Business Marketing Channels - Essay Example

Business Marketing Channels Affiliation Business Marketing Channels What do business marketing channels imply? Business marketing channels imply outlets used by companies to deliver their goods or services to consumers. The description given is just an informal explanation of business marketing channels. However informal it may be, delivery is at the root of a business marketing channel. To the consumer, all that matters is that they get the services or goods that are needed. It does not matter how or what route the said goods or services go through to reach them (Lacobucci, 2001). This route or design used by a group of organizations to deliver the services or products to the consumer is what constitutes a business marketing channel. Hence, a business marketing channel can be described as a group of interdependent businesses working together right from the product or service source to the endpoint – in this case the consumer – with the aim of delivering the services or products. From this definition, it is noted that a business marketing channel does not involve one business but a group of interdependent businesses. Interdependent means that the businesses involved rely on other members to function and that one member alone is not enough to define a business marketing channel. This interdependence is a fundamental feature of a business marketing channel, where all businesses work together to ensure that their products and services are delivered at the right time and to the right place (Rosenbloom, 2011). It is evident that a business marketing channel is a process that takes time to complete. Even when the process is completed, a connection is built up between the business and the consumer. Two questions arise: 1) Why do businesses use business marketing channels? , and 2) What roles do they perform? This paper seeks to answer these questions through explanations and descriptions that pertain to business marketing channels. Why Do Companies Use Marketing Channels? Companies usually collaborate with distributors. When a company produces a product or service, the company has to find means to deliver either to the consumer. It is for this reason that companies utilize marketing channels. Companies have to determine the most appropriate marketing channel. By using marketing channels, companies are able to obtain more marketing opportunities as the product or service is transacted along the marketing channel. On many occasions companies make use of distributors (McDonalds & Wilson, 2011). A distributor can be another company that specializes in buying from the source company in large quantities and selling to others, in this case retailers, value - added resellers, and suppliers who resell or deliver the product to the consumer. Companies use distributors as marketing channels for various reasons (McDonalds & Wilson, 2011). One reason is that it is easier for various interested parties to buy from distributors as it takes minimal time and logistics. The distributors facilitate transactions between the company and the end user. Upon selling the products or services, companies can then pay the distributors. The distributors have warehouses where unsold products are stored. These warehouses take away the burden of storage from the company (Kotler, 2011). An example of a company that uses distributors as marketing channels is Coca-Cola. This marketing channel has proved successful for Coca-Cola especially in developing countries. Distributors involved in the marketing channel know the market better than the company does. They are conversant with the competition in the market. They also have vast customer bases. These factors provide more marketing opportunities to the company indirectly. If a consumer visits a store run by a distributor, the distributor will endorse the company’s product. This endorsement functions to market the product (Kotler, 2011). Companies also use marketing channels because they add value to their products or services. Most consumers are usually very much value oriented. They tend to buy a product or service because they believe or know that it is of greater value than a similar one from a different product. It is up to a company to take advantage of this knowledge and ensure that their products or services offer the highest value. How do marketing channels add value to products or services? Marketing channels add value to products or services by utilizing intermediaries. These intermediaries comprise the interdependent companies forming the market channel. These companies are unique in that they are able to deliver or avail the products to the intended market because they have specialized in that area of the market channel. An example of such a company is a distributing company. As stated, companies making up the intermediaries are specialized; they also have the experience, capability, and contacts to deliver the products to the end user (Russell, 2010). Marketing channels also add value to the products by narrowing the gap created by possession, location, and time, which disconnect products or services from the end user. They narrow this gap through their undertaking of specific roles in the marketing channels. Such roles include promotion, as I have previously stated. Promotion involves building up and increasing messages on the products (Russell, 2010). Establishing contact with consumers is another function. They also design the product to suit the wants of the consumer. Moreover, they negotiate with the consumers on pricing of the product. This division of labor throughout the channel is not random; it is specific. It ensures that the channel member with the capability to undertake a certain role is assigned to that role hence ensuring value is added to the product or service as efficiency is upheld (Russell, 2010). Functions of Marketing Channels There are various functions of marketing channels. One of these functions is surmounting inconsistencies. The inconsistencies that marketing channels help surmount include time, range, quantity and space resulting from economics of scale in production. According to Lamb (2012), who goes on to give an example where a company produces more than 20,000 units of a certain product per day. The consumer cannot utilize that amount per day which builds up an inconsistency in quantity. The role of marketing channels in this scenario is providing a storage means from which products can be distributed in the required amounts according to the needs of the consumer. When one company produces one product, for example plates, the consumer also need a spoon to use along with a plate. Therefore, another company is required to provide the spoon to the same consumer. Marketing channels play a role here, as they provide other products from other companies to suit the consumers’ needs. Many companies also make products in vast quantities. This calls for large markets, which in some cases are not available. Marketing channels perform the role of provision. They provide these markets to companies by availing the products to customers at convenient locations (Lamb, 2012). In the definition of marketing channels, it is stated that marketing channels involve a group of companies. Each of the companies forming the marketing channel has a specific function which helps companies to specialize and divide labor across the marketing channel. Labor division and specialization reduces cost resulting from production. It also enhances efficacy as companies specialize in production of one product or undertaking a certain function. The economies of scale are met by a company in the marketing channel through its use of machinery to produce one product (Pride & Ferrell, 2004). Marketing channels also helps in the attainment of economies of scale through helping companies to take marketing directly to the end user. Various marketing channel members such as retailers are used. Retailers are better equipped to market the company’s product because they are in touch with the consumer who is the main target. Their efficiency is best at selling the product to the consumer, in which the source company is not efficient in (Pride & Ferrell, 2004). This efficiency of selling the product to the consumer translates into another function of marketing channels, which is availing contact. Availing contact requires that it is done efficiently. Efficacy in contact is availed by marketing channels through their ability to provide the consumers with products at very few locations that are known by the consumer. Such locations involve supermarkets where all products are available in one location. The few locations also reduce the transactions needed to deliver the product to the end user (McCalley, 1992). When the number of transactions is reduced, then contact efficiency is enhanced and the customer can easily access the products. An example of contact efficiency provided by marketing channels involves three companies engaged in production of distinct mobile phones. These companies would need three contacts to get to the end user. However, due to the availability of retailers who amass the mobile phones from the three companies, only one point of contact is needed, which is the retailer from which the customer can buy the product of choice (McCalley, 1992). Conclusion In conclusion marketing channels play a pivotal role in the sale of products or services that companies produce. Thus companies choose to use marketing channels for reasons such as getting more marketing opportunities and because they add value to products through intermediaries. The functions of marketing channels are not limited to those only stated in this discussion. However, those that have been described are with examples given as illustrations. Companies that have always done well in the market, along with those that are doing well now, have made use and are making utmost use of marketing channels. References Kotler, P. (2011). Marketing insights from A to Z: 80 concepts every manager needs to know. Hoboken, NJ: John Wiley & Sons. Lacobucci, D. (2001). Kellogg on marketing. New York, USA: John Wiley & Sons. Lamb, C. W. (2012). Marketing. Natorp Boulevard, USA: Cengage Learning. McCalley, R. W. (1992). Marketing channel development and management. London, UK: Greenwood Publishing Group. McDonald, M., & Wilson, H. (2011). Marketing plans: how to prepare them, how to use them (7th ed.). West Sussex, UK: John Wiley & Sons. Pride, W., & Ferrell, O.C. (2004). Marketing. Natorp Boulevard, USA: Cengage Learning. Rosenbloom, B. (2011). Marketing channels. Natorp Boulevard, UAS: Cengage Learning Russell, E. (2010). The fundamentals of marketing. Lausane, Switzerland: AVA Publishing. Read More