The marketing channel and distribution channel go hand-in-hand. Essentially, without the distribution channel or process, the marketing channel would not exist. The distribution channel includes all companies involved in developing and moving goods until they reach end customers. The marketing channel is the marketing process used by each company within this process.
To understand the function and purpose of the marketing channel, it is necessary to understand the distribution process. This includes the steps in product movement and the path it takes from production to end customer. Manufacturers produce or make products. They typically sell them to wholesalers or distributors that have expertise in getting products to retailers. Retailers then hold inventory and market the goods to consumers that purchase them for personal or family consumption.
Manufacturer to Wholesaler
The manufacturer must market its goods to the wholesaler or distributor. This usually involves one of two approaches. Established manufacturers use sales reps who meet with distributors and promote the benefits of new products and the potential value they offer to the marketplace. Over time, manufacturers often develop trusted relationships with wholesalers and retailers. Newer manufacturers or those promoting unproven products may have to offer discounts to entice distributors to carry the goods to market.
Wholesaler to Retailer
Wholesalers commonly acquire goods and then hold them in distribution centers they are until purchased or shipped to retailers. Wholesalers also commonly employ a team of sales professionals who develop relationships with new retailers or maintain relationships with existing ones. New products usually require intensive sales efforts to convince retailers to open up shelf space. Existing products are usually sold through internal salespeople who manage relationships with retail buyers. In some cases, wholesalers pass on or offer discounts to retailers to get them to hold inventory.
Retailer to Consumer
Retailers carry great weight in the marketing channel, because they must get customers to buy goods; otherwise, the entire distribution channel loses out eventually. Some manufacturers also promote goods to consumers to create market demand. Retailers use various communication methods, including advertising, public relations, personal selling, direct marketing and visual merchandising, to attract customers and generate buying. They also manage relationships with customers to create repeat purchases.
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