According to the American Marketing Association, ‘‘a channel of distribution or marketing channel is a structure of the intra-company organization, units and intra-company agents and dealers, wholesalers and retailers through which a commodity product or service is marketed.’’ Marketing channels are primarily concerned with the physical delivery of goods and services. Channels augment advertisement and promotions and regulate markets. It is through marketing channels that a producer places his goods in the hands of the actual user. A marketing channel is a structured system or a system of agencies which in groups execute all the activities essential to connect producers to realize the marketing activities. Marketing channels are “structures through which goods and services move from the producer to the consumer” (Louis, 1969).
A given channel acts as a combination of channel management and physical distribution management. The former focuses on operating and setting up a distributional network and latter is concerned with the delivery of goods when and where they are needed (Frederick, 1992). Rosenbloom (1999) views the marketing channel in terms of long-term planning and operations. For constructing such channels, a structure is required which is consistent with the needs and kinship of the people. The channel members have different roles (Stern et al., 1996). The producers develop, produces, and markets the product, the wholesaler is the mediatory between producer and the distributor/dealer, distributor/dealer is the mediatory between wholesaler and retailer, the retailer is a link between the distributor/dealer and customer who is the end user.
Channels of distribution are the ways and means employed by manufacturers and sellers to get their products to the market and into the hands of users. These are organization tools and techniques used to move goods from the point of production to point of consumption and constitute the means by which the title to goods is transferred from sellers to buyers. The process of transferring is a very tough job in the present-day marketing environment that is characterized by heterogeneity on both the demand and supply sides.
The marketing channel, therefore, is the lens to see the organization of marketing in its exterior aspects so as to bridge the gaps which exist in moving goods from producers to consumers. Economic growth is the focal point of Adam Smith’s Wealth of Nations. Growth for Ibn Khaldun (Khaldun, 1958) and Adam Smith is embedded in increasing the division of labour and specialization. As a result of this, a gap gets developed between producers and end users. The primary purpose of a distributive channel is to bridge this gap by resolving spatial (area wise) and temporal (relating to time) discrepancies in supply and demand.
Marketing Channels or channels of distribution have become eyes and ears of marketing today and are receiving great attention. Channels not only create value addition but also create customer and shareholder value, brand equity and market presence for a company. For most service organizations, consumer marketing agencies and business marketing firms, the distribution channels play a ponderous role in the flow of goods and services from producers to consumers (Gorchels, 2004; Lambart et al., 1998).
Distribution, as one of four elements of marketing complex, cannot be separated from marketing decisions. A successful marketing channel ensures that the desired product is distributed in the desired amount to the desired channel to satisfy the desired consumer (Kotler & Keller, 2009). Research dedicated to channel management has played an important role in the marketing discipline for over 4 decades. Two main areas of channel research in marketing have evolved. These are: how channels are organized or structured (Fein & Anderson, 1997) and how ongoing channel relationships are coordinated in a behavioural sense (Frazier, 1983).
A priori knowledge of the marketing channels is essential for those engaged in marketing research. Marketing costs, margins, and price spread are the tools for checking the profitability of intermediaries and efficiency of the market system in general and the marketing channels in particular. The malfunctioning of a business unit can be decided by the level of education and the high net outflow of human capital. Accordingly, in order to improve the marketing channels the level of education of the business stakeholders needs to be improved.
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—The author is a Research Scholar at Department of Economics, Central University of Kashmir, an Academic Counsellor, IGNOU STUDY CENTRE 1209,S.P. College, Srinagar and Editor in EPH – International Journal of Business and Management Science & Asian Journal of Managerial Science. She is Ezine Articles Expert Author and an IJRULA title awards, 2018 winner (Best Researcher, 2018). She can be reached at: email@example.com