Transcript Marketing channel - anuppstu | Prospect of Agricultural

Definition
 A marketing channel is a set of practices or
activities necessary to transfer the ownership of
goods, and to move goods, from the point of
production to the point of consumption and as
such which consists of all the institutions and
all the marketing activities in the marketing
process. A marketing channel is a useful tool
for management.
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Roles of marketing channel in marketing strategies:
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Links producers to buyers.
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Performs sales, advertising and promotion.
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Influences the firm's pricing strategy.
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Affecting product strategy through branding,
policies, willingness to stock.
Customizes profits, install, maintain, offer
credit, etc.
An example of this is an apple orchard: Apple
orchard > Transport > Processing factory >
Packaging > Final product to be sold > Apple pie
eaten
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An alternative term is distribution channel or
'route-to-market'. It is a 'path' or 'pipeline'
through which goods and services flow in one
direction (from vendor to the consumer), and the
payments generated by them flow in the opposite
direction (from consumer to the vendor).
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A marketing channel can be as short as being
direct from the vendor to the consumer or may
include
several
inter-connected
(usually
independent
but
mutually
dependent)
intermediaries such as wholesalers, distributors,
agents, retailers. Each intermediary receives the
item at one pricing point and moves it to the next
higher pricing point until it reaches the final
buyer.
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1(a) If the product is directly sold to the consumer-
Producer
Consumer
1(b) If the producer sells his product through a single middleman-
Producer
Middleman
Consumer
1(c) If the producer sells his product through more than one middleman-
Producer
Whole seller
Retailer
Producer
2(a) Industrially User
Producer
Sells Representative,
Production Cell
Whole
Seller
Industrial
User
2(b) If the product is handled over more than four times,
i. Broker
Whole seller
Sells Representative
Purchase Representative
Retailer
Consumer
Or
Contactors
Local Purchaser
ii.
Broker
Producer
Local
Purchaser
Commission
Contactors
Merchant
Retailer
Whole seller
Consumer
iii.
Producer
Sells Representative
importer
Broker
Whole seller
Producer
Retailer
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Producer should consider these points in selecting middleman
in order to sell his goods.
i. Number of Consumer
If the number of consumer is big, then direct sell is possible.
But if the numbers of consumers are scatteredly available then
direct sell is not possible.
ii. Area of Market
If the area of a product is smaller and the sell is little, then
direct sell will not be is possible, because overhead cost will be
higher without extending the area of market.
iii. Regularness of Market
The number of purchase should be reasonable, and then the
producer can sell his product by his own shop. Even if the
amount of product is lower.
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vii. Sequences of Purchaser
If the Purchasers are clustered in a particular
point, then own sales man is enough, otherwise
middleman is necessary.
viii. Consumer Purchasing Habit
It should be consider that, purchasing habit of
consumer is highly preferable, if the consumers
are habituated to purchase from middlemen,
then middleman is to be appointed. Otherwise
middleman is not necessary.
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iv. Amount of purchase
The amount of purchase and choice of consumer
influence the middleman performance. If the amount is
lower the producer can appoint commission merchant.
v. Nature of Market
If the product can be sold in consumer goods market
then direct sell can be possible. If the product is suitable
for industrial product market, then agent should be
appointed.
vi. Unit Price
If the unit price is higher, but number of producer is
small, then the product can be sold by the own sales
man.
Marketing intermediaries, also known as middlemen
or distribution intermediaries are an important part of
the product distribution channel.
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Intermediaries are individuals or businesses that
make it possible for the product to make it from the
manufacturer to the end user, essentially facilitating the
sales process. According to Business Dictionary, the
four basic types of marketing intermediaries are agents,
wholesalers, distributors and retailers.
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Agents
The agent as a marketing intermediary is an independent
individual or company whose main function is to act as the
primary selling arm of the producer and represent the producer to
users. Agents take possession of products but do not actually own
them. Agents usually make profits from commissions or fees paid
for the services they provide to the producer and users.
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Wholesalers
Wholesalers are independently owned firms that take title to
the merchandise they handle. In other words, the wholesalers own
the products they sell. Wholesalers purchase product in bulk and
store it until they can resell it. Wholesalers generally sell the
products they have purchased to other intermediaries, usually
retailers, for a profit.
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Distributors
Distributors are similar to wholesalers, but with one key
difference. Wholesalers will carry a variety of competing
products, for instance Pepsi and Coke products, whereas
distributors only carry complementary product lines, either Pepsi
or Coke products. Distributors usually maintain close
relationships with their suppliers and customers. Distributors will
take title to products and store them until they are sold.
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Retailers
A retailer takes title to, or purchases, products from other
market intermediaries. Retailers can be independently owned and
operated, like small “mom and pop” stores, or they can be part of
a large chain, like Walmart. The retailer will sell the products it
has purchased directly to the end user for a profit.
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Whether offline or online, if the consumer
cannot find a place where he or she can complete
the transaction, then regardless of the quality of
the rest of the marketing mix, the marketing will
be a disaster and sales will plummet. This is why
channel
management,
especially
the
management of distribution channels, is crucial
to those in marketing.
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Unlike decisions regarding products, pricing,
or promotion, distribution decisions require
both intra-organizational as well as interorganizational skills.
The product's path to the market frequently
involves interaction with external agencies or
intermediaries that bridge the gap between
the point of production and the point of sale.
Deciding whether to use an intermediary in the
distribution channel depends on many factors, but
essentially it involves determining whether the needs of
the consumer can successfully be met by the available
resources and skills of the producer. The three basic
functions performed by an intermediary in the
distribution channel are:
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1.
Transactional: This function involves adding value to the
distribution channel by bringing in the intermediary's
resources to establish market linkages and customer
contacts. The intermediary either directly undertakes the
marketing and sales function or helps to establish buyerseller relationships by serving as a link between the
manufacturer and the retailer.
2.
Logistical: This function involves the physical
distribution of goods. It involves sorting and storing
supplies at locations within the reach of the end customer.
It also breaks up the bulk production of the manufacturer
into smaller portions and may include the transportation
of smaller shipments to intermediaries or retailers further
down the channel of distribution.
3. Facilitating: Although often confused with logistics, the
facilitating functions of intermediaries supplement the entire
marketing flow of the product and are separate from
logistics. The facilitating functions include financially
supporting the marketing chain by investing in storage
capabilities. They may include facilitating sales by helping
the consumer buy even when he or she does not have cash
(through financing plans, purchase agreements, etc.).
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Together, these functions performed by the intermediary
ensure market coverage, reduce the cost of market
coverage, increase the availability of cash flow in the
distribution channel, and increase end-user convenience.
A producer can bypass an intermediary by elimination
or substitution, but the tasks performed by the
intermediary cannot be eliminated.
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The advantages of using intermediaries stem
from the core economics of supply-chain
management: market coverage, customer
contacts, lower costs, systematic cash flow, etc.
The intermediary adds value to the marketing of
the product by bringing in specialization,
marketing knowledge, capacity to segment the
market, and selling skills that allow the marketer
to implement marketing strategies effectively.
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Intermediaries providing logistic support
increase convenience to both the producer
and the consumer by offering effective
delivery and pre- and post-purchase customer
service as well as facilitating manufacturer
services, making them indispensable to most
mid- and small-scale producers.
Manufacturers quite often see intermediaries as
parasites rather than assets. The disadvantages of using
an intermediary stem from psychological
apprehensions, market antecedents which have created
such apprehensions, and lack of managerial skills or
resources that are sufficient to balance and manage the
intermediary. Fears, which may come true if the
producer fails to manage the intermediary, might
include:
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fear of losing control
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fear of losing customer contact
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fear of losing customer ownership
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fear of opportunistic behavior
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fear of inadequate communication
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fear that the objectives of the intermediary will
conflict with those of the producer
fear that the intermediary will extract rather than add
to value
fear of poor market management
Furthermore, an intermediary may have many of the
same fears (except for the last two on the list). These
fears often undermine the working relationship between
a producer and an intermediary and keep them from
effectively utilizing each other's resources and
maximizing the potential of the marketing mix.
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In general the marketing channel of rice can be introduced as bigger. The marketing channel of
rice is as follows-
Producer
Government
sales Center
Rice Mill
Faria, Bepari, Village
Merchant
Aratdar / Store house
owner
Broker of sales zone
Ration Shop
Ration
Consumer
Retailer
Consumer
Fig: Marketing channel of Rice.
Rice Mill
Retailer
Faria, Bepari, and Village Merchant: These
middlemen are termed on different ways in different places.
They assemble rice from door to door of rice producer
farmers or from local markets. They fix up prices of rice by
negotiations. Now-a-days the beparies of deficit rice area
come to surplus areas and thus make a relationship between
the two areas.
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Aratdar / Store house owner: They are the second
middlemen of rice marketing channel. The business area of
Aratdar or Store house owner is comparatively widened than
that of Faria and Bepari. The Aratdar has to take risk bearing
program. They act as broken and have commission from
both buyer and seller.
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The Retailer: In rice business the retailer is the last
step of middleman. They buy rice from Bepari and
Aratdar as sell it to the consumer. They also buy rice
from general producer. In rice marketing channel
retailer has the most important role. For rationing
program government has selected buying center of rice
in surplus areas of the country. These buying centers are
involved in buying rice in selling price. It is not a wide
program. Only ration cardholders can buy rice from
rationing rice.
 At present no association of Beparies and Retailers
but in some other places there is association of Aratdar.
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Marketing channel of jute
Producer
Bangladesh Jute
Corporation
Bapari/Faria
Aratdar/Broker
Jute Mill
Kacha Baler
Pacca baler
Bangladesh Jute Mill
Corporation
Bangladesh Jute
Export
Corporation
Exporting agent
Foreign Purchaser
Fig: Marketing channel of Jute
Bapari/Faria: These types of middleman are biggest in
number. They move from door to door for collecting jute
from producer. They also collect jute from village market. In
jut marketing those middleman are the first linkage. They
busy loose jute and sell these to Kacha baler or Aratdar or
directly to jute mills.
 Aratdar amd Dalal: This type of middlemen helps to
find out purchaser of jute on behalf of producer, Faria or
Bapari. Before selling the jute it is to be kept under the
custody of Aratdar. Aratdar’s function is flexible. He acts on
commission. Some times he himself sells jute. His principal
function is to make contact between seller & purchaser. The
Dalal is engaged in the transaction of loose jutes. He
receives commission from both seller and purchaser. The
rate of commission depends on the situation of market.
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Kacha baler: This type of middlemen purchase loose
jute, make bales of it. These bales can not export before
turning it to pakka bale. So domestic seller and purchases
are occured in Kacha bale, pakka bale condition. The kacha
balers sells these to shipper , Pakka balers and local mills.
 Bale brokers: They are quite different type of brokers.
They deal with baled jutes. They are found in only some
selected place like Narayngang & Khulna .They make
linkage between Kacha balers, pakka baler shipper, and
some time inland mill. They make assessment of saleable
amount and their expected price & tentative purchasers are
also selected by them.
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Pakka baler/shipper: In most cases of shipper &
pakka baler is the same person or institution. Their
important sales centers are situated in near assembling
center. They turn kacha bales into pakka bales in
Narayngang, khulna & Chittagong.
 Broker in baled jutes: This type of middlemen are
engaged in making (written) contact of selling baled
jutes both as business performances in Narayngang,
khulna & Chittagong terminals.
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