FUNCTIONS OF MARKETING CHANNELS
Marketing channels (Distribution channels) move goods and services for producers to consumers. It overcomes the major time, place and possession gaps the separate good and services from those who would use them.
Manufacturers, wholesalers, and retailers as well another channels members exist in channel arrangements to perform one or more of the following generic functions:-
• Information gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.
• Promotion: Developing and spreading persuasive communications about an offer.
• Contact: Finding and communicating with prospective buyers.
• Matching: Shaping and fitting the offer to the buyers needs including activities such as manufacturing, grading, assembling and packaging.
• Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.
• Others help to fulfil the completed transactions.
• Physical distribution: Transporting and storing goods.
• Financing: Acquiring and using funds to cover the costs of the channel work
• Risk taking: assuming the risks of carrying out the channel work
• Carrying of inventory, demand generation or selling, after sales services.
In getting its goods to end users, a manufacturer must either assume all these functions or shift some or all of them to channel intermediaries.
The foregoing discussion underscores three important principles in the structure of marketing channels
• One can eliminate or substitute institutions in the channel arrangement.
• However, the functions these institutions perform cannot be eliminated.
• When institutions are eliminated, their functions are shifted either forward or backward in the channel and therefore, are assumed by other members.
“It is true that you can eliminate an intermediary but you cannot eliminate its functions”.
To the extent that the same function is performed at more than one level of the marketing channel, the work load for the function is shared by members at these levels. For example, manufacturers, wholesalers, and retailers may all carry inventory. This duplication may increase distribution cost. However, the increase in cost is justifiable to the extent that it may be necessary to provide goods to customers at the right quantity, quality time and place. (Marketing channels fourth edition by Louis W. Stern A deli I. El.A).
A.B. Kintu B.Com (Hons) Marketing Makerere University (2007)