A marketing channel network, sometimes referred to as the distribution channel network, consists of the individuals, companies, and other activities required to move the ownership of products from the primary source of production to the final consumer. It is often called the distribution channel because products are being moved from their original source – the manufacturer – to their ultimate destination – the end user. Typically, this occurs during the manufacturing process or after the product has left the factory. The distribution channel typically includes manufacturers, importers, distributors, brokers, middlemen, agents, and others. In fact, distribution channels provide the service for which the term is based.
There are four key takeaways that a company needs to identify and address to ensure that all channels are effectively used to leverage sales to increase profits: Identify the target customer. As with any marketing strategy, identifying the customer is critical to achieving sales goals. Take time to understand the customer and their buying preferences.
Identify the distribution channels. There are multiple ways in which marketing channels can impact the distribution of a product. For example, if the primary marketing channels are retail stores, food preparation, or utility services, then the channel network may consist of these three locations. Each location will have different buying patterns and purchasing power. Develop a strategy that addresses the buying patterns of each location.
Set the appropriate marketing channels. When developing a distribution network strategy, it's important to set aside time to set up and evaluate the most appropriate marketing channels. Some channels will be more successful than others when a certain demographic consumer is targeted, and some will be a better fit in a new location due to environmental factors, population growth, etc. Develop a plan that takes these into account.
Define the actionable information. Once the distribution network is set-up, it's important to create actionable information for consumers to access. The information should be easy to find, understand, and act on. Many marketing channels provide consumers with easy access to key information, such as when and where a product or service is available, when a television advertisement was shown, or when a catalog was mailed to a consumer's address.
Work with the producer. Marketing is a two-way street. The producer must engage in marketing and the audience must respond in order for the marketing to be effective. The producer can build an effective marketing campaign by working with the consumer, establishing a good rapport with the audience, and making the customer feel like a part of something larger than themselves. Working with the producer can take the burden off the marketer, allowing the producer to focus on creating the creative ideas and stories that will make the commercial successful.
Evaluate the return on investment. Successful marketing channels will generate revenue from multiple streams. A manufacturer might receive advertising revenue from a single short-term channel, but the combination of different short term channels can lead to more sales and a larger profit margin for the manufacturer. Other factors include whether the manufacturer plans on using the marketing channel in the long-term, whether the targeted consumer is a repeat buyer, and how competitive the market is compared to similar products from other manufacturers.
When evaluating marketing channels, it's important to consider the return on investment (ROI) of each channel, including what it costs the manufacturer to produce the commercials and what it costs the consumer to purchase the product or service. Some producers might be willing to spend more on a marketing channel than they would on a television ad campaign, but this isn't always the case. It's important to balance cost against ROI, since the return on investment (ROI) will fluctuate depending on the types of messages and opportunities presented in the media marketing channel. Some channel producers may even refuse to participate in certain media marketing efforts if the ROI isn't a significant enough portion of their budget.