What Is Channel Marketing?

Every product goes a certain way from a producer to a person who will use it. This way may be short, like in direct marketing, or may consist of a few stops, such as a wholesaler warehouse and a retail shop. In marketing, this way is called a marketing channel. And there are a large number of channels today, which gives every manufacturer an opportunity to market their goods in different ways, thus reaching out to the wider audience.

Definition of Channel Marketing

So, channel marketing is how goods or services are being delivered to an end user. The main goal of channel marketing is to analyze available sales pathways, find the one(s) that will work better for this or that manufacturer, and use it (them) efficiently.

All distribution activities of a firm are usually under the responsibility of a firm’s channel marketing manager or team of managers, depending on the size of production and the number of channels used. These activities include building and improving relationships with distribution partners, helping them market a firm’s products or services more effectively. This process is called channel marketing enablement.

Types of Marketing Channels

Each marketing channel has certain benefits, so producers usually choose which channel to use based on their business goals.

  • Producer > consumer.

Often referred to as direct marketing, producer-to-consumer relationships involve no middlemen in the way of delivering a service or a product to an end user. Customers may order online, visit the manufacturer personally, or shop in brand stores owned by the manufacturer. Buying directly from a producer allows customers to save money and make sure they pay for the quality. The biggest benefit for a producer in marketing directly is closer relationships with clients.

  • Producer > retailer > consumer.

A business or an individual who buys goods from a manufacturer and sells them to an end user, thus performing the role of an intermediary, is a retailer. That’s how supermarkets and multi-brand shops work. When a product goes from a producer to a retailer and then to a customer, the latter benefits from having an opportunity to choose from a wide assortment in a retailer’s shop. At the same time, producers benefit from quick distribution of their merchandise to the target audience with no efforts from their side.

This channel type is especially useful for new manufacturers, who have no loyal base of clients yet, and for those who produce goods in a limited assortment. Also, having an intermediary is sometimes the best way to ensure a deal is safe, as all responsibilities are put on an intermediary.

  • Producer > wholesaler > retailer > consumer.

A wholesaler – a new member of the chain here – is a business that buys goods from manufacturers and sells them to retail businesses, who then sell them to consumers.

For a producer, marketing its merchandise to a wholesaler has the same advantages as marketing to a retailer – they get an opportunity to use an established distributing network and thus don’t have to worry about the distribution of their products at all. Yet, selling to a wholesaler allows for bigger quantities of merchandise to be sold.

For a consumer, this type of channel marketing mostly means higher prices, as the final cost of a product goes up with each new member involved in the chain of distribution.

  • Producer > agent > wholesaler or retailer > consumer.

An agent is a third party who helps a producer find wholesalers and sell products to them very quickly. This scheme is used mostly when a product is something that must be fresh when delivered to a customer. An agent typically receives a commission-based income and is responsible for quick and flexible negotiations, which will be beneficial to all parties.

Who Employs Channel Marketing?

Although larger companies are able to enjoy the benefits of channel marketing to a bigger extent, it doesn’t mean that smaller manufacturers won’t benefit at all. The tricky thing here is that developing a channel marketing plan and establishing beneficial relationships with distributing partners requires time and resources, which small producers might sometimes lack. However, even an individual producer, such as a dressmaker, can sell their services, for example, through own tailoring studio and through partner stores and studios, thus making use of different channels.