Fintech

Why are marketing channels important to a firm?

What are marketing channels and who are they for? How do marketing channels work? What are online and offline marketing channels?

Why are marketing channels important to the firm?

For any firm marketing channels are effective ways of ensuring that their products and services reach the intended target audience in a planned manner. All goods pass through distribution channels. The marketing often decides who wants the goods and how the goods are distributed. The process followed from production to consumer is important as the marketer decides which specific route(s) or channel(s) is best for their specific product. Let us explore why are marketing channels important to the firm or company.

What are Marketing Channels & their Functions

Stern & El-Ansary outlines advertising and marketing channels as, “sets of independent organizations involved in the process of making a product or service available for use or consumption.”

Marketing channels include individuals and firm, such as distributors, wholesalers, and retailers, who help extend the sales by reaching out to a wider audience. Channels can also be a retail store, a marketing email, cold-calling, mail order catalogue, etc.

The middlemen of the marketing channel can be divided into three categories:

  • The producer of the product: a craftsman, manufacturer, farmer, or other extractive industry producer
  • The user of the product: an individual, household, business buyer, institution, or government
  • Certain middlemen at the wholesale and/or retail level.

Their main functions include:

  • Transaction functions: buying, selling and risk taking
  • Logistics functions: picking, warehousing, sorting and transporting
  • Facilitating functions: after-sales service and maintenance, financing, information dissemination, channel coordination or routing

Types of Marketing Channels

There are four types of marketing channels: direct selling; selling through intermediaries; dual distribution; and reverse channels.

1. Direct selling

It is the marketing and sale of products directly to consumers outside of a fixed retail location.

2. Selling through intermediaries

An Intermediary (or broker/indirect selling) is a third party that offers an intermediary service between two parties for a transaction.

3. Dual distribution

This describes a wide range of marketing schemes whereby a manufacturer or wholesaler uses more than one channel at once to reach the end user.

4. Reverse Channels

The reverse channels can go from the consumer through the intermediary to the receiver. The recycling cans are an appropriate example of a reverse channel.

Types of Marketing Channels
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Why are marketing channels important to the firm?

The marketing channels are very important to every firm. Marketing channels are capable of majorly influencing:

  • The relationship between the manufacturers and the buyers.
  • The firm’s pricing strategy.
  • The overall product strategy through branding, policies, and willingness to stock.

It is essential to create an effective marketing strategy as the right channel will ensure optimal results between the producer and the buyer. The marketing channels represent the manufacturer and are responsible for how the goods and services are received by the consumers. Thus, to create the right perception about any product it is important to streamline the marketing channels.

The Digital Era

As the technology and world continue to grow, so do the marketing channels at one’s disposal. For example, a firm operating and manufacturing goods in the United States can today easily reach a customer base in other countries such as Europe and Asia through the right digital marketing channels. There is abundance of options for marketing from the digital perspective.

There are approximately 5 billion active Internet users worldwide, which is an attractive opportunity for brands to conduct online marketing campaigns. Methods such as search engine optimization (SEO), email marketing, social media channels, pay-per-click marketing, affiliate marketing, and others, are effective modes of digital marketing channels.

Also, check this post on why companies use social media and how it is a great tool for marketing in the modern day.

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