A marketing channel describes the entities, people, and activities required to move the ownership of products from the first point of production, usually the manufacturer, to the final point of sale, generally the end user. It is often referred to as a distribution channel, since it is the means by which products get from the manufacturer to the end user. Most businesses use channels to move products from their initial manufacturing site to their sales site. They can be physical or digital, but typically they require the manufacturer's product to be in some shape that can be packaged and shipped. It can take one of several approaches to channel marketing; however, each has its pros and cons.
Physical marketing channels include the manufacturer delivering the products to the customer, and consumers returning them. In order to encourage return business, the manufacturer will often provide price discounts to consumers who purchase more than one item from the same company. Return marketing is sometimes used by manufacturers to build brand equity. Some distributors employ such methods as "pro bono" work, or work that is performed by a third party not associated with the brand.
Digital marketing channels include electronic wholesale and retail sales of the manufacturer's products. The advantage to this type of marketing is that there are no shipping costs. The disadvantage is that it can be difficult for new distributors to become known without the manufacturer's blessing. Internet sales have a similar challenge; it can be expensive and difficult to find a distributor that will distribute to a web site.
Marketing through multiple advertising and marketing channels provides manufacturers with the opportunity to advertise to various target markets at different times. For example, a manufacturer might choose to advertise exclusively to dealers in his product line. He could also target consumers in the automotive trade and consumers in the commercial trucking market. Each of these marketing channels provides different advantages and disadvantages. One of the factors that affect the success or failure of each channel is the knowledge of the manufacturer as a whole.
Direct selling channels represent the most common method of distributing a manufacturer's products. Distribution channels include retail, membership organizations, membership stores and warehouses, and direct sales. Direct selling involves the process by which goods are sold directly to customers. The manufacturer makes all of the arrangements for direct sales. The company would not have control over the sales process but the manufacturer has a financial incentive to ensure that sales are high. One of the advantages of direct selling is the fact that it is quick; unlike distribution where distributors may have to wait for the right moment to begin purchasing inventory.
Distribution channels, on the other hand, include ways in which goods are delivered to end users. Distribution channels help reduce cost, increase efficiency and reduce waste. Distribution channels represent one of the two main marketing channels represented by direct selling and distribution intermediaries.
Social media is the latest and one of the newest marketing channels. Social media is defined as "the practice of sharing information online, especially through a website." This type of marketing is popular because users can interact with others and share content with the rest of their network. Many people are attracted to social media because they offer more immediate access to information, entertainment, news, tips and advice than most other forms of media do. However, there are some downsides to social media including the fact that the target audience is younger than average and that there is less of a connection to one's demographic than other marketing channels such as direct selling.
Direct distribution is a marketing channel in which the manufacturer distributes its own goods to retailers. In order to enter this channel, a manufacturer must first establish an authorized distributor or joint venture partner. Once the manufacturer contacts a distributor for the goods it needs, the distributor will then distribute the goods to retailers on behalf of the manufacturer. This type of channel allows manufacturers to directly sell their goods to consumers while maintaining a healthy supply chain.