When we talk about marketing channels we usually refer to the different methods by which products are moved from manufacturers to distributors or the end users. These are also called the distribution channels in the FMCG industry. The way the distribution channels are designed and set up will determine the efficiency of a company’s marketing method and will also impact sales and profitability. When the right channels are not set up for marketing goods, a company might end up facing inefficiencies in its economies of scale and reduction in profitability. Again, finding the right market or customers for the different products is important in setting up the right marketing channels.
Some companies refer to events agency companies when they want to market their wares directly. In most cases, small ventures opt for the direct marketing method by which they eliminate the need of a middleman in order to get the products across to the end customer or user. In this form of marketing there are sales representatives who are employed to conduct the direct sales.
Use of distribution channels
In most cases, companies sell their products not directly to the end users, but through different distribution channels. The products are sent to a distributor outlet first and then to retail outlets. The companies usually employ an events agency for promotional campaigns while distributors are employed for distribution of the goods through different channels. There are different kinds of marketing channels that are chosen as per the nature of the goods being marketed.
Movement of goods
The channel that is chosen for distribution of goods of a company differs in the way the products are sent to the market. For instance, clothing that is created in a warehouse or designed by a designer is created and then shipped to the boutiques or departmental stores. This is a kind of marketing channel. In other cases, where products are sent to overseas locations, they are sent through the shipping companies. The marketing channels in this case involve several shipping and distribution partners.
Distribution channels and costs
The end product cost is dependent on the number of marketing channels that are used. There are several middle men who are involved in the distribution of a product and that affect the end cost of a product or service. The cost of each middle man’s service gets added as a premium or a percentage fee to the production cost of a product. In this way the final cost or price of a product is arrived at. At the time when a product’s marketing is being planned, the distribution channels and methods needed to be planned accordingly so that the final market price can be arrived at.