EFFECT OF MARKETING CHANNELS
In the first place, the channels bring together the manufacturer and the user in an economic manner and thereby provide distribution efficiency to the manufacturer. Channels break the bulk and meet the small-size needs of individual consumers. The channels take care of the physical flow of products, the title/ownership flow, the risk flow, the negotiation flow, the financing/payment flow, the information flow and the promotion flow. We are briefly discussing other aspects in the ensuing paragraphs as to hpw the marketing channels help in reinforcing the marketing.
Minimize the number of contacts needed for reaching consumers:
In most cases, it will be impractical for a manufacturing firm to sell its entire production directly to the consumers. Resource constraint is the hurdle in this regard. Even assuming that the required resources can be found, the question arises whether it will be advantageous for the firm to sell its products directly and all by itself, totally avoiding external marketing channels. Analysis shows that in most cases, using external marketing channels/intermediaries is more advantageous to the firm than performing the distribution function all by itself. When channels are dispensed the numbers of contacts a manufacturer will have to establish for reaching out to the consumers are far too many. Channels minimize the number of contacts.
Supply products in suitable assortments:
Channels also combine products and components manufactured by different firms and offer them in assortments that are convenient to users. The users normally need an assortment of items. They will shop at only those outlets, which supply such assortments. But, a manufacturer cannot meet the need for such assortments, since it will not be feasible for him to take up distribution of other products required by the customers. The channels thus render the vital service of assembling the products of different manufacturers and offering them to customers in suitable assortments. In other words, the channels help in â€˜matching segments of supply with segments of demandâ€™.
Marketing channels also provide salesmanship. In particular, they help in introducing and establishing new products in the market. In many cases, buyers go by the recommendations of the dealers. The dealers establish the products in the market through their persuasive selling and person-to-person communication. They also provide pre-sale after-sale service to the buyers.
Help in Price Mechanism:
In many cases, the channels also help implement the price mechanism. They conduct price negotiations with buyers on behalf of the principals and assist in arriving at the right priceâ€”the price that is acceptable to the maker as well as the user. This is vital for the consummation of the marketing process. The manufacturer would find it difficult to complete this step without the help of the channels.
Assist in Merchandising
Merchandising is another important function performed by marketing channels. Through merchandising, they help reinforce the awareness about the product among customers. When a customer visits a retail shop, his attention can be allured by an attractive display of the product/brand increasing his awareness and interest. Merchandising especially display compliment the selling efforts of the company and acts as a silent salesman at the retail outlet.
Provide Market Intelligence
Channels provide market intelligence and feedback to the principal. In the nature of things, channels are in a good position to perform this task, since they are in constant and direct contact with the customers. They feel the pulse of the market all the time.
Act as Change Agents and Generate Demand
In certain cases, the marketing task involves diffusion of some innovation among consumer. In such cases, the channels go much beyond the conventional functions of distribution and act as â€˜change agentsâ€™ among consumers and generate demand for the product.
Take Care of the Flows Involved in Distribution
We can understand the role of marketing channels in another way. The distribution process can be viewed as a series of flows: the physical flow of products, the title/ownership flow, the risk flow, the negotiation flow, the financing/payment flow, the information flow and the promotion flow. Marketing channels handle and care of all these flows.
Some of these flows are forward, some backward and the others take place as a two-way process. Normally, the flow takes place sequentially through different levels in the distribution chain. In some cases, however, the flow may bypass a particular level in the chain.
In conclusion the foregoing elaborations not only explain the importance of marketing channels, but also clarify the fact that the channels acquire their importance by virtue of the functions they perform.