Chapter 2: Emergence of Marketing Channels 2004 - Facebook launched

MARKETING CHANNELS - It is a set of people, 2005 - YouTube launched

organizations and activities that work together to
transfer goods from the point of origin to the point of 2006 - Twitter launched
consumption. 2009 - Facebook advertisement gain momentum
MARKETING - In 1904, the University of Pennsylvania 2011 - Google + launched
offered a course in "The Marketing of Products", and
the term "marketing" was officially born. At the time, TRADITIONAL MEDIA - like print and TV exist today but
the industry was focused on increasing production, and businesses are increasingly allocating more budget in
that time marketing was little more efficient product digital media. Marketing experts predict a further rise in
distribution. internet-based marketing channels and even an
evaluation into marketing opportunities within video
MARKETS- Marketers have learned that they can no games and virtual reality spheres.
longer limit their marketing effort in just convincing and
persuading the customers to buy. That they had an in- MARKETING CHANNEL - is the people, organizations and
depth understanding of who their customers are, also activities necessary to transfer the ownership of goods
what they need and want. from the point of PRODUCTION to the point of
CONSUMPTION
- it is the way products get to the end-user, the
TIME LINE OF THE MARKETING CHANNEL IN HISTORY CONSUMER, and is also known as a DISTRIBUTION
1800s - Billboard advertisement go up as more people CHANNEL
have access to automobiles. - A marketing channel is a useful tool for
1864 - Earliest record of the telegraph for mass management and Is crucial to creating an effective and
unsolicited spam. well-planned marketing strategy.

1880s - Businesses start to utilize trademarks and logos - The DUAL DISTRIBUTION channel. This channel
as branding. is a less traditional from that allows the
MANUFACTURER or WHOLESALER to reach the end-user
1920s - Radio advertising starts to take shape. by using more than one distribution channel.
1941 - First recorded use of television advertising - The producer can simultaneously reach the
consumer through a direct market, such as a web site,
1950’s - systematization of telephone marketing, or or sell to another company or RETAILER that will reach
"telemarketing" th5 consumer through another channel or a store.
1960s - print advertising gains popularity as companies ROLES OF MARKETING CHANNEL IN MARKETING
dedicated to marketing services start to take shape STRATEGIES:
1970s - Commerce invented 1. Link producers to buyers
1980s - development of database marketing and 2. Influences the firms pricing strategy.
computer-oriented spam
3. Affecting product strategy through branding, policies,
1984 - introduction of guerrilla marketing willingness to stock.
1985 - desktop publishing increases as computers are 4. Customizes profits, install, maintain, offer credit.
more accessible to the public
THERE ARE FOUR MAIN TYPES OF MARKETING
1990s - concept of CRM begins to take shape CHANNELS
1995 - yahoo search is launched
1. Producer - Customer (Zero-Level channel)
1998 - Google search is launched The producer sells the goods or provides the
service directly to the consumer with no development
2000 - Google Pay-Per-Click (PPC) advertisement gains with a middle man such as an INTERMEDIARY,
momentum WHOLESALER, RETAILER, AGENT, or a RESELLER. The
consumer goes directly to the producer to buy the Inbound marketing - pull in potential customers with
product without going through any other channel. This interesting content and potentially make a purchase.
is one of the oldest forms of selling products.
●Direct Marketing - is a promotional method that
Examples : peddling, bakeries, farmers market involves presenting information about your company,
product, or service to your target customer without the
2. Producer - Retailer - Consumer (One-Level use of an advertising middlemen.
Channel)
●Television Advertising Moves Online - Television as
The relationship between retailers and one of the most popular and effective advertising
producer is a business - to - business relationships in channels worldwide
which the retailer is the customer and the producer is
the supplier. For this reason, retailer satisfaction is a ●Moving to Inbound Marketing Channels - inbound
certain kind of customer satisfaction in business - to - marketing lets the user come to you, which provides
business marketing. The most common examples of better quality customers who are more likely to make
retailing are traditional brick-and-mortar stores. These purchases. This creates value for the customer instead
include giants such as Walmart and Target, but retailing of forcing unwanted ads on them.
includes even the smallest kiosks at your local mall. A
traditional street side business that offers products and ●Social Media as Marketing Channel - social media
services to its customers face to face. allows people to freely interact with others and offers
multiple ways for marketers to reach and engage with
Examples of online retailers are Amazon, eBay, and consumers.
Netflix. Retailers don't just sell goods; they also sell
services, restaurants, hotels, and bars are all included ●Going Mobile - Mobile phone usage jumped to
nin retailing. 242.6 million in 2012, and 106.7 million of those were
on smartphones. Tablet users increased to 54.8 Million
3. Producer - Wholesaler - Retailer - Customer (Two- during that year. Mobile internet users increased by 17
level Channel) percent to 113.9 million in the same year.
Wholesaler buy the products from the
manufacturer and sell them to the consumer. In this Direct Channel
channel, consumers can buy products directly from the ■Simplest channel
wholesaler in bulk.
For example, if five manufacturers supply goods ■Direct to consumer
directly to hundred different retail stores, then they will ■Producers sell the products in small quantities
have 500 of deliveries (5 times 100). However, if those
five manufacturers supply the same wholesaler, and the ■Also applicable in selling services
wholesaler at this stage supplies 100 different retailers,
Examples :
then the total number of deliveries will decrease to 105
( 5 plus 100). 1.Etsy.com online marketplace
4. Producer - Agent / broker - Wholesaler or Retailer 2.Farmers Market
- Customer (Three-Level Channel)
This distribution channel involves more than 3.Oracle person sales team
one intermediary before the product gets into the 4.A bake sale
hands of the consumer. This middleman, known as the
agent, assist with the negotiation between the Retailer
manufacturer and the seller.
■Companies focusing on the direct-consumers selling
■They're not the one producing the product
BACKGROUND DEVELOPMENT (EVOLUTION)
■Market the goods on behalf of the producers for
EVOLUTION OF MARKETING CHANNELS OVER THE consumers
LAST 20 YEARS
■Provide tremendous contact efficiency
Outbound marketing - pushes messages about your
■Products can may sell store, online, kiosk or on
product and service to a whole audience.
doorstep
 ■Not emphasizing the location ROLES OF MARKETING CHANNEL
Examples : Marketing Chanel - a set of interdependent
organizations involved in the process of placing
1.Walmart discounts products and services with consumers.
2.Amazon online store The introduction of intermediaries between the
3.Nordstrom department store manufacturers and final consumer is adopted by many
organizations to facilitate distribution of their products.
4.Dairy queen restaurant
Manufacturers of snack foods, pie and
Wholesale Channel cigarettes and many similar products require mass
■Involves a wholesaler distribution in often small quantities. This distribution
makes the demand management process by one
■Involved in advance economy company difficult to achieve cost effective distribution.
■Also includes manufacturers and retailers In situation where many deliveries are made to retail
outlets.
Examples :
●Makes the demand management process by one
1.Christmas tree wholesalers who buy from growers
company difficult to achieve cost effective distribution
and sell to retail outlets
●The intermediaries can reduce a large por3 logistics
2.Restaurants food suppliers
cost
3.Clothing wholesalers who sell to retailers ●Distributors endeavor to act as middlmen for many
Agent/Broker Channel manufacturers

■Includes one additional intermediary ●This increases their profitability and can lead them
to offering lower distribution costs.
■Different from wholesalers
Disadvantages
■Negotiate, represent, bring
●The manufacturer relinquishes a level of control
■Match up buyers and sellers over the products, as well as increasing their distance
■Adds expertise to create a more efficient channel from the end consumer.

Examples : Various key functions are:

1.An issuance broker ●Information gathering and distribution

2.A literary agent ●Product promotion

3.An export broker ●Arranging contacts and matching products to meet

buyers needs negotiation of prices and financing the
NOTE! costs of the activities in the channel
Larger and more complex to flow of materials from ●Physical distribution of products through the
the initial design through purchase, the more likely it is channel
that multiple channel partners may be involved,
because each channel partners will bring unique
expertise that increases the efficiency of the process. If
an intermediary is not adding value, they will likely
removed overtime, because the cost of managing and
coordinating with each intermediary is significant.