What do you understand by marketing channels?

Ans.

Meaning of Marketing Channels

In order to maximize profit and maintain the proper flow of selling and distribution of products, companies must maintain and manage their marketing channels effectively. Maintaining or management of marketing channel refers to the process of analysing, planning, organizing and controlling its marketing channels. In marketing channel two different activities occur –

1. Establishment of Physical Distribution – The establishment of physical distribution system in which we involve the flow of goods like transportation, warehousing and inventory management.

2. Management of Marketing Mix: Management of marketing channel involves all functions of marketing mix which include product, price, physical distribution, programme and people. The physical distribution system and channel structure is established through which products flow in the marketing channels.

Main Factors of Maintaining the Marketing Channels:

These are as under-

1. Marketing Mix Activities in Marketing Channel Management- To maintaining or manage marketing channel, firm must adopt new and motivational strategies such as paying higher slotting allowances, offering higher trade discount, providing strong promotional and advertising support. Management professional stated that after a firm has selected a channel system, it must select, trained, motivate and evaluate individual intermediaries for each channel.

2. Selecting Channel Members – To proper maintenance and for successful management, companies must have to choose talented channel members because for customers, the channels are the company. Producers should decide what features distinguish the better intermediaries and scrutinize the number of years in business, other lines carried, growth and profit record, financial strength, co-operativeness and service reputation of potential channel members. If the intermediaries want exclusive distribution, the manufacturer should assess locations, future growth potential and types of customers.

3. Training and Motivating Channel Members –

(i) It is a major responsibility of a company to examine its intermediaries in the same way it views its customers. It needs to establish intermediaries’ needs and build a channel positioning such that its channel offering is tailored to provide superior value to these intermediaries.

(ii) To enhance intermediaries performance, the company should offer training, market research and other capability-building programmes. The company must also continually strengthen that its intermediaries are to jointly gratify the needs of end users.

(iii) Motivating channel members takes numerous forms in order to gratify the requirements at each level in channel. Profitability is major motivational force for whole seller for product selection. When profit motivation is satisfied, whole seller will look for marketing programs offered by producers to sell products to retailers.

4. Motivational Consideration for Channel Members- To maintain and manage the marketing channel another important factor is to give proper motivational consideration for channel members so that they can perform their best and achieve their goals and objectives.

5. Evaluate Channel Members- To successfully manage market channel, producers must assess intermediaries performance at regular intervals against such standards as sales-quota attainment, average inventory levels, customer delivery time, treatment of damaged and lost goods and cooperation in promotional and training programs. A producer will occasionally determine that it is paying particular intermediaries too much for what they are actually doing. Producers should establish functional discounts in which they pay specific amounts for the intermediary’s performance of each agreed-upon service. People who are not performing must be given extra training or counselling.

6. Modifying Channel Arrangements – Channel arrangements must be reassessed regularly and altered when distribution does not work as planned, consumer buying patterns change, the market develops, new competition occurs, inventive distribution channels appear and the product moves into later stages in the product life cycle. The company may add or drop individual channel members, add or drop particular market channels or develop a new way to sell merchandise. The process of adding or dropping an individual channel member needs an incremental analysis to decide profitability of company.

Market channel is the medium through from raw material move to customers. In the process of maintaining the marketing channels, it is important to comprehend customer’s needs and behaviours. Like What, Why, When they want to buy the products and their personal, cultural and psychological factors and then task of managing marketing channels falls to marketing and sales managers. They know how to find valuable information for good management decisions. Thus these are the important features which we have to consider while maintain and manage the marketing channel for a marketing firm.