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MARKETING MANAGEMENT - Marketing Channels

Defining Distribution Channels - Marketing Channels

   Posted On :  18.06.2018 11:49 pm

Different people perceive marketing channels in different ways, some see it as a route taken by a product as it moves from the producer to the consumer, and others describe it as a loose coalition of business firms that have come together for purpose of business.

Defining Distribution Channels

Different people perceive marketing channels in different ways, some see it as a route taken by a product as it moves from the producer to the consumer, and others describe it as a loose coalition of business firms that have come together for purpose of business. Customers may view marketing channels as simply ‘a lot of middlemen’ standing between the producer and the product. Given all these different perspectives it is not possible to have one single definition for marketing channels. Marketing channels can be defined as the external contractual organization that management operates to achieve its distribution objectives.
 
There are four terms in this definition that has to be given a special mention namely external, contractual organization, operates and distribution objectives. The term external means that the marketing channel exists outside the firm. Managing of the marketing channel therefore involves the use of inter-organizational management (managing more than one firm) rather than intra-organizational management (managing one firm). The term contractual organization refers to those firms who are involved in the negotiatory function as the product moves from the producer to the end user.
 
The function of these firms involves buying, selling and transferring of goods and services. Transportation companies, public warehouses, banks ad agencies do not come under these and are referred to as facilitating agencies. The third term operates suggests the involvement of management in the channels and this may range from the initial development of the channel structure to the day-to-day management. Finally the distribution objectives explain the distribution goals the organization has in mind. When the objectives change, variations can be seen in the external contractual organizations and the way in which the management operates. In simpler terms a channel then consists of producer, consumer and any intermediary.

Marketing channel strategy is one of the major strategic areas of marketing. In most cases eliminating middlemen will not reduce prices, because the amount that goes to the intermediaries compensates them for the performance of tasks that must be accomplished regardless of whether or not an intermediary is present. In simple terms, a company can eliminate intermediaries but cannot eliminate the functions they perform. 
Tags : MARKETING MANAGEMENT - Marketing Channels
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