In the article “Distribution channel. Pushing, or to whom the product opens the door,” I only casually mentioned the role of players in the distribution channel and the skills and weaknesses of the players that we have to deal with when building a system that provides access to the masses of Central Asia to our product.
Here, let us take a deeper look at the scam distribution system and define the rules by which each player should live and what each player should do for the benefit of the normal existence of the distribution channel.
Channel named ... marketing
So, to understand the essence of the subject, it is necessary to imagine a deep channel with the banks, turns of the channel and shoals. Shipping channels are designed and able to move a huge amount of goods over long distances, distributing goods among buyers all along the river.
Notice that the channels are not just a means of distribution, but also a means of communication between all living along the shores, it is no longer just a commodity and logistics distribution resource, it is already a powerful marketing channel - a tool with accessible mechanisms for taking into account the needs of coastal residents, analyzing common features and ways and consumption preferences, and hence the instrument of influence on them.
Sales, logistics or marketing?
Each of the experts involved in "meeting the needs of the buyer in the product": marketers, marketers, logistics, financiers call this channel by its name. However, the canal would not be a canal if it were only floated on one end, or used only for the transport of goods. As any batch of goods shipped is always accompanied by information, advertising, it implies a reverse financial flow, so the flow of goods, knowledge, finance, and experience flows through this channel.
Marketing Channel Flows
And even so, it is marketing, since the flow is formed between the manufacturer of the product and the consumer of this product and strive to “maximally satisfy the market demand”:
in a competitive product;
in product knowledge;
in the possibilities of its acquisition;
facilitate the distribution of goods;
simplify financial flows.
in the end, in profit.
Well, the channel has such a task ... and nothing strange that the same tasks are facing marketing. In this case, to call a channel, for example: “logistic channel”, it means to clearly distinguish only the tasks of “logical” transportation; "sales channel" - the task of selling the produced goods; "financial channel" - highlight the task of managing the financial flows obtained as a result of distribution and sales.
Marketing channel layout
On the diagram, I tried to depict the flows accompanying the product in the marketing channel. It is quite natural that the marketing channel represents a system of bidirectional flows, some of which are directed from the producer to the consumer, and part of them are not a turnaround, and it is they who close the connection between the consumer and the manufacturer of the goods.
Thus I will try to define the marketing channel:
Notes of a practicing marketer A marketing channel is a combination of market entities, legal entities and individuals (producers, buyers, intermediaries), united by a manufacturer's product, entering into relationships in order to get the benefit of maximizing market demand.
Here is a general definition of a marketing channel.
As to other existing names: “distribution channel”, “multi-level channel”, “regional or industry distribution channel” - all of these names originated from the varieties of the marketing channel and from the purpose with which the channel is created. However, these names are fair and I will tell about them later.
Marketing Channel Intermediaries
If everything seems to be quite understandable with the other participants of the marketing channel (manufacturer, buyers), then with intermediaries - not very much so far.
When do intermediaries appear in the marketing channel?
Then, when there is a need for them. Indeed, as soon as a manufacturer fails to cope with its role of “maximally satisfying the customer’s need for its product,” an intermediary immediately appears, willing and able to perform certain functions better than the manufacturer does.
From here it is very important and, perhaps, for the time being, not a completely logical conclusion, the logic under which we will summarize later. However: The manufacturer must satisfy the buyer’s need for the product. And only when someone part of the work on "satisfaction" can do better than him, does the manufacturer give part of the functions to the intermediary.
From here there is one more important conclusion: Since the intermediary performs part of the work for the manufacturer, then financial compensation for the work he does falls on the manufacturer’s shoulders.
In other words, compensation for the inability, inability, and unwillingness of the manufacturer to “satisfy” the buyer does not in any way fall on the buyer’s shoulders in the form of a price increase for the goods.
How does the manufacturer compensate the efforts of the intermediary to perform the work? That's right, the manufacturer shares an hourbenefits acquired after the sale of goods to the buyer. Here I deliberately omit profits and costs. Let's call intermediaries: distribution companies specializing in building their distribution channels; logistics transport companies; all imaginable advertising agencies; retailers; all possible agents providing services to the manufacturer. Can I do without intermediaries? And yes and not! If weaving bast shoes under the order of their neighbors in the village, then for such marketing there is no need to build a channel through intermediaries. But as soon as there appeared a desire and opportunity to sell sandals to the neighboring village, or around all the villages, it is easier to get an intermediary here and sell goods to him in bulk, which he, in turn, will sell at the city fair. This intermediary to cope with the work of "sell" better than someone who knows how to weave. Just because such an intermediary specializes in doing just such a work, respectively, and performs it with greater efficiency. The subject of the manufacturer's vigilant vigil is its product. The concern of the intermediary: either his ability to do something better than others, or the knowledge of the buyer - his habits, patterns of consumption, ways of buying, etc. And no matter how unique the product of the manufacturer is, it is bought and consumed by the same number of buyers and consumers known to such intermediaries (often these are different sets). It means that you need to find such intermediaries for large sales. And can you grow and develop everything yourself without them: and spit and carry and stand in the bazaar? Probably it is possible, but often it will require a lot of effort and time and, if the competitors are not asleep, then you can be late with such an extensive development. That means intermediaries (all or some of them) are not necessary if the manufacturer copes with everything himself. I emphasize for those novice builders of marketing channels who are sure that one can do without any intermediary, and as a matter of argument they are stating: "and in our market this way ...". That's right, colleagues, when the channel you build will not cope with “customer satisfaction,” for various reasons, an intermediary will immediately appear (he will come, or you will search) who will do the job better.