What Are Marketing Channels?

A marketing channel is the type of medium used to advertise your

company. Learn how to choose the right marketing channel for your
business here.
Types of marketing channels
In 2022, the answer to the question "What are marketing channels?"
includes digital advertising, events, influencer marketing, search
engine optimization (SEO), content marketing, word-of-mouth, and
traditional marketing through mass media and print.

No matter what your marketing channel's definition, your marketing

goals probably include raising awareness of your brand, generating
leads, improving your conversion, and boosting repeat business.

As you will see in our examples to answer the question of "What are
channels in marketing?" there is a digital marketing channel for
every online business.

Digital advertisements
Digital advertisements enable you to use images, audio, and video
marketing to communicate your message, market products, and
reinforce your brand presence online. Display ads appear on
websites, email platforms, social media posts, and many other
digital channels, usually in the form of a banner, like the digital
advertisement for AT&T we mentioned earlier.
Digital display advertising doesn't target keywords. It isn't limited to
search engine results. There are many more pages for digital
advertising on websites than there are for search ads on search
engine results.

For those reasons, the cost per click for digital advertising is
usually a lot lower than the cost per click you would have to pay for
Google ads. However, you have to do some research to make sure
that you place your ads on pages that have content that attracts
site visitors who are interested in what you have to sell.

One of the advantages of display advertising is its capacity for

tracking. If someone clicks on your display ad to go to your website
and then doesn't convert, you can track them with a cookie. You
can use this information to target your market with a more effective
ad later. When you achieve contextual relevance with your ads,
digital advertising becomes extremely cost-effective.

Email
Email marketing isn't exactly the most modern technology available
to digital marketers, but it is familiar, measurable, and well-
understood.
Email marketing also allows you to take advantage of some of the
latest tools of content marketing, such as automation and
personalization while staying within your marketing budget. And
even in 2022, 63% of digital marketers say that email is their top
tool for generating leads and 73% say email is their cost-effective
driver of new revenues.

Here is a simple fact that can make the difference between failure
and success for your email marketing campaign:

In 2022, SuperOffice tells us, 62 percent of emails are read on a

phone. Another 28 percent are read on a pad. Only 10 percent of
emails are read on a desktop or laptop computer.
If you want to attract potential customers with email marketing,
your messages must be framed for reading on a phone. And if your
site must be fast-loading and responsive, or potential customers will
simply swipe to the next message.
Events
If you want to set your brand apart, you can't spend all your
time building a digital presence. You occasionally need to meet
your target audience face-to-face. Product reveals, brand reveals,
client conventions, trade shows, and expos are all opportunities to
exercise your sales skills in person.

Event marketing is a strategy for promotion that involves in-person

contact between the people behind the brands, their influencers,
and their customers. Every event is a little different. It is always
necessary to provide at least slightly different content for different
audiences, taking into consideration local culture.

Why is Event Marketing Important?

Most digital marketing professionals are finding that as the tools of
online marketing become increasingly sophisticated, maintaining a
good return on investment on marketing dollars requires constant
innovation. If you are frustrated with open rates and click-through
rates, consider hosting an event.
A survey sponsored by Aventri reported that 31% of marketers
believe that event marketing is their single most effective tool for
increasing revenues. Perhaps more importantly, 87% of executives
believe in the power of events, and 84% of customers attending
events stated that they had a more positive view of the product,
service, brand, or company being promoted after they attended an
event.
Influencer marketing
Influencer marketing has emerged as an alternative way of reaching
consumers who have grown tired of other forms of advertising.
Backlink reports that 45 percent of consumers have ad blockers on
their computers and 24 percent have ad blockers on their phones.
But nearly everyone is on social media.

Social influencers blog about their lives and their experiences with
the brands that sponsor them. The job of a social influencer is to
establish online relationships. A byproduct of those social media
relationships is interest in sponsored products.

Influencer marketing is relational, not transactional. You are

building relationships with your brand, not sales of your products.
But over time, you will get new customers who want to try out your
products that social influencers mention online.

Search engine optimization (SEO)

SEO is a fundamental tool of multichannel marketing. SEO is all
about making sure that your content is recognized by the search
engines, namely, Google.
Google insists that the most important element of good SEO is
useful content. If you are providing the content searchers are
looking for, Google will reward you with high rankings, at least in
theory. There are no magic algorithms that guarantee that your
pages will rank in the top of the search results. but Mailchimp
offers online instruction in SEO that will show you how to use
headers, meta descriptions, and other tools of on-page SEO to
boost your rankings in Google search.
Content marketing
Digital marketers around the world rank content marketing as their
most useful tool in the day to day marketing efforts. The research
service Statista reports that marketers are four times to list
content marketing as their most effective marketing tool as social
media, and three times more likely to prefer content marketing to
improved U/X.

Content marketing can keep customers coming back to your site to

learn more. They will not necessarily make a purchase every time
they visit your site, but every visit reinforces your brand and makes
your products the first choice for consumer needs.

Social media
TikTok has become a tour de force of the digital marketing world in
2022. It has overtaken Google as the most popular site worldwide,
largely because its algorithms give everyone an equal chance to go
viral. With one billion subscribers, TikTok still doesn't have the
reach of Facebook. Every social media marketing strategy must
include Facebook, too. But for huge promotional potential, be sure
that TikTok is part of your social media plan.
Word-of-mouth
Word-of-mouth advertising is the natural outgrowth of great value
and exceptional service. If you delight your customers, they will tell
their friends. Word-of-mouth is free, and the benefit to your brand
can be priceless.
Traditional marketing
Traditional marketing channels include direct marketing like
television, radio, billboards, signs, and print. Traditional marketing
still works for reaching enormous numbers of people at the same
time. But you need to consider the cost of traditional marketing
versus its potential benefits to avoid overspending.
Benefits of using marketing channels
What are the benefits of using these marketing channels?

Having a clear plan for how you will use each marketing channel
available to your business helps you achieve a higher rate of return
on your promotional dollars. Finding the right pros to manage your
marketing channels costs money, but gives you a greater return
than doing all the work yourself.

Marketing channels save time. You don't have to do all the work of
distributing your product by yourself. And pursuing several
marketing channels helps you find far more customers than you
ever could on your own.
The right marketing channel for your business is the channel that
brings you the greatest number of customers who spend the most
money. Determining which marketing channels work best for your
business isn't something you should leave to guesswork. The best
way to choose the right marketing channels is to be SMART,
targeting specific goals with agreed-on metrics of success, keeping
your goals achievable, relevant, and time-bound.

Distribution Decisions Definition

There are two main processes in supply chain management: downstream
and upstream. The upstream process sources materials for production,
while the downstream process focuses on bringing the product to
consumers. Distribution decisions belong to the downstream process.

Distribution decisions refer to all decisions that ensure the efficient

delivery of goods and services to the end user.
We often think of distribution as delivering physical products such as
clothes, vegetables, and bakeries, but distribution also impacts services
(e.g. consulting, dry cleaning) and digital content (e.g. streaming music,
TV programs). While online distribution brings companies the opportunity
to reach more people, it faces many same issues as offline distribution—
for example, choosing the right product for sales or converting prospects
into buyers.

One major distribution decision is choosing distribution channels.

Distribution channels are paths that a product goes through, from the
manufacturer to the end-user.
Main distribution channels include wholesalers, retailers, brokers, and
delivery companies. The purpose of distribution channels is to ensure the
timely arrival of goods and prevent delayed sales. Distribution channel
decisions refer to selecting distribution types, levels, and strategies.

Distribution is also one of the four marketing mix elements. As a result, it

can significantly impact a product's positioning, pricing, and promotion:
  Impact on positioning: Products distributed in a few outlets enjoy a
more luxurious image compared to those sold in multiple outlets.
 Impact on pricing: Commission paid to middlemen can affect the
price of the goods. Also, local goods may be less expensive than
foreign goods as they have a shorter distribution channel.
 Impact on promotion: Without wholesalers and distributors,
businesses must market and deliver the products themselves, which
could consume a lot of resources. On the other
hand, outsourcing tasks to a third-party distributor allows the firm to
reach a wider market with less effort.

International distribution decisions

International distribution decisions are one of the strategic decisions made
by global companies. The decisions include choices of products to sell
overseas, the difficulty in delivery, and the degree of control the company
wants to have over the selling process.

There are three ways to distribute your products in the foreign market:

1. Set up international departments: The company directly enters a

market and takes full control over distribution. For example,
Amazon set up fulfillment centers all over the world to pick, pack,
and ship products to customers.
2. Partner with distributors: This strategy involves getting export
companies to sell your products overseas so that you don't have to
worry about shipping and complex procedures. This is the easiest
and fastest way to extend your product reach. For example,
motorsport startup Formula E uses Deutsche Post DHL to transport
race cars, batteries, charging units, and media equipment to urban
areas around the world.
3. Sell your products online: This strategy involves using the internet
to sell your product over the world. However, you may still need to
partner with local distributors for shipping. For example,
eCommerce stores sell clothes, technology, and most consumer
goods.
Types of distribution decisions
There are four types of distribution decisions:

Direct selling
In direct selling, the product goes directly from the producer to the
customers.

An example is a local bakery that sells bread directly to people in the

neighborhood.
It's hard for companies with a direct channel to scale quickly as a producer
is the sole distributor. However, the perks are that they can offer faster
delivery service and don't have to pay commissions for intermediaries.

A commission is a fee for a service. It is often calculated as a percentage

of the total cost.

Indirect selling
In indirect distribution channels, products are delivered
by intermediaries. These intermediaries can be wholesalers, retailers, or
brokers.

An example is a chocolate maker distributing chocolates in grocery stores.

The indirect distribution offers a wider customer reach while saving the
producer a lot of time and effort in distribution. However,
manufacturers will have less control over the selling process and must split
pay commissions to intermediaries.

Dual distribution
Dual distribution is the combined strategy of direct selling and selling
through intermediaries to maximize product reach.

An example is M&M chocolate which can be purchased at both M&M's

own stores and retailers like supermarkets, department stores, gas stations,
etc.
Reverse channel distribution
Reverse channel distribution is the channel where products flow from
consumers back to retailers and manufacturers.

Examples of reverse channels include containers (e.g. bottles, wine

glasses) being returned to the store after use, and faulty products being
recalled (withdrawn from the market).

Distribution Channel Decisions

Distribution channels can be split into 4 levels:

Distribution: Zero-level channel

A direct distribution channel is called the zero-level channel. Goods are
delivered directly to the customers, without intermediaries. Some
examples include selling in brand stores and taking orders through the
hotline or the company's website. This strategy works well for perishable
goods or expensive goods where the consumer point is close to the
manufacturers.

One-level, two-level, and three-level channels are indirect channels. In

these channels, goods travel from manufacturer to consumer through one
or many levels of intermediary:

Distribution: One-level channel

Retailers buy goods from the manufacturer and sell them to the
customers. The one-level channel is often used for products such as
clothing, toys, furniture, etc.
Distribution: Two-level channel
Wholesalers buy the products in bulk from the manufacturer, and sell
smaller batches to the retailer who later markets them to the end-user. The
two-level channel applies to durable, inexpensive goods.

Distribution: Three-level channel

Companies make use of three-level channels when there's high demand for
a product throughout the country. Agents are split into stockist agents, and
carrying and forwarding agents. Stockist agents keep stock on behalf of
the company and sell them to wholesalers in the area. Caring and
forwarding agents only provide the warehouse and shipping expertise for
the order process and they work on a commission basis.

Distribution Decisions Strategy

Depending on the level of penetration, are three main strategies to
distribute a product in the market:

Intensive distribution
The intensive distribution channel is used for distributing common
consumer goods.

Intensive distribution is when companies distribute their products

through a large number of outlets.
Intensive distribution works well for mass production and cheap-cost
products such as milk, meat, clothes, or cosmetics. With this strategy, the
company tries to cover as big a market as possible.

An example is Heineken beer being sold in supermarkets, restaurants, and

pubs.
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Selective distribution
The distribution of higher-value goods is often handled in selective
channels.

Selective distribution is when companies select a few outlets to distribute

their products.
The selective outlets are chosen for their reputation and are responsible for
marketing the product to the customers. The strategy is suited for
specialized products such as technology or fashion.

Sony TVs and Zara are brands that adopt the selective distribution method.
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Exclusive distribution
Very high-end products are distributed in exclusive channels.

Exclusive distribution is when companies reserve the distribution to one

store chain.
Products for exclusive distribution are often expensive and target middle-
or high-income customers. The producers are also well-established brands
in the market.
AT&T is the sole distributor of iPhones to the end customer. Gucci and
Lamborghini also reserve exclusive distribution to one distributor.
Intensive Selective
Exclusive distribution
distribution distribution

Product prices
$ $$ $$$
& quality

Number of As many outlets as One or few stores in Reserved for only one store

outlets possible each country chain

Milk, chocolate, Apple phones, Gucci

Examples Sony phones
cosmetics, clothes handbags, Lamborghini cars
Table 1 - Intensive, Selective, and Exclusive Distribution
Functions Of Marketing Channels
Marketing channels play a very important role in the success of a
business. Some of the key functions of marketing channels are:

 Logistics and distribution: Marketing channels play an

important role in transporting the product or service from the
manufacturer to the end consumer. They are responsible for
ensuring that the chosen products reach customers through
their distribution network at an affordable price and in a timely
manner.
 Promotion: Marketing channels also further promote a product
by providing marketing messages and other advertisements to
targeted audiences, which helps them build a strong brand
image and reputation.
 Transactional functions: These channels are vital to enabling
the transfer of product ownership from manufacturers to
consumers. They help businesses in billing, invoicing, and
collecting payments from customers.
 Facilitating functions: Marketing channels also offer other
important services like storage, packaging, credit facilities,
and after-sales service that add value to the product or service
being offered.
 Risk sharing: Marketing channels help businesses to share the
risk by joining hands with them, as they can reduce their own
risks and losses by reducing exposure to all kinds of
uncertainties. This reduces the overall costs of selling a product
or service since manufacturers are not bearing the entire loss
themselves.
 Efficiency and effectiveness in distribution: By working with
marketing channels, businesses can ensure that their products
or services reach the right customers at the right time and place.
This helps to improve customer satisfaction levels as well as the
efficiency and effectiveness of businesses.
Factors Affecting The Choice Of
Marketing Channels
Every business has to carefully consider the factors that affect their
marketing channels in order to ensure that they make the best
decisions. Some of these essential factors include:

Product Characteristics
The type of product or service being offered by a business plays an
essential role in determining which channel would be most suitable for
it. For instance, a brand goes for a short channel for its product if the
product is:

 Perishable
 Complex
 Expensive
That is, perishable products like food items or flowers that need to
reach the customer as soon as possible use shorter channels.
Similarly, complex products like industrial goods that require more
explanation and demonstration before purchase, and expensive
products like jewellery where customers need time to think and decide
before making a purchase also rely on shorter channels to work
better.

Market Characteristics
The market in which a business is operating also has a big impact on
the choice of marketing channels. For example, a brand chooses
shorter marketing channels if:

 The offering is targeted at business users

 Customers are geographically concentrated
 Customers require extensive technical knowledge
 Regular servicing is required for the product
 The order quantity is large
Similarly, a brand uses a longer marketing channel when it sells
shopping goods to individuals in a geographically dispersed market.
Competition Characteristics
The choice of marketing channels is also influenced by the nature of
competition in that market.

The channels that the competitors use play a vital role in this decision.
If a brand sees that its competitors are using shorter marketing
channels, it would be wise of them to follow the same path so as not
to lose out on potential customers.

In a market with low competition, a brand might choose to use a

longer marketing channel so as to create a more differentiated
offering for its customers.

Company Characteristics
The company’s financial resources and objectives are also major
factors that come into play while deciding on marketing channels.

For example, if a company has limited financial resources, it might not

be able to afford to set up its own distribution network and would
instead have to depend on other intermediaries to reach its target
market.

Similarly, if a company’s objective is to build a strong relationship with

its customers, it might choose a shorter marketing channel so that
more personal touch can be added to the product/service.

Marketing Channels Examples

Every company in existence use one or more marketing channels to
reach their target customers. Some of the most common examples
include:

Nike
Nike is a famous shoe manufacturer that sells its products to
customers through both online and offline channels.
The company uses a mix of both direct and indirect channels where it
sells its products directly using its websites and franchise model, and
indirectly on online marketplaces and offline retailers using
intermediaries.

Apple
As one of the most popular technology companies in the world, Apple
sells its products through both online and offline, direct and indirect
channels.

The company sells its products directly using its own website and
physical stores, and indirectly through intermediaries such as online
marketplaces and offline retailers.

As of 2018, 29% of Apple’s net sales come from direct channels, and
71% come from indirect channels.

Designing the Marketing Channel

There are variations in usage of the term ‘design’ of
marketing channel:
• a noun to describe channel structure
• The formation of a new channel from scratch/
modifications to existing channels
• ‘Selection’
What is Channel Design
• It refers to those decisions involving the development
of new marketing channels where none had existed
before, or to modification of existing channels.
Key distinguished points associated with channel design:
 • It is presented as a decision faced by the marketer
(same as other marketing mix).
• It is used in the broader sense to include either setting
up channels from the scratch or modifying existing
channels (reengineering).
• The management has taken a proactive role in the
development of the channel.
• The term ‘selection’ refers to only 1 phase of channel
design (selection of the actual channel members).
It is a strategic tool for gaining a differential advantage
Who Engages in Channel Design
1. Producers/Manufacturer
2. Wholesalers
3. Retailers
4. Market
The channel design decision can be broken down into 7
phases or steps:
1. Recognizing the need for a channel design decision
2. Setting and coordinating distribution objectives
3. Specifying the distribution tasks
4. Developing possible alternative channel structures
5. Evaluating the variables affecting channel structures
6. Choosing the best channel structure
7. Selecting the channel members
Factors for selecting channel
A careful and systematic study needs to be done for selecting a marketing/
distribution channel. It not only affects the marketing strategy and
organisational goals but also the strategies of the intermediaries in the
channel. Place factor of the marketing mix that involves the distribution
system requires effort and time of the management and involves costs for
making changes to it. Therefore it becomes essential that a right channel if
chosen to avoid any later changes. Below are the factors that influence the
choice of the channel –
 Product – The first factor to be considered is the product category. A
FMCG product will require different distribution than an automobile.
Similarly the channel of distribution for making an industrial product
like a “Rotary Encoder” will be shorter as compared to a consumer
product like Shampoo. Some consumer goods need immediate
availability for the risk of shorter life like perishable goods from a
bakery, etc. Similarly a fragile product will need careful handling by the
intermediaries and hence, a shorter channel is selected. A technical
product will need selling from knowledgeable sellers providing demos,
etc. Complexity of product and level of sales service also decide the
selection of the intermediary.
 Customer – There is a difference in buying behaviour of consumers
and a business buyers. They have to be sold through different
channels. A consumer may want to personally inspect vegetables and
fruits bought for home consumption. A business buyer (hotel owner)
will not be that inclined to do personal inspection. He/ she my expect a
dealer, company supplier, agent, or a reseller contacting him/ her. This
was a business owner would sign a contract for a regular supply for a
certain period. Similarly the buying style for consumer and a business
buyer will vary like buying on credit, demo by sales team, etc.
 Type of market – A large market will require increase in channel
members. If the number of buyers is large, it is better to have local
presence to understand the pulse of the market. If the market is small,
direct selling can be utilised. Number of buyers in the market and their
frequency of buying the product affects the choice of channel member.
 Organisations objectives and resources – To ensure complete
control on the quality, price and after sales service, the organisation
may sell directly to consumers. A large organisation with huge
resources can avoid intermediaries and deal directly with consumers. It
can have its own exclusive outlets to sell its products. An organisation
will less financial resources are dependent on the intermediaries to sell
 their products. They rely on the experience and expertise of the
channel members.
 Marketing environment – Economic environment affects the choice
of marketing channels. For example, a fall in the dollar or pound value
will result in increase of product imported from other countries like
India and China. Similarly, at the time of high inflation, cheaper
intermediaries are chosen. The organisations try to shorten the
channel to reduce costs.
 Technological advancements have given consumers options to buy
products through mobile phones. The organisations also have control
over the prices of products when sold over the internet. They can also
track the number of potential buyers who visited their sites and which
products they have shown interest in. The consumer can buy a custom
made product.
 Availability of intermediary – The availability of the intermediary
also influences the selection of the channel member. The intermediary
that the organisation wishes to sell through should be available in the
target market. In their absence, the organisation will have to opt for
an intermediary that is available to them. Or the organisation will have
to invest to open their own stores, opt for direct selling, etc.
Sometimes the intermediary is unwilling to distribute the organisations
products. In such cases the firm should be ready to involve channel
alternatives.
 Channel partner capabilities – A new gadget from a manufacturer
can be sold through internet. But if a consumer wants to physically
inspect the gadget, the producer will need to make it available at
stores to increase its sales. The store salesman will be able to educate
and influence the sale of the product. Sometimes, the customer is
more inclined to buy from a store to ensure easy return and after sales
service. Depending on the characteristics and capabilities of the
intermediary, the manufacturer chooses an intermediary to meet its
objectives.
 Cost –There is cost involved in distributing products in the market.
The intermediaries are given a share of the profit for their services.
Organisations strive to make the channel network as efficient and
effective as possible to reduce the costs. The organisations select a
channel network that generates high sales with minimum costs.
 Competitors control and choice of intermediaries – Sometimes
the market leaders control the intermediaries, and threaten to
withdraw their products for selling competitor products. An
 organization has to closely study the intermediaries of the competitors.
To avoid conflicts, a firm can sell products through direct selling if the
competitor has its products sold through retailers. If both the rival
firms sell through the same retailer, intermediaries often influence sale
of a product that gives them higher profit margin.
 Selecting the best channel is critical for the success of the product in
the target market. Not every organisation can have the same channel.
The above factors play a big role in selection of intermediaries.
Organisations need to balance the above factors carefully to design an
effective and efficient marketing channel.