Channel Management Essay Example | Topics and Well Written Essays - 1500 words

Channel Management - Essay Example The insurance industry too has begun using hybrid marketing channels. The objectives of marketing channels can be understood better by analysing their four functions - facilitating the exchange process, alleviating discrepancies, standardizing transactions and providing customer service. A marketing channel's most important aim is to facilitate a smooth exchange process between a firm and an individual. As marketing is a process of exchange between a buyer and a seller, channel members are considered exchange facilitators. When a marketing channel fails to deliver goods that match customer expectations, discrepancies occur. These can be corrected through activities such as sorting, accumulating, allocating and assorting. Organizations produce a variety of products for several reasons. Some reasons are: Distributors facilitate the task of sorting products so that their identification becomes easier and they can be delivered fast. Accumulating is the process of collecting the same product in large quantities. Distributors help both buyers and sellers protect themselves against price and supply fluctuations. Allocating is the process by which larger quantities of homogeneous products are broken down into smaller quantities. Manufacturers sell their products in bulk to wholesalers, who in turn, sell these in bulk to distributors. The distributors sell these products in smaller quantities to customers. Assorting is the process by which the customer's exact requirement is ascertained for a target group of customers. Distributors facilitate the marketers' task of assorting the products for different consumers according to their tastes and preferences. Another major objective of marketing channels is standardizing transactions. Let us consider the example of a milk delivery system here. In this case, the distribution is standardized throughout the marketing channel so that consumers do not need to negotiate with sellers on any aspect, whether prices, quantity, payment method or products location. Customer service includes installation, training and maintenance of the product and other forms of service required by customers. Distributors too offer these services. In a typical distribution system, there are two tiers between the manufacturer and the final consumer - the wholesale distributor and retailer. In a marketing channel, working with distributors and resellers creates more problems than it solves. This is because it is feared that intermediaries are interested in maximizing their profits and are not concerned about manufacturer's profits. To further this end, they prefer manufacturers with products and brands in high demand. Though this may be considered rational, it creates problems for manufacturers who are introducing new products in a new market. This forces the manufacturer to set-up a direct-distribution channel in international markets. Established companies, when entering international markets, choose emerging markets first. As they have limited exposure in these markets, they sell their products through local distributors who are independent in nature. Initially, though there can be a fast growth in sales, as the time passes, manufacturers start realizing and identifying problems with the distributors (Arnold,