Almost all modern companies use intermediary services in the process of promoting and selling goods. Depending on the chosen strategy and the size of the organization, these can be distributors, wholesale dealers of different sizes. Companies that transfer goods from producer to consumer form sales channels in marketing.
Unfortunately, today far from all companies pay decent attention to the management of distribution channels. Often, the “old-fashioned” leadership focuses on managing internal processes, although management should monitor the effectiveness of the entire economic chain. However, it should be borne in mind that attracting intermediaries is cost-effective - their services will be cheaper than organizing, for example, their own delivery system, and besides, they will perform similar work more efficiently, as they can focus on performing limited functions, which ensures higher level of service.
Marketing channels have the following functions:
- in terms of external logistics, goods are moved to a potential buyer in order to ensure its availability;
- in terms of marketing and sales, the necessary information about customers is collected, as well as measures to offer goods to the market;
- in terms of providing related services that support and add value to the product.
The characteristics of distribution channels include:
- the quality and quantity of services that are provided by distribution channels, as well as their cost;
- coverage of the distribution network by the distribution channel;
- the ability of individual intermediaries to carry out transactions on favorable terms;
- channel length.
Let us dwell on the latter in more detail. The length of the channel is an important parameter of any sales, that is, how many intermediaries exist on the way to the client. Sales channels in marketing significantly affect the volume of sales of goods.
The direct marketing channel is the direct sale by the manufacturer to the final buyer of the goods. An example is a retail store in production. Most often there are similar channels in the service sector, where the production and sales process is combined. A single-level sales channel is characterized by the presence of a single intermediary, a two-level - by the presence of two or more intermediaries. An example of such a channel is the tourism product sales channels .
The longer the channel, the more expensive the price of the product for the consumer. The cost of distribution channels is from 50% of the final cost of the goods. The use of long distribution channels leads to a decrease in producer profitability to ensure a competitive price of goods. Therefore, monitoring the effectiveness of the sales channel is a determining factor in the profitability and competitiveness of the manufacturer.
Although long channels are quite expensive, the manufacturer of consumer goods often has no other options for gaining market space. And the opportunities and motivation of partners that are part of the sales channel determine the potential for winning a customer.
The process of determining the optimal distribution channel consists of the following actions:
1. Determining the requirements for channels, establishing criteria for their assessment, based on the marketing strategy, goals and capabilities of the company.
2. Definition of the list of options for distribution channels.
4. Evaluation of each option according to established criteria.
5. The choice of the best option.
Due to the fact that sales channels in marketing are important, a thorough approach to the selection of optimal distribution channels, organization of the structure, ways of interaction is necessary. This is a fundamental decision that determines the long-term performance of a producer of goods and services.