Marketing Channel
Strategy &
Management
MKT 460. Taufique Hossain
Marketing Channel
 A marketing channel is the structure linking a
group of individuals or organisations through which
products are made available to the consumer or
industrial user.
 The structure of channels may vary depending on the
type of market, needs of the end consumer and type
of product.
Intermediaries
 Play an important role in increasing efficiency and reducing
costs.
 There are several different types that come together to
characterise distribution channels between manufacturer
and consumer.
 Each intermediary adds a margin to the price of the
products handled.
 Not all intermediaries take legal title or physical possession
of the products.
 Different functions are performed by the different
intermediaries.
Types of Intermediary
 Wholesalers are intermediaries that buy products in bulk,
usually from manufacturers, and resell them to trade
customers, usually small retailers.
Types of Intermediary
 Retailers sell direct to the consumer and may either
purchase direct from the manufacturer or deal with a
wholesaler, depending on purchasing power and
volume. They come in many different formats, sizes
and locations.
Channel Structure
 Channel structure concerns the route selected to
move a product through different intermediaries.
Rationale for Using Intermediaries
The channel selection decision
 Manager must conduct a through market analysis to
identify the target markets that will be served by a
prospective marketing channel. Managers need to ask:
 Who are the potential customers?
 Where do they buy?
 When do they buy?
 How do they buy?
The design of marketing channels
 Direct Versus Indirect Distribution:
 Use intermediaries to reach target markets or
 Contact ultimate buyers directly using its own sales
force or distribution outlet or the Internet.
The design of marketing channels
 Direct Distribution:

Target market is composed of easily identifiable buyers

When personal selling is the major component of the
organization’s communication process

When the organization have a wide variety of offerings for
the target market

When sufficient resources are available to satisfy target
market requirements

When intermediaries are not available for reaching target
markets

When intermediaries do not poses the capacity to service the
requirements of target markets
Channel selection at retail level
 Which channel and intermediaries will provide the
best coverage of the target market?
 Which channel and intermediaries will best satisfy the
buying requirements of the target market?
 Which channel and intermediaries will be most
profitable?
Target Market Coverage
Intensive
Selective
Exclusive
distribution distribution distribution
Intensive Distribution Characteristics
 Maximum number of outlets
 Maximum availability
 Convenience products
 High number of potential purchasers
 High purchase frequency
 Low level of planning for purchases
 Low price
Selective Distribution Characteristics
 Number of outlets varies
 Specialist retailer knowledge
 Shopping products
 Medium number of potential purchasers
 Occasional purchase frequency
 Medium level of planning for purchases
 Medium price
Exclusive Distribution Characteristics
 Few outlets
 Close retailer/consumer relationship
 Specialty products
 Low number of potential purchasers
 Low purchase frequency
 High level of planning for purchases
 High price
Satisfying buyer
requirements/Intermediary benefits
 Information: In store displays, Demonstration,
Personal Selling,
 Convenience: Delivery, Proximity or driving time,
Sorting, Storage, Web page: easy to locate & navigate
 Variety: Both breadth & depth of products.
 Attendant Services: Installation, Credit, Technical
assistance, Post sale service
Dual Distribution & Multi channel
Marketing
 Dual distribution occurs when an organization
distributes its offering through two or more different
marketing channels that may or may not compete for
similar buyers. E.g. Using both direct distribution and
indirect distribution
 Multichannel marketing involves the blending of an
electronic marketing channel & a traditional channel.
Channel Relation
 Actively managing your agents and distributors is a vital
part of getting the best results from these sales channels.
 Keeping them up to date with product information and
selling the benefits to them of any new initiatives you want
them to be involved with.
 Regular communication
 Regular visits
 Product training
 Joint promotions
Channel commission and loyalty
 Pricing decision
 Competitive advantage
 Creating channel loyalty