Marketing channels are the route between producers and users through which goods are distributed. This route is also known as Distribution Channel, Channel of Distribution or Trade Channel. In case of services, the distribution channel is direct, since the services are intangible in nature. A distribution channel generally requires a buyer and seller.
Meaning and Definition of Marketing Channels
According to American Marketing Association___” A channel of distribution or marketing channel is a structure of the intra-company organization, units, and intra-company agents and dealers, wholesalers and retailers through which a commodity product or service is marketed“.
According to Philip Kotler___” Every producer seeks to link together the set of marketing intermediaries that best fulfill the firm’s objectives. This set of marketing intermediaries is called the marketing channel”.
According to William J Stanton___” A channel of distribution for a product is the route taken by the title to the goods as they move from the producer to the ultimate consumers or industrial user”.
‘Delivery’ is the main aim of marketing channel. The availability and reachability of all public and private goods and services to final consumers can be made only through marketing channels.
Successful value creation depends on successful value delivery. Holistic marketers are increasingly taking a value network view of their business, examining the entire supply chain that links raw materials, components, and manufactured goods and shows how they move toward the final consumers.
Nature of Marketing Channels
- Pathway or Route: Distribution channel is the route through which goods and services are transmitted from the manufacturers to the consumers.
- Flow: In a distribution channel, the goods and services flow in a sequential, smooth and unidirectional manner.
- Composition: The channel comprises of intermediaries like agents, distributors, retailers, wholesalers, etc.
- Function: The functions of distribution channel are performed by intermediaries. They assist in the transfer of title, ownership, and possession of goods and services between manufacturers and consumers.
- Marketing Tool: Distribution channel acts as a medium for screening the external aspects of the marketing organization and for bridging the physical and non-physical gaps which occur while transferring goods from the manufacturers to the consumers.
- Supply-Demand Linkage: It bridges the gap between the manufacturers and consumers by eliminating all the spatial and temporal discrepancies related to supply and demand.
Importance of Marketing Channels
- Relive from Marketing Problems: They help the producer in his production function by relieving him of marketing problems. Thus, the producer can pay his full attention towards organizing the production function only smoothly to earn a high rate of return.
- Information to the Producer: The channels of distribution provide information to the producer regarding the taste and needs of consumers, competition in the market, current market trend and the product conditions for the increased volume of sales because they have complete knowledge of the market.
- Storage of Finished Goods: The channels of distribution keep the producer free from the problems of storage of finished goods.
- Finance the Producer: Channels of distribution finance the producer as well as the consumer.
- Fixing the Price: Channels of distribution assist the producer in fixing the price of a product.