Question

Marketing channel levels and its function. With example

( 500 words)

Answer 1

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A TOTAL OF 750 WORDS!

Channel is a medium utilized by retailers and other required intermediaries to move goods from the supplier to the end customer. Within the system an operator is called an agent / middleman. Channels usually range from two-level, intermediary-free channels to five-level channels with three intermediaries. For example, a maker of leather handbags that produces handbags and markets them directly to the customer is in a two-tiered market. A poultry farmer sells chicken and eggs to a restaurant manufacturer, who markets in a four-level funnel to individual restaurants, who then service the customer. Agents / intermediaries in the distribution chain are used to promote the transmission of the product, and to pass ownership, payments, and product information. Channel decisions are among the most critical decisions Management makes, according to Philip Kotler, and can directly impact any other marketing decision. These decisions are taken by interdependent organizations (intermediaries) interested in making a product or service accessible to the customer or enterprise recipient for use or use.

A Channel Functions — Channels are well-organized structures that execute all the activities needed to assist trade transactions. A distribution channel's basic function is to build a connection between output and demand, and to generate time, location, and possession services that represent the added value of distribution. Intermediaries (wholesalers, distributors, marketers, brokers) are required because producers lack the financial and human capital available to carry out direct marketing. Maruti Suzuki Company markets the cars from over 600 Indian and international distributor outlets. Maruti Suzuki Corporation won't be able to buy-out and sell its distributor network.The number of intermediate levels which separate the producer from the end user can be an example of channels. The preference of a specific medium of distribution is determined by factors related to market demand, consumer behaviour and the characteristics of the enterprise. As illustrated below, a traditional distribution channel will execute different functions.

All the functions listed above can reasonably be seen in every industry. Another significant step to take is to decide what tasks need to be done, who will execute them, and how many steps it takes to make the delivery operation cost-effective.

Channel Levels — A channel level is a tier of delivery intermediaries that performs certain function in getting the commodity to the end customer.

A Zero Level Channel — There are no intermediate stages in a zero level channel, generally known as the direct marketing channel. Manufacturer markets products directly to the consumers through this distribution setting. A Factory outlet store will be an example of a zero level system. Many service providers such as holiday operators, often sell directly to travelers, bypassing a conventional retail broker – the travel agent.

Eureka Forbes, specialist in domestic and commercial water purification devices, vacuum cleaners, air purifiers & protective technologies is pioneering in direct marketing making it the biggest direct sales company in Asia. The remaining canals are known as sources of indirect marketing.

A One Level Channel — A one Level Channel includes an agent for sale. This is usually a seller in general markets. The UK consumer electronic goods industry is representative of this system that manufacturers such as Sony, Panasonic, Canon etc. sell their products directly to major retailers such as Comet, Dixons and Currys who then distribute the product to end customers.

A Two Level Channel — A two-level system comprises two intermediate rates-a wholesaler and a store. A wholesaler usually imports and stocks vast amounts of goods from various suppliers, and then splits into bulk orders to sell smaller quantities to distributors. Taking advantage of wholesalers makes practical sense for independent businesses with minimal financial capital and order volumes. This deal appears to operate best where the distribution market is jumbled – it is not dominated by a limited group of big, dominant distributors that have an opportunity to cut the wholesaler out. Typical example is the sale of medicines / pharmaceuticals in Europe and the UK.

A Three Level Channel — As the name suggests, a third level channel comprises three intermediate tiers-a wholesaler, a manufacturer, and a jobber. Goods such as mutton, ham, eggs etc. are first sold to wholesalers in the poultry industry; then they are sold to employers, who sell them to local and unorganized vendors. One thing to remember in this respect is that the production patterns differ from industry to industry, and from country to country. For Japan, the food delivery system will typically include as much as five to six levels, while the rest of the world depends on a distribution network of two or three tiers.

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