Introduction
A marketing channel is organizations and people who direct the flow of goods from manufacturers to consumers. The marketing intermediaries act between the producers and the consumers and serve as their links. They are usually independent bodies that form part of the distribution channel that assists products to move from the producer to the end-users (Citiman Network, 2010, para. 4).
Unless for a few manufactures that sell their produce directly to their consumers, most manufacturers prefer using the distribution channels that consist of intermediaries (Pride-Ferrell Marketing, 2010, para. 4). Intermediaries operate through contracts or in some cases buy goods from the manufacturers in large quantities and later resale them in small quantities at a profit to consumers (Kurtz, Mackenzie & Snow, 2009, p.393).
Marketing intermediaries
The nature of channels can either be direct or indirect. For direct channels, the producers sell their produce directly to consumers, whereas for the latter, they sell their produce to intermediaries. Manufacturers produce goods in large quantities in very few localized areas to reap the benefit of the scale of the economy. On the other hand, their customers are dispersed over a large geographical area and therefore, these products must be transported to these dispersed areas to reach their customers when they need them (Pride-Ferrell Marketing, 2010, para. 5).
Because it is very expensive and time-consuming for manufactures to transport their products directly to their customers, they make the use of intermediaries which are generally very efficient and economical. Intermediaries have proved to be very important aspects even to consumers because they help to bring products close to them (Kurtz, MacKenzie & Snow, 2009, p.397).
Therefore, every moment a customer wants to purchase a product, he/she does not have to go to the manufacturers who sometimes are miles away, but gets it faster and more conveniently from the intermediaries. For that reason, these middlemen make business lesser costly and more convenient because the consumer gets what they require when they need it.
The intermediaries have also made it possible for customers to buy various products from different manufacturers in one place. For instance, intermediaries help consumers to purchase butter and bread in one place, although the two commodities are seldom produced by one manufacturer.
Similarly, they enable consumers to have a variety of brands of substitute products which helps them make informed decisions on which one to buy and leave depending on their prices, quality, preferences, and tastes. In addition to making consumers access a variety of products in one place, intermediaries also help in supplementing the manufacturers some expenses they would have incurred such as transport and warehousing expenses. Moreover, customers can access commodities to use or keep for future use (Kurtz, Mackenzie & Snow, 2009, p.396).
In summary, the marketing channels help by creating utility of time, place, and possession. Also, they cut down the overall exchange costs and help to ensure order in the business arena. The process of formulating a marketing channel should be considered as a long-term commitment since it affects other marketing decisions (Kurtz, Mackenzie & Snow, 2009, p.390). Therefore, when marketers are designing a marketing channel, they ought to consider customers’ needs.
This involves determining the number of output levels desired by targeted consumers. There are five output channels which include: lot size: this determines the number of units that the channel allows customers to buy at a go (Pride-Ferrell Marketing, 2010, para.6).
When the targeted markets are big companies, the lot size should be large, while it should be one when the target is meant for the household. Waiting and delivery time: this entails the period that will elapse before the customers receive the goods ordered. Generally, customers prefer quick deliveries. Spatial conveniences: This involves how convenient the channel is in facilitating customers to purchase the products. It is noted that the decentralization of channels facilities customers buying and mostly for automobiles. This is because it eases the cost used for search and transportation.
Product variety: This entails the range of similar products the channel supports. Customers prefer those channels that provided a wide range of brands because they provide them with a variety of products to select from (Pride-Ferrell Marketing, 2010, para. 5). This enhances the chance of customers finding what they want. Service backup: This involves the ability of channels to offer various services such as credit, repair, and installations. The higher the backups the more the channel will be desired by many customers.
Channel objectives are subject to the targeted service output. When the competition is very stiff, channel institutions should align their functions task in a manner to greatly reduce total cannel cost. Effective planning entails establishing the segment to serve and using the best channel. Channel objectives differ with the characteristics of the products. For instance, perishable products prefer using direct marketing. Bulky products require a channel that helps to minimize the amount handled and distance transported.
Conclusion
Channel conflicts result when some channel members interfere with the objectives of other members (Kurtz, Mackenzie & Snow, 2009, p.395). Horizontal conflicts occur in channels that are on the same level. For example, a drug store and a grocery store. Vertical conflict results in channels that operate at different levels. An example is a conflict of producer versus wholesaler.
Reference List
Citiman Network. 2010. Channel design decisions. Web.
Kurtz, D., Mackenzie, H.F. & Snow, K., 2009. Contemporary marketing. New York: Cengage Learning.
Pride-Ferrell Marketing. 2010. Distribution decisions: marketing channels and supply chain management. Web.
Wyman, O., 1998. Strategic organization design. Hamburg, Germany: Oliver Wyman Group.