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The Function of Marketing Channels

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Companies try to forge a marketing channel, a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user. Information, promotion, contact, matching, and negotiation help to complete transactions. Physical distribution, financing, and risk taking help to fulfill the completed transactions. Explain why companies use marketing channels and discuss the functions these channels perform.

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A marketing channel consists of individuals and firms that find their ways to provide the goods and services available for use by the consumers and which make sure that the payments generated are given back to the provider. A marketer decides which route or channel would be best for the particular product or service as the marketing is as important as the production of the product/service.

Among the marketing intermediaries which can be an individual or a company that are important in the marketing channels are the following: Middleman - connects the producer and consumer; Agent or Broker - someone with legal authority who can act in behalf of the producer; Wholesaler - one who sells to other intermediaries or retailers; and Retailer - one who sells to the customers directly. (Berkowitz, et. al., 2000)

There are a few types of distribution channels in which a marketing channel is being patterned from. According to MBA&Company, the most common types are the following:
1. Manufacturer to customer - the most used in small-scale industries or where the goods have short life-span and need to be distributed right away, the manufacturer sells the goods directly to the customer.
2. Retailer to customer - the traditional marketing channel wherein the retailer receives the goods from the manufacturer or from an agent or dealer/wholesaler and then sells them to the customers.
3. Wholesaler to customer - Some industries use a channel that allows customers to buy the goods directly from the wholesaler. They can buy in bulk (wholesale basis) and be given discounts. However, most wholesalers are ...

Solution Summary

This solution looks at the the function of marketing channels, distribution channels and marketing intermediaries.