Activities performed by marketing channels

• Connects producers to buyers
• Performs sales, advertising and promotion
• Influences the firm’s pricing strategy
• Affects the product strategy through branding, policies, willingness to stock and customizes profits, install, maintain, offer credit, etc

Activities performed by Marketing Channels are described below.

Disseminate Marketing Communications and Promote Brands

Somehow wholesalers, distributors, retailers, and consumers are required to be informed through marketing communications that an offering exists and that there’s a good reason to buy it. Sometimes, a push strategy is used to help marketing channels accomplish this. A strategy in which businesses are the target of promotions so products get “pushed” through their marketing channels and sold to consumers is called a push strategy. It is a strategy in which a manufacturer convinces wholesalers, distributors, or retailers to sell its products. Consumers are informed either through advertising or other promotional activities that the product is available for sale, but the main focus is to sell to intermediaries. But the problem with a push strategy is that it does not focus on the needs of the actual users of the products. Example – Coca-Cola used a push strategy for years before realizing that instead of focusing on moving beverages through a retailer’s back door, it needed to help them sell to shoppers through the retailer’s front door.

On the other hand, a pull strategy is in which consumers are targeted with sales promotions such as coupons, contests, games, rebates, mail-in offers. It focuses on creating demand for a product among consumers so that businesses agree to sell the product. The pharmaceutical industry is a good example of an industry that utilizes both pull and push strategies, since they promote their drugs to pharmacies and doctors, but they now also run ads designed to persuade individual consumers to ask their physicians about drugs that might benefit them. In many cases, two or more organizations in a channel jointly promote a product to retailers, purchasing agents, and consumers and work out which organization is responsible for what type of communication to whom.

Sorting and Regrouping Products

Many businesses do not want to receive huge quantities of a product. One of the functions of wholesalers and distributors is to break down large quantities of products into smaller units and provide an assortment of different products to businesses.

Storing and Managing Inventory

If a channel member has run out of a product when a customer wants to buy it, the result is often a lost sale. This is the sole reason why most channel members stock, o[r carry, reserve inventory. However, storing products and maintaining inventory has an associated cost i.e., warehouses cost money to build or rent and heat and cool; employees have to be paid to stock shelves, pick products, ship them, and so forth. Example: Wal-Mart put their suppliers in charge of their inventory. The suppliers have access to Wal-Mart’s inventory levels and ship products when and where the retailer’s stores need them.

Distributing Products

Physical goods that travel within a channel need to be moved from one member to another and sometimes back again. Some large wholesalers, distributors, and retailers own their own fleets of trucks for this purpose. In other cases, they hire third-party transportation providers such as trucking companies, railroads, and so forth to move their products.

Assume Ownership Risk and Extend Credit

In case of damage to goods during transit, one of the first questions asked is who owned the product at the time. In general, no one channel member assumes all of the ownership risk in a channel. Instead, it is distributed among channel members depending upon the contracts they have with one another and their free on board provisions. A free on board (FOB) provision designates who is responsible for what shipping costs and who owns the title to the goods and when. However, the type of product, the demand for it, marketing conditions, and the influence of the various organizations in its marketing channel can affect the contract terms channel members are willing to agree to. There are few companies who try to wait as long as possible to take ownership of products to avoid storage. The channel members try to hold as little inventory as possible for fear it would go unsold or become obsolete.

Share Marketing and Other Information

Complete information about the demand for products, trends, inventory levels, and what the competition is doing is available with the channel member. The information is valuable and can be beneficial if channel partners trust one another and share it. More information can help each firm in the marketing channel perform its functions better and overcome competitive obstacles.

Also, confidentiality is a huge issue among supply chain partners because they share so much information with one another, such as sales and inventory data. Many business buyers require their channel partners to sign nondisclosure agreements or make the agreements part of purchasing contracts. A nondisclosure agreement (NDA) is a contract that specifies what information is proprietary, or owned by the partner, and how, if at all, the partner can use that information.