CHANNEL POWER

Channel Power

Channel Power

Abstract

Once you have selected and developed a unique product or business idea, correctly positioned and targeted it to buyers, and developed your packaging and pricing, the selection of distribution channels and sales representation is key to successful marketing. It's fairly easy to change many of your marketing tactics and strategies on a periodic basis; pricing, packaging, and product mix are among these flexible choices. However, distribution and sales decisions, once made, are much more difficult to change. And distribution affects the selection and utilization of all other marketing tools. There is a wide variety of possible distribution channels, including: Retail Outlets owned by your company or by an independent merchant or chain (Rossen & Stanley 2007 782-823). Wholesale Outlets of your own or those of independent distributors or brokers, Sales Force compensated by salary, commission, or both, Direct mail via your own catalog or flyers, Telemarketing on your own or through a contract firm, Cyber Marketing, surfing the newest frontier, and TV and Cable direct marketing and home shopping channels. Manufacturers must be able to sell their goods to customers in order to make the real aim of a business profit. This is achieved by sending their goods through various channels of distribution. This paper will discuss the article written by Ken Rolnicki titled "Managing channels of distribution".

Introduction

The channel's cost and the amount of control the manufacturer wants over, distribution are two important influences deciding which channel will be used. According to Rolnicki's article the influences of cost and control also affect the choice of channel for raw materials and food products. Raw materials are often distributed through a number of commodity exchanges: an example used by Rolnicki is The London Metal Exchange, which grades and sells a range of metals. Some food products are also sold either through a commodity exchange such as The Baltic Exchange. A number of different channels are also used to sell industrial goods. There may be direct selling to the final user; wholesalers or manufacturer's agents may also be used to distribute items, such as farm machinery and steel.

In order to decide whether a firm should undertake its own distribution direct to consumers or whether it would be more efficient and effective to use intermediaries, it is necessary to understand the functions of these intermediaries. Consumers often want only a limited quantity of a wide range of goods, goods that are conveniently made available under one roof (i.e. in a retail supermarket). Intermediaries can help overcome this discrepancy of assortment by reducing dramatically the number of contacts required between suppliers and the end customers (Beier & Stern 1999 638).

A marketing channel has been defined as "a system of relationships existing among businesses that participate in the process of buying and selling products and services". Channel intermediaries are those organizations that facilitate the distribution of goods to the ultimate customer. The complex roles of intermediaries may include taking physical ownership of products, collecting payment, and offering after-sales ...