The dynamic nature of channels - Marketing Management

Marketing is characterized by constant change, and there is a need for the marketer to adapt to these changes, making marketing channels subject to change and innovation. Channels represent a dynamic area of marketing as they are constantly evolving to meet changing customer and market needs which reflect underpinning wider changes and trends in demography and lifestyles. Marketers must be aware of the changing nature of channels and respond to them. An example of recent developments that are indicative of the innovation and changing nature of this area is the growth of multi-channel systems of direct marketing and Internet marketing .

The growth of multi-channels

Companies now use a variety of channel arrangements to reach their target customers. Once, companies tended to use only one type of channel configuration in their marketing; now they use several. The use of multi-channel systems can be for a number of reasons:

  • to increase market coverage by reaching new customers;
  • to reduce costs of selling to certain customers where for example such customers require less service than that provided through the company’s normal channels;
  • to achieve a more customized service to particular customers than would be available through the company’s normal channels.

In multi-channel marketing, a company might sell to one group of customers using telephone selling and no intermediaries, while another target group may be marketed to through a network of dealers, since these customers require after-sales service and technical advice. Although there are advantages to be gained through using several different channel configurations to different target customers, multi-channels can give rise to increased costs if not controlled. They can also give rise to problems of conflict between different channel members where several channels are used, particularly where one type of channel member feels that their contractual rights are being infringed. An example is where the marketer uses a system of ‘appointed’ distributors for the company’s products. In return for being granted ‘exclusive’ distribution rights in a particular geographical area a retailer may enter into a formal agreement with a supplier. In exchange for these ‘exclusive’ rights, the dealer may agree not to stock and supply other competitive brands. Unsurprisingly, ‘exclusive’ dealers feel aggrieved if they find that the brand they have been appointed to sell in a given are can be purchased direct over the Internet often at a price the dealer cannot hope to match.

Growth of direct channels

Besides being an element of the promotional mix, direct forms of marketing can be considered as sales channels. Clearly, the growth of direct marketing methods such as catalogue selling and direct mail are examples of developments in channels as well as promotion. In addition to direct marketing channels, another key area of growth in direct distribution is the development of home shopping mainly through the Internet.

Internet channels

The Internet has brought about significant changes to existing channels e.g. traditional booksellers, travel agents and record stores have had to cope with major changes in how customers purchase. Jeff Bezos founded Amazon in Seattle in 1994. It started as an Internet bookseller and shocked traditional retailers. From virtually nothing, Amazon built substantial sales in a very short space of time. Without having to support expensive retail outlets, Amazon was able to undercut the prices of conventional book retailers. The company added the facility for buyers to write their own book reviews. People began to look at Amazon as more of an on-line community and not just a place to make purchases. Amazon diversified into DVDs, video games, toys, clothing, beauty products, household goods and other items.

Mail order shopping at home has been around for a long time. In 1744 Benjamin Franklin formulated the basic mail-order concept in the USA when he produced a catalogue selling scientific and academic books. New forms of home shopping take this concept of selecting goods at home and ordering further. Access to cheap computing power at home has enabled marketers to develop systems of real time shopping where customers call up descriptions and pictures of products on their computer screen, search through computer-based catalogues, and order and pay over the Internet through charge cards. Virtual reality shopping is now commonplace where the home shopper calls up the shopping mall onto their screen and moves to different selected outlets, taking trips down different aisles in the retail outlet, and even selecting products from the ‘shelves’ for closer inspection. The customer places an order through the Internet and has it delivered. Large supermarket groups offer such facilities.

A fast growing area of home shopping has been shopping channels on the television. Cable television in particular has fostered this growth; in the United Kingdom many television companies have a shopping channel where customers view products and services and buy direct using only the television, a credit card and the telephone. Home shopping is advantageous for the elderly and infirm and it is likely that this type of retailing will continue to grow. As Ozuem, Howell and Lancaster conjecture:

Marketing communication is in need of reinvention in respect of its key concepts, methodologies and prevailing procedures to ensure their appropriateness for the evolving global interactive market-space. This is a challenge for both theoreticians and communications specialists.

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