10 Most Important Functions of Marketing Channel

Some of the important functions of a good marketing channel are as follows:

Marketing channels serve many functions, including creating utility and facilitating exchange efficiencies.

Marketing Channel

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Although some of these functions may be performed by a single channel member, most functions are accomplished through both independent and joint efforts of channel members. When managed effectively, the relationships among channel n embers can also form supply chains that benefits all members of the channel, including the ultimate consumer.

1) Information Provider:

Middlemen have a role in providing information about the market to the manufacturer. Developments like changes in customer demography, psychography, media habits and the entry of a new competitor or a new brand and changes in customer preferences are some of the information that all manufacturers want. Since these middlemen are present in the market place and close to the customer they can provide this information at no additional cost.

2) Price Stability:

Maintaining price stability in the market is another function a middleman performs. Many a time the middlemen absorb an increase in the price of the products and continue to charge the customer the same old price. This is because of the intra-middlemen competition. The middleman also maintains price stability by keeping his overheads low.

3) Promotion:

Promoting the product/s in his territory is another function that middlemen perform. Many of them design their own sales incentive programmes, aimed at building customers traffic at the other outlets.

4) Financing:

Middlemen finance manufacturers’ operation by providing the necessary working capital in the form of advance payments for goods and services. The payment is in advance even though the manufacturer may extend credit, because it has to be made even before the products are bought, consumed and paid for by the ultimate consumer.

5) Title:

Most middlemen take the title to the goods, services and trade in their own name. This helps in diffusing the risks between the manufacturer and middlemen. This also enables middlemen to be in physical possession of the goods, which in turn enables them to meet customer demand at very moment it arises.

6) Help in Production Function:

The producer can concentrate on the production function leaving the marketing problem to middlemen who specialize in the profession. Their services can best utilized for selling the product. The finance, required for organising marketing can profitably be used in production where the rate of return would be greater.

7) Matching Demand and Supply:

The chief function of intermediaries is to assemble the goods from many producers in such a manner that a customer can affect purchases with ease. The goal of marketing is the matching of segments of supply and demand.

The matching process is undertaken by performing the following functions:

i) Contractual:

Finding out buyers and sellers.

ii) Merchandising:

Producing goods that will satisfy market requirements.

iii) Pricing:

Process of attaching value to the product in monetary terms.

iv) Propaganda:

Sales promotion activities.

v) Physical Distribution:

Distribution activities.

vi) Termination:

Settlement of contract, i.e., paying the value and receiving the goods.

8) Pricing:

In pricing a product, the producer should invite the suggestions from the middlemen who are very close to the ultimate users and know what they can pay for the product. Pricing may be different for different markets or products depending upon the channel of distribution.

9) Standardizing Transactions:

Standardizing transactions is another function of marketing channels. Taking the example of the milk delivery system, the distribution is standardized throughout the marketing channel so that consumers do not need to negotiate with the sellers on any aspect, whether it is price, quantity, method of payment or location of the product.

By standardizing transactions, marketing channels automate most of the stages in the flow of products from the manufacturer to the customers.

10) Matching Buyers and Sellers:

The most crucial activity of the marketing channel members is to match the needs of buyers and sellers. Normally, most sellers do not know where they can reach potential buyers and similarly, buyers do not know where they can reach potential sellers. From this perspective, the role of the marketing channel to match the buyers’ and sellers’ needs becomes very vital. For example, a painter of modern art may not know where he can reach his potential customers, but an art dealer would surely know.

Submitted by : Dr. Eliza, Category : Marketing, Tag : Marketing