An Overview of Marketing Channels

Marketing channels are business structures, extending from points of product origin to
consumers, through which marketing professionals sell, transport, store, and deliver products and
motivate, communicate, and provide services for customers.
The primary marketing objective of most marketers is to profitably provide their products and
services for as many consumers or users as possible. A formal structure for sales and distribution
is needed to achieve this task of moving products from fixed points of origin to millions of
consumers. This structure is the marketing channel. There are two parts to it:
1. The material distribution structure that moves a product from the manufacturer to the
consumer or user
2. The marketing structure that, as a part of the distribution channel, ensures the
achievement of marketing bjectives
Activities in the Marketing Channel
The principal tasks of a marketing channel are:
1. Communicating
2. Selling
3. Shipping and storing
4. Providing products and customer service
Communicating
Marketing communications include advertising, promotional literature, trade promotions, mail,
telephone campaigns, product training, and any vehicle of marketing information. The
communications loop in a marketing channel can include following up on complaints or billing
for marketing communication. To be of value, all communications should be timely and accurate,
for the success or failure of marketing channels depends upon the uninterrupted flow of
information. Channel communications are two-way systems, with information flowing from the
marketer to the consumer and back from the consumer.
Selling
The task of selling involves the act of transferring product titles from one channel member to
another. This may require a series of intermediaries such as wholesalers, brokers, agents, and
retailers before the final act of transferring the product to the consumer is completed. Though
selling is one of the principal tasks of a marketing channel, it may be an independent function in
the corporate structure and considered separate from marketing. However, the transfer of titles
remains a part of marketing-channel management regardless of the sales people or marketing
people handling the responsibilities.
Shipping and Storing
The choice of intermediaries depends on their abilities to collect, stockpile, and distribute

products. Physical distribution can be performed by facilitating agencies, such as public

warehouses and freight carriers, at one or more levels in the channel of distribution. Shipping
and storing products takes place at every level of the channel before the products reach users.
Customer Services
The role customer services plays can vary from product to product or from one business
organization to another. Customer services include the tasks performed to inform, teach, comply
with legal requirements, and provide facilitating services. Direct product services and technical
advice can also be counted as customer services. Some companies consider customer services to
be a part of the product itself.
A marketing channel is much more than a simple conduit for consumer goods; it includes every
facet of a business. From communicating a products concept to providing guarantees of the
products value or usefulness to consumers, the marketing channel is the backbone of marketing
activities.
Types of Marketing Channels

Introduction
There are basically four types of marketing channels:

Direct selling;

Selling through intermediaries;

Dual distribution; and

Reverse channels.

Essentially, a channel might be a retail store, a web site, a mail order catalogue, or direct
personal communications by a letter, email or text message.

Direct Selling
Direct selling is the marketing and selling of products directly to consumers away from a fixed
retail location. Peddling is the oldest form of direct selling.
Modern direct selling includes sales made through the party plan, one-on-one demonstrations,
personal contact arrangements as well as internet sales.
A textbook definition is: "The direct personal presentation, demonstration, and sale of products
and services to consumers, usually in their homes or at their jobs. "

Industry representative, the World Federation of Direct Selling Associations (WFDSA), reports
that its 59 regional member associations accounted for more than US$114 Billion in retail sales
in 2007, through the activities of more than 62 million independent sales representatives.
The United States Direct Selling Association (DSA) reported that in 2000, 55% of adult
Americans had at some time purchased goods or services from a direct selling representative and
20% reported that they were currently(6%) or had been in the past(14%) a direct selling
representative.
According to the WFDSA, consumers benefit from direct selling because of the convenience and
service benefits it provides, including personal demonstration and explanation of products, home
delivery, and generous satisfaction guarantees. In contrast to franchising, the cost for an
individual to start an independent direct selling business is typically very low, with little or no
required inventory or cash commitments to begin.
Most direct selling associations, including the Bundesverband Direktvertrieb Deutschland, the
direct selling association of Germany, and the WFDSA and DSA require their members to abide
by a code of conduct towards a fair partnership both with customers and salespeople. Most
national direct selling associations are represented in the World Federation of Direct Selling
Associations (WFDSA).
Direct selling is different from direct marketing in that it is about individual sales agents reaching
and dealing directly with clients while direct marketing is about business organizations seeking a
relationship with their customers without going through an agent/consultant or retail outlet.
Direct selling often, but not always, uses multi-level marketing (a salesperson is paid for selling
and for sales made by people they recruit or sponsor) rather than single-level marketing
(salesperson is paid only for the sales they make themselves).

Selling Through Intermediaries

A marketing channel where intermediaries such as wholesalers and retailers are utilized to make
a product available to the customer is called an indirect channel.
The most indirect channel you can use (Producer/manufacturer --> agent --> wholesaler -->
retailer --> consumer) is used when there are many small manufacturers and many small retailers
and an agent is used to help coordinate a large supply of the product.

Dual Distribution
Dual distribution describes a wide variety of marketing arrangements by which the manufacturer
or wholesalers uses more than one channel simultaneously to reach the end user. They may sell

directly to the end users as well as sell to other companies for resale. Using two or more channels
to attract the same target market can sometimes lead to channel conflict.
An example of dual distribution is business format franchising, where the franchisors, license the
operation of some of its units to franchisees while simultaneously owning and operating some
units themselves.

Reverse Channels
If you've read about the other three channels, you would have noticed that they have one thing in
common -- the flow. Each one flows from producer to intermediary (if there is one) to consumer.
Technology, however, has made another flow possible. This one goes in the reverse direction and
may go -- from consumer to intermediary to beneficiary. Think of making money from the resale
of a product or recycling.