Marketing channels are an effective way of ensuring that products reach their intended customers.
Marketing channels are usually integrated to ensure increased profits. They are important and allow a business to accomplish its original goal. Any business should consider maximizing its marketing channel to ensure that customers receive their products.
According to Statista, better use of marketing channels can help to increase early engagement.
However, to be effective, a marketing channel needs to be carefully thought through to be successful. In short, they are the primary link between manufacturers and customers.
Moreover, many large businesses make use of marketing channels and you should try to be as accessible to them as possible. They tend to find it an easier way of delivering products to customers.
Their primary goal is to facilitate how goods travel from you to consumers. Distribution chains are very important for both online stores and traditional sellers. What’s more, it helps you to boost sales. Online marketing channels work the same way.
There are different types of marketing channels available for you to utilize. You can determine why companies use marketing channels based on the size of your company. Today, you can use a wide variety of digital marketing channels for your e-commerce business. They function in the same way as traditional marketing channels.
Types of marketing channels include:
- Direct selling – manufacturers sell directly to customers; this is mostly used by online stores.
- Selling through intermediaries – making products available for customers through wholesalers and retailers.
- Dual distribution – more than one marketing channel is used to deliver products to consumers.
- Reverse channels – it is the opposite of the others; it flows from the consumer to an intermediary and then to the beneficiary.
Advantages of Using Marketing Channels
The importance of marketing channels is so great that without them, customers may not receive products at all. Marketing channels are equally beneficial for manufacturers. Manufacturers rely on them for making sure that their products are effectively sold.
Most products require the use of marketing channels for effective distribution to consumers. So, why should every company have a marketing channel? A marketing channel has many advantages. These include:
1. Help to Save More Money
When you use a distribution channel, you end up spending less than you would if you did the task yourself. If you deal with every step needed to deliver products to customers yourself, it may cause you to spend more money. Members of a marketing channel know what to do and what measures to take to reduce expenses.
2. Save Time
Marketing channels can also help you to save more time. You do not have to waste time trying to distribute your products. The extra time you have can be used to increase the productivity of your company. When you decide to sell directly to consumers, you can expect to have more expenses. Expenses include:
- Renting a warehouse
- Hiring labor
- Shipment
All these can cost you more than if you use a marketing channel. You won’t be able to just focus on manufacturing. This means that you have to divert attention to other parts of your business. Distributing channels help you focus on producing what customers need.
3. Convenience
Using a distribution channel is more convenient for customers. Customers do not have to visit various companies to buy different products. Distribution channels ensure that customers get various products from the same retailer. So, they can purchase various products from different manufacturers without wasting time.
4. Reduced Costs
Because intermediaries become accustomed to dealing with transactions, they become cheaper over time. You don't have to worry about bargaining with customers over the price of products. Intermediaries have a link with customers and help to conduct transactions.
5. More Customers
As a manufacturer, it is your goal to make sure that customers purchase your products. It may cost you more to try to increase the number of customers who purchase your products. However, when you use intermediaries, it can be a way of reaching out to more customers. They help you to sell more. Intermediaries also help customers to find products. Customers can find products when they shop at a retail shop.
This is better than going to the manufacturer. Manufacturers can also focus on producing goods that customers need. They place their products in various retail shops so that customers can have more access. Thus, distribution channels provide a link–be it indirect–between manufacturers and consumers.
6. Rapid Distribution of Products
Distribution channels may be responsible for delays in customers receiving products. However, they can be rapid at times, as well. Customers don’t want to have to wait for long periods before receiving products. This is very crucial for online businesses.
You want to make sure that once they order from you, you can deliver products as soon as possible. If you are unable to do this, it makes customers consider shopping from other local retailers. Using a distribution channel decreases the time it takes to deliver products.
7. Increased Effectiveness
Each level of a marketing channel has its specialization. It helps to increase the accuracy of the chain of supply. The manufacturer doesn’t have to worry about how goods will be delivered to customers. All efforts can then be directed towards producing products useful for customers.
Distributors are skilled in receiving, managing, and distributing products. Retailers are experts at making products available for customers. By using direct distribution, your costs may be significantly higher than if you use marketing channels instead.
8. Access to Customers
Since retailers provide a link between customers and manufacturers, they can offer insight into what customers need. This crucial information can be used to produce products that are trending. Knowing the latest trends provides a more accurate description of the goods to make.
However, all these benefits are only possible when you use supply chain management. Let’s also check out some disadvantages that you may face.
You can also read- 8 Effective Ways to Increase Your Average Order Value.
Disadvantages of Marketing Channels
Distribution channels also have some potential negative repercussions. These disadvantages can lead to decreased sales and losses. The disadvantages of marketing channels include:
1. Decreased Revenue
When you use a distribution channel, you sell your products at a cheaper price. This is lower than the price that retailers sell to customers. For retailers to make a profit, they have to sell at a higher price. They cannot distribute your products without any benefit.
If you sell directly to customers, you take in greater profit margins–simple as that. Distributing products to customers leads to complete control over the profit. Other losses that you can encounter come from paying the retailer–directly or paying for shipment. All these expenses may lead to losses.
2. No Direct Link with Customers
When a retailer gets products from your company, he or she may make some changes in an attempt to increase sales. This is harmful to your business. Customers may fail to recognize your products over time. You then lose the link between customers and your company. Customers will no longer turn to your brand. They may purchase from competitors instead. Moreover, you are responsible for what products you produce.
However, retailers have more control over what message is conveyed to customers. The worst thing that can happen is if a retailer lies about the benefits of products. Once customers realize that, they will value your products less.
3. Loss of the Value of Products
The problem with using a distribution channel is that you have no control over products. This means that you may not control the image that customers have of your brand. Sometimes there might be delays in transportation. Because of this, your products can lose their value before they reach customers. If this persists, it will lead to losses.
4. Complexity
Some distribution channels require several participants. In such cases, it can be difficult for you to understand. Adding more members to a marketing channel creates more delays in delivery. This will also reduce how much customers value your products.
5. Too Many Participants
If you have too many intermediaries in a marketing channel, it can increase expenses. Paying every intermediary will cost you a lot. This extra revenue, which can be used for expanding your business. If you don’t pay your intermediaries directly they can increase the price as a way of making profits. This affects customers, as they have to pay a very high price for your products.
6. Confusion
Sometimes, channel members may have conflicts of interest. This happens whenever roles and responsibilities overlap. Once conflicts arise, it can lead to great losses which can affect your business.
Conflicts usually arise when there are several distributors. Management becomes a problem. Problems with supply chain management are responsible for causing conflicts. These conflicts, if not resolved, can lead to serious losses.
Do you know What is Omnichannel marketing, and how it works? This guide helps you build your own omnichannel-based marketing platform.
Conclusion
Always evaluate the advantages and disadvantages of using a distribution channel. This all comes down to what your ultimate goal is. The type of business that you have can also be a determinant factor.
If you decide to use a marketing channel, analyze what problems you may encounter. This will help you to manage your distribution channel. In addition, this way you can minimize any losses that may occur.
This is a guest post by Emily Watts. She is a writer for https://ukessay.com/. She enjoys writing and is passionate about helping other people. She has also worked as an editor for her local newspaper. In her free time, Emily enjoys outdoor activities such as hiking and taking walks. Her love for writing started in elementary school and she enjoys her work every day.