Intermediaries constitute a Marketing Channel.
Marketing Channels are sets of interdependent
organizations involved in the process of making a
product or service available for use or
Set of pathways a product or service follows after
production, culminating in purchase and use by
the final end user.
MERCHANTS (Wholesalers, Retailers).They take
title to the goods and resell.
AGENTS. They negotiate for a fee. No title to the
FACILITATORS. They assist in the distribution
process. Transporters, advertising agencies, banks.
No title to the goods and no negotiation.
Importance of Channels
A marketing channel system is a set of marketing
Channels employed by a firm.
Convert potential buyers into profitable orders.
Not just “serve” markets, but “make” markets.
Push and pull
PUSH STRATEGY: manufacturer uses its sales
force and trade promotion money to induce
intermediaries to carry, promote and sell the
product. For low brand loyalty products.
PULL STRATEGY: manufacturer uses
advertising and promotion to persuade consumers
to ask intermediaries for the product. For high
brand loyalty products.
Top marketers use both Push and Pull Strategy.
Role of Marketing Channels
When producers lack the financial resources
to carry out direct marketing
When direct marketing is not feasible
When producers can earn greater returns by
concentrating on their main business of
Distribution channels exist to perform
certain fundamental activities that should be
performed after the product is manufactured
or the service is designed, and before the
end consumer eventually consumes the
Gather information about potential and current
Develop communications to aid purchase.
Storage and movement of physical products
Place orders with manufacturers
Organize funds to finance inventories at different
levels in the marketing channel.
Price agreements and terms so transfer of
ownership can be effected.
Oversee transfer of ownership
Provide for buyers’ payment of bills
through various options.
Numbers of Distribution Channel
Each layer of marketing intermediaries that
performs some work in bringing the product
to its final buyer is a "channel level". The
figure below shows some examples of
channel levels for consumer marketing