Marketing Channels: Direct vs. Indirect - Essay Sample

Introduction

Marketing channels are ways through which manufactured goods of a company reach the consumer. A direct marketing channel is a good example. In these channels, there are no intermediaries. Indirect marketing channels have intermediaries such as distributors, wholesalers and retailers. A company must propose its marketing channel before deciding on one. They should consider the needs of the customer, set the objectives of the channel; they should identify the channel alternatives and evaluate them. The value and functions of the marketing channels are, categorizing products with the different customer category and filling the gap that separates the goods with the users. According to Chapter 12, ppt 10, How Channels Add Value, these channels also add value through, physical distribution, product promotion, financing, risk-taking and product information.

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Different channels interact and organize how each of them will perform their roles. It is common for them to conflict over tasks, goals and rewards. Vertical conflicts occur between different levels of the same channels, while horizontal conflicts occur between firms of the same level of the chain. Vertical marketing systems consist of wholesalers, retailers and producers acting as a unified system. Corporate, contractual and administered marketing systems are examples of vertical marketing systems. A company is open to several channel alternatives. A company can quickly meet the market conditions and opportunities by analyzing consumer needs, evaluating channel alternatives, setting channel objectives and identifying channel alternatives. A company can use three strategies to determine the number of channel members required. They include Intensive distribution, Exclusive distribution and selective distribution.

Marketing intermediaries play a significant role in business. They provide all the necessary information about a product or service to the consumers. Marketing intermediaries also add value to a product with a high competition in the market. They promote and sell goods and services to the consumers on behalf of the company. They avail the goods through contracts and markets goods on behalf of the manufacturers. Both the producer and an intermediary need to agree before conducting any business. They need to decide on, conditions of sale, specific services, price policies and territory rights.

The process of directly selling a service or a product to a customer for their consumption is known as retailing. There are three types of retailers, self-service retailer, who have the option to choose and purchase a product among many. Limited service retailer provides information about their products and full-service to assist customers in their purchase process. The change in the economy makes consumers change their consumer trends which affect retailers directly. While consumers consume some products less with other products, they increase. As a result, they are benefiting some retailers, while other retailers suffer significant losses.

In Chapter 13, ppt 24-33, it is evident that new retailing trends have emerged. The retail convergence is an example where manufacturers producing similar products market these products at the same price, same shops making it difficult for shoppers to differentiate the product. Other examples of retailing trends include; the rise of mega-retailers, growth of non-store trends, online channel retailers, retail technology, green retailing and global expansion of major retailers. Major retailer marketing strategies include price decisions, significant product variables, profiling the market, promotion decisions and place decisions.

Conclusion

Based on the chapters, wholesaling involves selling goods and services to those buying for resale. This includes selling and promoting, warehousing, transportation, bulk breaking, risk-bearing, market information and financing. There are three types of wholesalers, brokers and agents, merchant wholesalers and manufacturers and retailers. Wholesalers must decide on their marketing strategy since they cannot serve everyone.