Marketing channels bridge the gap between producers and consumers.
Marketing channels are the independent organizations responsible for selling a manufacturer's products. Channels are how customers buy the product, which fulfills the "placement" function of the marketing mix. Channels that buy and resell products are called "merchants." Retailers and storefronts are examples of merchant channels. Channels searching for customers and making sales on the manufacturer's behalf are called "agents." Channels that transport, store and aid in product distribution are called "facilitators." Multichannel marketing uses a mix of distribution channels. The mix may include different types of channels or different types of the same channel.
Types of Channels
The personal attention of channel representatives adds to the value of the product. Internet and telephone marketing are among the set of marketing channels that sell on a mass, impersonal scale. Other types of channels, such as a retail sales force or door-to-door salespeople, personally sell to consumers one-by-one. Finally, some types of channels passively or indirectly sell. Distributors and many retail stores sell passively. Mass-marketing channel distribution tends to be the least expensive means of selling; passive channels are in the mid-range because they must maintain storefronts and logistics. Direct, personal selling is the most expensive distribution channel.
Integrating Multichannel Systems
Businesses choose to use more than one channel because it helps to reach multiple consumer groups. Consumer groups needing the same product buy from different channels because they live in separate areas or have individual shopping preferences. For example, one shopper may prefer to shop online while the other shopper feels more comfortable at a physical store. This increased market coverage leads to a rise in sales. Company marketers can integrate the sales channels and design a distribution system that works in harmony. Integration techniques include allowing each channel unique offerings and splitting up territories to limit competition.
Channel Conflict
Even with precautions in place, companies using a multichannel strategy still face the risk of competing channels. Sometimes, competition turns to conflict and one channel takes steps to prevent the other channel from selling, which results in a loss for the manufacturer because one channel is distributing the product when it's supposed to be two channels distributing the product. Manufacturers can limit conflict by setting multichannel sales goals and rewarding all channels for collective sales.
Brick-and-Click Companies
"Brick-and-Click" refers to a popular kind of multichannel offering that includes an online store and a physical retail store. This system cuts out a number of intermediaries and allows a manufacturer to sell directly to consumers, while still offering physical channels for those more comfortable with retail shopping.
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