The term marketing channel simply describes the means by which:
- Your product is delivered to consumers at the right place and time, and
- Payments gets back to you
Channel strategy comes down to determining who performs which related functions and at what cost.
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Any channel – whether direct or indirect – must perform several essential functions:
- Marketing functions include gathering information about potential customers and using that information to segment the market and generate demand for your product.
- Logistical functions include storing, packaging, and transporting your product.
- Transactional functions include processing the sale and negotiating who assumes the risks associated with ownership, fulfillment, payment, and product performance.
New Marketing Channel Options for Small Businesses
Not long ago, channel strategy was a relatively straightforward proposition for most small producers. That’s because the range of choice was limited. However, new technologies have enabled the emergence of marketing, logistical, and transactional specialists, many of which are accessible by small businesses. The resulting unbundling and rebundling of channel solutions presents a mind-boggling array of choice today.
Even as the components of marketing channels are in turmoil, the fundamentals of channel strategy haven’t changed. You still need to answer these questions:
- Who is going to perform each of the required marketing channel functions?
- Who is responsible for coordinating the various channel players?
- Who pays whom how much and on what terms?
For most human scale businesses that offer unique products to a niche market, direct-to-consumer e-commerce will represent their primary marketing channel. However, that entails taking primary responsibility for marketing and customer service functions and coordinating a portfolio of specialists that provide logistical and transactional functions.LEARN MORE