MODULE 4

MARKETING CHANNELS
MEANING
A marketing channel is the people, organizations,
and activities necessary to transfer the
ownership of goods from the point of
production to the point of consumption. It is the
way products get to the end-user, the consumer;
and is also known as a distribution channel.
A marketing channel is a useful tool for
management and is crucial to creating an
effective and well-planned marketing strategy.
MARKETING CHANNELS

DEFINITION
According to Phillip Kotler,” It is a set of
independent organizations involved in the
process of making a product or service available
for use or consumption.”
 PURPOSE OF MARKETING
CHANNELS
• To ensure the proper availability of desired
products
• To improve the sales outlook
• To establish cooperation between distribution
factors
• To achieve and maintain a level of service
• To minimize logistics and total cost
• To collect accurate information
 LEVelS OF CHANNELS
Zero level channels: - Here the goods move directly
from producer to consumer.
One level channel: In this case there will be one sales
intermediary ie, retailer.
Two level channel: This channel option has two
intermediaries, namely wholesaler and retailer.
Three level channel: This contains three
intermediaries. Here goods move from manufacture
to agent to wholesalers to retailers to consumers.
 CHANNELS AVAILABLE FOR THE
DISTRIBUTION OF CONSUMER
GOODS
• Direct distribution - owned website, a retail store, or even door-to-
door sales.
• Retail distribution - department stores, supermarkets, and specialty
stores
• Wholesale distribution - sold in bulk, such as food and beverages.
• Online distribution - e-commerce platforms like Amazon or eBay
• Direct mail distribution - through the mail, phone, or online.
• Multi-level marketing - products they sell, as well as on the sales
made by the distributors they recruit.
• Direct response distribution - Consumers can place orders by
phone or online.
 FACTORS AFFECTING CHANNEL
CHOICE
• Price of the Product
• Perishability
• Size and Weight
• Technical Nature
• Goods Made to Order
• After-Sales Service
 CHANNEL DESIGN

Channel design: Those decisions involving the

development of new marketing channels where no
one had existed before, or the modification of
existing channels.
 CHANNEL MANAGEMENT
DECISIONS
The term Channel Management is widely used in sales
marketing parlance. It is defined as a process where
the company develops various marketing techniques
as well as sales strategies to reach the widest possible
customer base.
Steps in channel management decision
1. Selecting channel members
2. Training channel partners
3. Motivating channel members
4. Evaluating channel members
5. Modifying channel arrangements
 CHANNEL CONFLICT

Channel conflict occurs when manufacturers

(brands) dis-intermediate their channel
partners, such as distributors, retailers, dealers,
and sales representatives, by selling their
products directly to consumers through general
marketing methods and/or over the Internet.
TYPES OF CHANNEL CONFLICT
 CAUSES OF CHANNEL CONFLICT

• Goal incompatibility
• Ambiguous Roles
• Different Perceptions
• Manufacturer dominating the Intermediaries
• Lack of Communication
 MANAGING CHANNEL CONFLICT

• Subordinate Goals
• Exchanging employees
• Trade associations
• Co-optation (Expert Advice)
 DESIGNING A PHYSICAL
DISTRIBUTION SYSTEM
• Physical distribution is the group of activities
associated with the supply of finished product
from the production line to the consumers. The
physical distribution considers many sales
distribution channels, such as wholesale and
retail, and includes critical decision areas like
customer service, inventory, materials,
packaging, order processing, and
transportation and logistics.
 COMPONENTS/ ELEMENTS OF A
PHYSICAL DISTRIBUTION SYSTEM
• Customer service
• Order Processing
• Inventory Control
• Warehousing
• Transportation Mode
• Materials Handling
 PROMOTIONS

• Promotion is also one of the elements in the

promotional mix or promotional plan. These
are personal selling, advertising, sales
promotion, direct marketing, publicity, word of
mouth and may also include event marketing,
exhibitions and trade shows.
MARKETING COMMUNICATIONS
• Marketing communication involves sharing of
meaning, information and concepts by the
source and the receiver about the products and
services and also about the firm selling
through the devices of promotion via,
advertising, publicity, salesmanship and sales
promotion.
 DIRECT MARKETING

• Direct marketing is a type of marketing that

involves communicating directly with
customers and potential customers in order to
promote products and services.
 INTEGRATED MARKETING
COMMUNICATION – (IMC)

• Integrated Marketing Communications (IMC)

blends various promotional tools and
communications/marketing/advertising services
and techniques to maximize profit. IMC is
ultimately achieved through concise and
consistent messaging that fosters familiarity and
consumer affinity. (Strong)
 COMMUNICATION OBJECTIVE
• To develop brand awareness
• To increase consumer or business demand for
a product category
• To change or influence customer beliefs or
attitudes
• To enhance purchase actions
• To encourage repeat purchases
STEPS IN DEVELOPING EFFECTIVE
COMMUNICATION
• Identify the target audience
• Determine the communication objectives
• Design the message
• Select the communication channels
• Establish the communications budget
• Decide on the media mix
 STAGES IN DESIGNING MESSAGE
• Sender
• Encoding
• Message
• Media
• Decoding
• Receiver
• Response
• Feed Back
 ADVERTISING
• Advertising is a paid form of non-personal
communication. Advertising promotes ideas,
goods and services of identified sponsors.
 ADVERTISING OBJECTIVES
• To Inform
• To Persuade
• To Remind
• Introduce a product
• Introduce a brand
• Differentiation and value creation
• Acquiring customers or Brand switching
• Brand building
• Increase sales
 ADVERTISING BUDGET
• An advertising budget is estimate of a
company's promotional expenditures over a
certain period of time. More pertinently, it is
the money a company is willing to set aside to
accomplish its marketing objectives.
 METHODS / TYPES OF
ADVERTISING BUDGET
1. Percentage of Sales method
2. Objective and Task method
3. Competitive Parity method
4. Market Share method
5. Unit Sales method
6. All Available Funds method
7. Affordable method
 ADVERTISING COPY
• An advertising copy is a term used to describe
the main text used in the advertisement. The
text could be a dialogue, a catchy punch line or
a company’s dictum (rule).
 AIDA MODEL
• AIDA is an acronym that stands for Attention,
Interest, Desire and Action. AIDA model helps
to explain how an advertisement or marketing
communications message engages and
involves consumers in brand choice.
 TRADITIONAL MEDIA
• The non-electronic mediums which works as
part of our culture and as vehicles of
transmitting tradition from one generation to
another generation is called traditional media.
 MODERN MEDIA
• New media are forms of media that are native
to computers, computational and relying on
computers for redistribution. Some examples
of new media are telephones, computers,
virtual worlds, single media, website games,
human-computer interface, computer
animation and interactive computer
installations.
 ONLINE ADVERTISING
• Online advertising, also called online
marketing or Internet advertising or web
advertising is a form of marketing and
advertising which uses the Internet to deliver
promotional marketing messages to
consumers.
 MOBILE ADVERTISING
• Mobile advertising is the communication of
products or services to mobile device and
Smartphone consumers. The mobile
advertising spectrum ranges from short
message service (SMS) text to interactive
advertisements.
SOCIAL MEDIA FOR ADVERTISING
• Social network advertising, also social media
targeting, is a group of terms that are used to
describe forms of online advertising that focus
on social networking services.
 KEY COMPONENTS OF DIGITAL
MARKETING
Digital marketing is the practice of promoting
products or services through digital channels.
Search engine optimization (SEO)
Pay-per-click (PPC) advertising
Social media marketing
Content marketing
Email marketing
Mobile marketing
Analytics and reporting
 PUSH AND PULL STRATEGIES
• Promotion is an important part of any marketing
strategy. You can have the best product or service
out there, but unless you promote it successfully,
no one will know about it. There are three basic
types of promotional strategies – a push strategy,
a pull strategy or a combination of the two.
Push Promotional Strategy
• A push promotional strategy works to create
customer demand for your product or service
through promotion: for example, through
discounts to retailers and trade promotions.
Pull Promotional Strategy
• A pull promotional strategy uses advertising to
build up customer demand for a product or
service. For example, advertising children's toys
on children's television shows is a pull strategy.
Combination of Both Strategies
• Some companies use a combination of both push
and pull strategies. For example, Texas-based
textile producer Cotton Incorporated uses a
push/pull promotional strategy.
When To Use Each Strategy
• Push promotional strategies work well for lower
cost items, or items where customers may make a
decision on the spot. New businesses use push
strategies to develop retail markets for their
products and to generate exposure. Once a
product is already in stores, a pull strategy creates
additional demand for the product. Pull strategies
work well with highly visible brands, or where
there is good brand awareness. This is usually
developed through advertising.