
RETAILERS
CONSUMERS
RETAILERS
CONSUMERS

Marketing Channels for Consumer
Products

• Channel 1 Channel 2 Channel 3
PRODUCER PRODUCER PRODUCER
AGENTS/BROKERS
BUSINESS
BUYERS
BUSINESS
DISTRIBUTOR
BUSINESS
BUYER
BUSINESS
DISTRIBUTOR
BUSINESS
BUYER