The Role of Marketing Channels

The majority of companies do not vend their goods straight to the end consumers even in B2B markets. Between the companies and the end consumers are a set of mediators carrying out multiple functions. These mediators comprise the marketing channel or distribution channel or trade channel, as they are alternatively known.In any distribution channel, there are three sets of intermediaries:

1.    Merchants:

Such as wholesalers and retailers; these merchants, buy the goods hence take title to the goods from companies and resell the goods in smaller lots to other channel members or end customers.

2.    Agents:

Such as sales agents, carrying and forwarding agents or manufacturer’s representatives; these agents represent the company, look for new customers, negotiate on behalf of the company, and help expand the reach of the company’s channel. However, they do not take title to the goods.

3.    Facilitators:

Such as transportation companies, warehousing companies, insurance companies and after sales-service facilities, facilitate the distribution process but do not negotiate sales or purchases nor take title to the goods.

In a general sense, channel members “add value” to a company’s products by making the goods available at the right time, place and in the right quantity and right conditions to the end customer. To do so, a number of activities need to be performed. We can broadly classify these activities into forward flows, backward flows, and point-of-sale.

The various activities taken by channel members are:

•    Transfer of title or ownership and physical movement of goods.
•    Storage of goods at various transit points as well as stocking and inventorying goods.
•    Processing orders from retailers and customers.
•    Assuming risk connected with movement of goods.
•    Provide for payment of bills and credit to buyers.
•    Negotiate pricing and other terms.
•    Maintain a sales force to stimulate demand at retail level and to service retailers.
•    Develop and disseminate information to stimulate merchandising.
Handling complaints and sales returns.
•    Display of products at retail level through attractive merchandising.
•    Gathering and sharing information with companies about buying patterns of current customers, potential customers, competitors and other factors that affect the business.

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