Marketing Channels
Marketing channels are also known as distribution channels as well. The marketing channel can be defined as a combination of interdependent organizations that are involved in the process of making a product or service available for the customer for final consumption or for further use. A company’s channel decision directly affects all the marketing decisions and at this part of the process is considered to be most critical for the marketing of ‘flying cars’. It so happens that if the ‘flying car’ company does not pay attention to their distribution channels it would cause the company a great deal of damage like low sales or bad reputation of the company etc. It would be very important if the ‘flying car’ company would use imaginative marketing channels so that they would be able to gain a competitive edge over their competitors.
There are many channels of distribution. Channels of distribution are not limited to the physical products alone but to the services as well. The different channels of distribution are as follows (Channels of Distribution, 1999):
- Direct selling
- Wholesaler or distributor
- Retailer
- Advertisements
- Agent
- Internet
Marketing Strategy & the Channels of Distribution
Distribution channels are more than just ordinary collection of companies that are tied together by various flow of information. They are complex systems in which companies and people collaborate to accomplish the objectives and goals of a company. The channels of distribution integrate with the firm’s market strategy with the help of either vertical marketing systems or horizontal marketing systems.
A vertical marketing system can be defined as a channel whose structure is a unified system i.e. all the producers, wholesalers and retailers are combined to act as one. The vertical marketing system can be dominated by the producer or wholesaler or even by the retailer i.e. is one channel member can dominate the others, has contracts with them or has so much power that the other has to corporate no matter what. In the case of ‘flying car’, the dominant party would be the producer. And the producer will have a great deal of power over its retailers and wholesalers and due to that the power the retailers and the wholesalers will have to comply with the wishes of the producer.
Whereas horizontal channel can be defined as a channel in arrangement with two or more firms who are joined at one level so that they can follow a new marketing opportunity. Here the companies are combined together along with their financial, production and marketing resources so that they can accomplish the goals and the objectives of the company. For example, if two companies like Boeing (a plane producing company) and General Motors (a car producing company) are joined together to make a ‘flying car’, they will be able to make a separate company that produces flying cars and it will benefit both of the companies. And it will open a new market for Boeing since General Motors provides worldwide experience in the marketing and distribution of cars but the contribution of Boeing would be the most essential of flying cars because it would be providing aerospace technology.
Channels of Distribution
As we know that there are many channels of distribution. They are as follows:
- Direct selling: direct selling these days is increasing. The customers do not have to go to the market to buy the products, they just simply have to order their product through telephone, mail-order catalogs, kiosks and e-commerce and the product gets delivered that their place.
- Wholesaler or distributors: wholesalers are the ones who are connected with the company. The activity of wholesalers is that they sell the goods and services to retailers, industrial consumers.
- Retailer: retailers are the ones who sell the goods and the services directly to the final customers of the company for final consumption. This channel is considered more effective because the customer is connected with the retailer.
- Advertisements: is the paid form of non-personal presentation of a product or service. Advertising includes different kinds of tools like commercials, print ads, broadcasts or billboards, etc. With the help of advertising, the people will become aware of the product
- Agent: the agent is the one who sells the product or service directly on the behalf of the producer.
- Internet: the internet has now become one of the main distribution channels. All the customers have to do is go to the company’s website and place an order of the product they want and that product will be delivered to them wherever they are on the globe. (Kotler, 1997)
In this case of “flying cars” the most effective channel of distribution would be the agent. As we know that the agent is the one who sells the product on behalf of the producer. The agent would find a client who would be willing to buy the product and then will make a sale.
Evaluating Distribution Strategies
Distribution strategies are very essential for the success of a company. Distribution strategies can be defined as profit maximization and as the increase of sales. The evaluation of the distribution strategies regarding the distribution channels can be done through economic criteria where the company can compare the sales, costs and profitability of different channel alternatives. The company can also consider control issues and the company can also adopt adaptive criteria as well for the evaluation of the distribution channel. For example, in the case of ‘flying cars’, it is very important that the company should have distribution strategies because flying cars is not like any other commercial product that can be sold easily. With the help of control issues, the flying car company will have control over the marketing of flying cars and along with the help of intermediaries it will be able to take control of others. (Craven, 2000).
References
Craven, D.W (2000). Strategic Marketing. McGraw-Hill.
Channels of Distribution (1999).
Distribution Strategies (2007).
Kotler, P (1997). Marketing Management: analysis, planning, implementation and control. Prentice-Hall.