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Marketing 101
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What Is A Marketing Channel

Supply Chain And Logistics Marketing                             

 

What is A Marketing Channel?

A marketing channel of distribution or a supply chain are simply the ways in which an individual or firm makes available a product or service for sale.  Understanding the way a marketing channel or supply chain works is crucial to being able to create and use an effective marketing strategy.

 

What Are the Middlemen?

A marketing channel begins with the manufacturer or service provider offering a product or service for sale.  These goods or services are then offered to an intermediary, which can be a wholesaler, retailer, agent, broker, distributor, or dealer.  The intermediaries then create a value for the product or service by the adding to the price that was charged them by the manufacturer.  These extra charges are then passed along the marketing channel tot the consumer.

 

In the marketing channel a retailer can provide value for the consumer by selecting and offering the consumer the product at a lower price.  The lower price is because while working in the marketing channel they have selected an intermediary or wholesaler which has provided the retailer to opportunity to buy the product at a lower than normal price. 

 

This means that the wholesaler has also provided value to the consumer by offering this lower price to the retailer who in turn sold the product for less.  The process of value for the consumer does not stop there because the agent or broker of the manufacturer started the process of value for the consumer by offering the product or service to the wholesaler at a lower price, which was then passed on up the marketing channel to the consumer.

 

The whole process of having middlemen or intermediaries benefits the consumer because at each level there is a negotiation of price going on.  This negotiation allows the consumer to get the best price possible. There can also be a negative side to the marketing channel because of the very structure of the channel.  Each level of intermediary that the marketing channel goes through is going to add an increase in price to the goods or services provided.

 

Cutting Out the Middlemen

In recent years there has been a growing trend by manufactures and service providers to try and cut out the middle men thus altering the marketing channels for goods and services from one of manufacturer, to agent, to wholesaler, to retailer, to consumer to one of manufacturer to consumer or any number of variations which leaves out as many intermediaries as possible. This means that the savings can be passed onto the consumer. 

 

The Supply Chain

Similar to the marketing channel is the supply chain. A supply chain is a group of firms or suppliers that provide their goods or services to others in the form of raw materials to suppliers and manufacturers so they can in turn deliver the finished goods to the consumer.  The difference is that in a marketing chain the goods or services are completed products whereas in the supply chain the goods or services may not be a finished product but the raw products needed to make the goods or perform the service.

 

A supply chain needs a different set of logistics in order to get the product from the raw material to finished goods than does a marketing chain, which is getting a finished product from the manufacturer to the consumer.   Logistics are simply the steps for getting the right amount of the right product to the right place. 

 

To successfully manage a supply chain so that it fits into a marketing strategy you must first understand your customer.  A company must know their customer’s wants and needs and how they best can fill those needs.  Once a company understands the customer they can then go about figuring out what is the best supply chain to get the product from conception, to manufacturing to the customer.  Will it be factory direct or a store this is all part of figuring out the correct supply chain. 

 

Once a company understands how their particular supply chain operates they can then correctly identify the logistics of what it will take to get the product from manufacturing to the consumers. All this affects the marketing strategy because the supply chain must be able to meet the needs of the marketing strategy.  If it doesn’t then the company must go back to the drawing board and redesign the logistics of the supply chain in order to better attend to customer needs.

 

Something to Think About

Whether it is a marketing channel or a supply chain there are certain logistics that must be met in order to get a high quality product into the hands of the customer.  It is up to the companies providing the product or service to make sure all the logistics are met and the product is there and satisfies the customer’s needs.