Channels Essay ⋆ Business Essay Examples ⋆ EssayEmpire

A channel means a narrow but deep route connecting two entities. Business entities use channels to connect themselves with their customers. Most businesses today use two broad categories of channels: communication channels and distribution channels. They use communication channels to carry various kinds of information and messages to different stakeholders. Some examples of commonly used communication channels are television, radio, texts, e-mail, phone, newspaper, fliers, posters, mail, and billboards. Businesses use distribution channels to take their goods and/or services from their premises to the customer’s/end user’s premises. This essay focuses on distribution channels. Distribution channels are also known as marketing channels or trade channels. They are constituted by a set of interdependent entities called intermediaries or channel partners. Intermediaries operate primarily at two levels: wholesale and retail.

Wholesale intermediaries are those who sell goods and/or services for resale to other intermediaries such as retailers or for business use to industrial, institutional, governmental, or agricultural firms. They may also sell to other wholesalers but are not supposed to sell to individual consumer end users. Wholesale intermediaries may be owned by producers/manufacturers or could be totally independent business entities. Manufacturer’s sales branches or offices are examples of manufacturer-owned wholesale intermediaries. Merchant wholesalers, agents, and brokers are examples of independent wholesalers. Merchant wholesalers use many different names to identify themselves: wholesaler, jobber, distributor, industrial distributor, assembler, importer, or exporter. Wholesalers provide market coverage to producers and manufacturers, develop sales contacts, hold inventories, provide credit, and offer customer support.

Retail intermediaries are those who primarily sell goods and/or services directly to individual consumers for personal or household consumption. Some of them, like Office Depot, also sell for business use. They assume many forms and vary in size and format. Retail intermediaries may also be owned by producers/manufacturers or could be totally independent business entities. They may be as small as a convenience store selling daily necessities in the neighborhood or as gigantic as the mass merchandise chains Wal-Mart and Carrefour.

Retailers offer different levels of services ranging from full service to self-service. Some of them have physical as well as virtual presence; others like Amazon.com offer only online shopping. A specialty store like The Body Shop offers a narrow product line whereas a department store like Sears offers many product lines. Other major types of retail intermediaries include supermarkets, superstores, discount stores, category killers, off-price retailers, and catalog showrooms. Charles Y. Lazarus has stated that the role of the retailer, regardless of size or type, is to interpret the demands of customers and to find and stock the goods these customers want, when they want them, and in the way they want them. Retailers’ power and influence in marketing channels have significantly increased over the last few decades. Indeed, a few retail intermediaries have grown much bigger than several manufacturers supplying them.

Channel partners are tied together with others in distribution of goods and/or services through the allocation of specific roles and tasks. Such allocation creates a channel structure for the firm. Wide variations in channel structures can be seen across the world due to differences in psychological, social, cultural, political, legal, economic, and other demographic factors.

Ensuring that the goods and services efficiently reach the target customers when, where, and how they want them is the real function of channels.

Bibliography:

Coughlan, E. Anderson, L. W. Stern, and A. I. El-Ansary, Marketing Channels (Pearson, Prentice Hall, 2006);
Charles Y. Lazarus, “The Retailer as a Link in the Distribution Channel,” Business Horizons (1961).

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