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Marketing Channels and Distribution Network

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What is a marketing channel? What decisions do companies face in designing, managing, evaluating and modifying their channels?

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Solution Summary

This solution provides a basic description about marketing channels and distribution systems used in different industries according to a company's nature of product, target market and marketing strategy

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Marketing Channel

Marketing channel refers to the fourth 'P' in the marketing mix - Place; this is where a company has to decide how it will distribute its product or service to the target market or what route a company should follow to make its product or service available to potential customers.

Direct versus Indirect Channel

The first important decision in this regard is whether to distribute product or service directly to the ultimate consumer or whether it should be channeled through a network of wholesalers and retailers. This decision is influenced by a number of factors. For example, the nature of product or industry will dominate the choice of distribution channel. Mostly fast moving consumer goods (FMCG) are distributed through a channel of wholesalers and retailers. Due to the nature of the product it needs to be distributed in a mass market which may include a huge number of customers spread over a vast geographic area. For instance, companies such as Procter and Gamble and Uniliver market their toiletries and cleaning products to a huge domestic and international market. It is neither practically possible nor financially feasible to distribute such small value items directly to end users. Therefore, such companies use a network of ...

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