Marketing Channels Overview

Study Notes

Two-Level Channel

Manufacturer sells to wholesalers who sell to retailers who sell to customers
Ideal for durable, standardized, inexpensive goods with a wide target market

Three-Level Channel

Manufacturer sells to agents who sell to wholesalers who sell to retailers who sell to customers
Agents help with quicker market entry
Preferred for nationwide markets with high product demand

Categories of Agents

Super Stockiest: purchase stock and sell to wholesalers and retailers within their region
Carrying and Forwarding Agents: operate on commission, provide warehousing, order processing, and delivery services

Direct Channel (Zero-Level)

Manufacturer sells directly to customer
Examples: peddling, brand stores, company websites
Commonly used for perishable goods, expensive goods, and goods with a geographically concentrated audience

Indirect Channels

Manufacturer uses intermediaries to sell to customers
Classified into three types: one-level, two-level, three-level

One-Level Channel

Manufacturer sells to retailers who sell to customers
Best suited for manufacturers of shopping goods (e.g., clothes, shoes, furniture, toys)

Functions of Distribution Channels

Facilitate pre-sale and post-purchase services (financing, maintenance, information dissemination, channel coordination)
Create Efficiencies: bulk-breaking and creating assortments
- Wholesalers and retailers buy bulk and sell smaller quantities to many channels/customers
- They offer different types of products in one place
Share Risks: channels buy products beforehand, sharing the risk with manufacturers
Marketing: channels are touchpoints for implementing marketing strategies
- They are in direct contact with customers
- Help manufacturers propagate brand message and product benefits

Types of Distribution Channels

Direct Channels
Indirect Channels

Direct Sales

Good model for mid-range products not purchased daily (stationery, air purifiers, jewelry)
Manufacturer directly communicates with customers, removing intermediaries
Internet and e-commerce have popularized direct distribution
Key to success is clear communication with customers

Strategies to Encourage Direct Sales

Features: highlight the product's usefulness and purpose
Advantages: emphasize the product's unique features compared to competitors
Benefits: explain how the product solves problems, saves time, or generates profit
Intimacy: establish a personal connection with the customer, maintain their attention, and convince them of the value
Reciprocity: offer favors (free samples, discounts) to create a need for the customer to reciprocate

Dual Distribution

Manufacturer uses more than one marketing channel to reach the end user
A more complex strategy for high-demand brands
Can help reach broader customer segments

Example of Dual Distribution - Automobile Manufacturer

Sells cars through independent dealerships (conventional channel)
Also sells cars directly through the manufacturer's website (direct channel)

Description

Explore the various types of marketing channels in this quiz, including two-level and three-level channels, as well as direct and indirect channels. Understand the roles of agents and their categories, and learn about the ideal market conditions for different channel types. This is essential knowledge for anyone studying marketing principles.