Talking about marketing channels

The days, if they ever existed at all, when prospective buyers were supposed to beat a path to the factory door are long gone. 

Today, businesses, are participating in a global market that exerts a direct influence, even on companies only operating in their home market. Conversely the opportunity to sell products and services to a wider market place has never been better. Moving product from the point of manufacture to the ultimate end user may involve a lengthy chain of participants, or be delivered direct.  With the advent of the Internet and e-commerce continuing to exert changes on the markets addressed and channels to serve them, new business models have emerged. Sales teams are much slimmer than before, product volumes often higher and market channels, distribution and delivery changing to the new paradigm.

Traditionally serving a large customer base, has been through an intermediary – wholesaler, stockist, distributor, dealer or agent. The manufacturer is relieved both of shipping to multiple end customers and the cost, and risk, of carrying perhaps thousands of small accounts, in return for a discount against the published selling price plus marketing and training support. Working through intermediaries can present a number of marketing challenges, in terms of pricing, profitability and keeping in touch with the end user. A term that has been introduced in the last few years is disintermediation – the process of bypassing distribution and going straight to the end customer. Direct selling demands a high level of product quality associated with a ‘plug and play’ out of the box simplicity, to avoid high levels of ‘expensive to deal with’, returns. The use of call centres and the Internet linked with global carrier services and credit payment methods have now given the manufacturer the mechanisms to bypass traditional channels by appealing directly to the end user, but the investment in promotional costs with this model is high.

Finally it is important to remember the roles of specifiers and influencers, although not part of the supply chain, may still wield the real specifying influence. The end customer is often not just buying your product, but a complete working system where a system integrator or consultant may be a key player in bringing together a range of products to carry out the tasks needed by the end user.