How do you ensure that your goods and services reach the intended customer? Well, you need a proper marketing channel. This channel determines the flow of products and information from your company to your customers. The marketing channel that you choose has a direct implication on the profitability of your business. Therefore, it is crucial to decide the most appropriate marketing channel for your products or services before setting up a business.
How do you determine the best marketing channel to use? Well, begin by understanding what every channel entails. This understanding will guide your choice and help you to structure your business. We have compiled a comprehensive list of the available marketing channels to help you with this decision.
This marketing channel involves selling products directly to the customer. This channel does not have any middlemen. The company organizes sales presentations to prospective customers either at their homes or offices. Direct selling works best for small companies that do not have a complicated supply chain. For instance, a bakery owner may sell directly to customers.
Adopt direct selling when your business has a small profit margin, deals with perishable goods, or is small. However, you need to understand that direct selling requires your business to have an exceptional relationship with the customers.
Indirect Selling Through Intermediaries
Most large companies have various intermediaries who avail the product to the consumer. The intermediaries include retailers and wholesalers. You can structure your business to include either one or both intermediaries. Therefore, your business can sell directly to a retailer who, in turn, sell to consumers. Also, you can sell your products to wholesalers, who then sell to retailers. The retailer ensures the product reaches the consumer.
The indirect marketing channel is robust. However, you need to adopt it only if your company’s production capacity can meet the wholesalers’ demand. Therefore, this channel is common in large companies that have to sell to customers over long distances. Wholesalers from different regions get the goods from the manufacture and sell them to retailers.
Dual Distribution Channel
Sometime, a business may decide to sell both to consumers and to intermediaries. Such an arrangement is called a dual channel. The marketing channel requires you to market your products to consumers and sell to them as you would in a direct channel. However, you also incorporate the indirect channel.
Have you thought about owning a franchise of one of the established companies such as KFC? Or, maybe your business has grown, and you now wish to expand by franchising. Well, that model of business is an excellent example of a dual distribution channel. Both the franchisee and the parent company sell to the consumers. The dual distribution channel allows organizations to also sell their products to other companies for resale. The channel helps businesses to expand fast.
Reverse Marketing Channel
Do you wonder how to build brand loyalty and make sure your customer never goes to other producers? Try implementing the reverse marketing channel. In essence, the channel requires goods to come from consumers to manufacturers. Companies use the model to make their customers loyal and minimize competition.
In most cases, the channel involves recycling and reusing various products. Consumers collect the waste that remains after using a given product and take them to either the intermediaries or the organization. The reverse channel allows companies to recycle items such as plastics, hence reducing the cost of production.
Factor to Consider Before Choosing a Marketing Channel
You need to consider a few factors before deciding the business channel for your business. Start by reviewing the size of your business. Small companies do not require an elaborate market channel. Such a business can sell directly to clients. However, a large company requires a method that will help its products reach far places.
Another factor to consider is the type of product. Highly perishable products require a short channel. Also, products that people buy in small quantities requires a channel that has multiple intermediaries.
The marketing channel that you choose for your business determines how far the product reaches the consumer. Choose a marketing channel only after reviewing the type of product and your distance from the consumer. If you are having trouble deciding the most appropriate business channel, seek help from professionals.