Indirect marketing channel
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Indirect marketing channel is a type of distribution channel in which goods or services are transferred from the manufacturer to the end customer through intermediaries such as wholesalers, retailers, agents, or distributors. This approach allows the manufacturer to maintain control over the positioning and promotion of the product and to reach a larger customer base without having to invest in a direct sales force. The intermediaries in the channel can provide additional services such as storage, distribution, and customer service, allowing the manufacturer to focus on product design and innovation.
Example of indirect marketing channel
- Manufacturer → Distributor → Retailer → Customer: In this type of indirect marketing channel, the manufacturer produces and sells the products to a distributor. The distributor then sells the products to retailers, who in turn sell the products to the customers. This type of channel is commonly used for products that require a large distribution network and for products that require special services such as installation or after-sales service.
- Manufacturer → Agent/Broker → Customer: In this type of indirect marketing channel, the manufacturer sells its products to an agent or broker, who then sells the products to customers. This type of channel is commonly used for specialized and technical products. The agent or broker can provide additional services such as technical advice, training, and support.
- Manufacturer → Wholesaler → Retailer → Customer: In this type of indirect marketing channel, the manufacturer sells its products to a wholesaler, who then sells the products to retailers. The retailers then sell the products to the customers. This type of channel is commonly used for products that require a large distribution network and for products that require special services such as installation or after-sales service.
When to use indirect marketing channel
An indirect marketing channel is useful in a variety of situations. This type of distribution channel can be used when:
- The manufacturer needs to reach a broad customer base with limited resources.
- The manufacturer wants to maintain control over the product and its positioning in the market.
- The manufacturer needs the assistance of intermediaries such as wholesalers, retailers, agents, or distributors to provide storage, distribution, and customer service.
- The manufacturer wants to focus on product design and innovation.
- The manufacturer is unable to invest in a direct sales force.
Types of indirect marketing channel
An indirect marketing channel is a type of distribution channel that involves intermediaries such as wholesalers, retailers, agents, or distributors to transfer goods or services from the manufacturer to the end customer. There are several types of indirect marketing channels, including:
- Wholesalers: Wholesalers are businesses that buy goods in bulk from manufacturers and then resell them to retailers in smaller quantities. They provide a cost-effective way for manufacturers to reach their target customers.
- Retailers: Retailers are businesses that buy goods from wholesalers and then resell them directly to end customers. They provide a convenient way for customers to purchase goods, often with added services such as customer service, order processing, and delivery.
- Agents: Agents are intermediaries that act on behalf of a manufacturer to promote their products and services. They may also provide additional services such as market research, advertising, and sales support.
- Distributors: Distributors are businesses that buy goods from manufacturers and then resell them to retailers or directly to customers. They provide a way for manufacturers to reach a wider customer base without having to invest in a direct sales force.
Advantages of indirect marketing channel
An indirect marketing channel offers a number of advantages for businesses looking to reach their customers. These include:
- Increased reach: Through intermediaries, a business can gain access to customers that it would not be able to reach through a direct sales force.
- Cost savings: By relying on intermediaries to handle storage, distribution, and customer service, businesses can save on costs associated with having to maintain their own sales force.
- Reduced risk: By relying on intermediaries, businesses can reduce their risk of failure by spreading out the responsibility of sales and customer service.
- Increased control: By maintaining control over product positioning and promotion, businesses can better ensure that their products are represented in the way they want them to be.
Limitations of indirect marketing channel
One of the main limitations of using an indirect marketing channel is the decreased control the manufacturer has over the communication and promotion of their product. Some of the other limitations of using an indirect marketing channel include:
- Increased cost- The manufacturer must pay the intermediaries in the channel for their services, resulting in increased costs for the manufacturer.
- Lack of direct customer feedback- The manufacturer does not have direct contact with the customer, making it difficult to gain feedback and adjust the product as needed.
- Delayed response to changing market conditions- Due to the presence of intermediaries in the channel, the manufacturer must wait for feedback from the channel before making decisions, resulting in slower response times.
- Reduced profits- The intermediaries in the channel take a portion of the profits, which can reduce the manufacturer's overall profits.
In addition to the indirect marketing channel, there are several other approaches related to marketing and distribution of goods and services. These include:
- Direct marketing channel, which involves the direct sale of goods or services to customers without the use of intermediaries.
- Franchise marketing channel, which is a type of distribution in which the manufacturer grants a franchise to a third party to produce and market its products or services.
- Multi-level marketing channel, which involves the sale of goods or services through a network of individuals who earn commissions based on their sales.
- Online marketing channel, which involves the use of digital technology to market and distribute goods and services.
These approaches allow companies to reach a wider customer base and increase their sales by utilizing different methods of marketing and distribution. By using these different approaches, companies can create a more comprehensive marketing strategy that will be effective in reaching their target audience. In summary, indirect marketing channel is only one of the various approaches companies can use to reach their customers and increase their sales.
Suggested literature
- Kiang, M. Y., Raghu, T. S., & Shang, K. H. M. (2000). Marketing on the Internet—who can benefit from an online marketing approach?. Decision Support Systems, 27(4), 383-393.
