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Marketing Channel: Definition and Function in the Marketplace

Marketing Channel: Definition and Function in the Marketplace
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  • 0:05 What is a Marketing Channel?
  • 1:10 Providing…
  • 2:24 Overcoming Discrepancies
  • 4:46 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
In this lesson, we'll learn about the marketing channel, which allows producers to deliver their product to consumers in the correct quantity, type and location. Without help from additional channel members, most companies would not be able to increase their target market reach and satisfy their customer needs.

What is a Marketing Channel?

What comes to mind when you think of a channel? Does a television station enter your mind, or a deep canal near the shore? In marketing terminology, a channel refers to a way of making a product available to distribute to the end consumers. A marketing channel helps by getting the right products to the right consumer in time for purchase. This channel terminology falls under the P of physical distribution in the four P's of the marketing mix.

There are three ways that marketing channels can accomplish this task. One of Farmer Joseph's tasks is to make sure his pies are delivered to his customers when they need them. He has to be concerned with providing specialization and division of labor, overcoming discrepancies, and providing contact efficiency.

Providing Specialization/Division of Labor

Farmer Joseph's first task is to be able to manufacture his pies in an efficient manner. He has achieved economies of scale by using large ovens to cook hundreds of pies daily. This has resulted in producing large enough quantities that he can supply his local farmers' market plus outside vendors with his delicious pie specialties.

Specialization and division of labor means breaking down complex tasks into simpler ones and training specialists to accomplish the tasks. This leads to greater production, efficiency, and profits. Marketing channels allow the farmer to train his employees with product specialization to make his pies quickly and efficiently.

He also uses specific channel members to enhance his pie delivery. He realized early on that the local wholesaler could help him deliver his pies to his growing list of retail clients. The local wholesaler takes daily delivery of his pies and then uses their trucks to get their pies to local retailers within a 50 mile radius. The use of the wholesaler's trucks provides the farmer with over $5,000 extra per week per vendor.

Overcoming Discrepancies

Another important task of marketing channels is that they provide the ability to overcome discrepancies of quantity, assortment, time and space. Marketing channels provide the ability to overcome discrepancies of quantity. This means that the channel providers help eliminate the key differences between the amount of product purchased and the amount of product an end user wants to buy.

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