Overview
This lecture covers the structure and types of marketing channels in B2C and B2B markets, discusses multiple and alternate channel strategies, examines disintermediation, and explains approaches for firms to enter foreign markets.
Types of Marketing Channels (B2C & B2B)
- Direct channels involve only the producer and the consumer, with no intermediaries.
- Indirect channels use intermediaries (wholesalers, distributors, agents, retailers) between producers and consumers.
- B2C channels include agents, wholesalers or distributors, retailers, and then consumers.
- B2B channels are similar but end with business or government users rather than consumers.
- Industrial distributors in B2B supply products for business/government use, not for resale.
Disintermediation: Pros and Cons
- Disintermediation means removing intermediaries to sell products directly to customers.
- Benefits include lower costs and greater control for producers.
- Drawbacks are producers taking on intermediaries' functions, such as storage and distribution.
- Some products or companies cannot feasibly bypass intermediaries due to logistics or customer preferences.
Multiple and Alternate Channels
- Companies often use more than one marketing channel to reach different target markets.
- Alternate channels can include selling online, in store outlets, or through mobile alerts.
- Integrating multiple channels increases customer loyalty and provides a consistent experience.
- Strategic channel alliances, like co-locating products and services, can expand market reach.
International Marketing Channels
- Entering foreign markets can involve exporting, franchising, licensing, joint ventures, or direct investment.
- Challenges include navigating complex local intermediary systems, regulations, corruption, or government restrictions.
- Some countries require joint ventures or prohibit foreign ownership.
Key Terms & Definitions
- Direct Channel — a distribution route with only the producer and the end user.
- Indirect Channel — involves one or more intermediaries between producer and consumer.
- Disintermediation — the removal of intermediaries in the supply chain.
- Industrial Distributor — a firm supplying products for business/government use, not for resale.
- Strategic Channel Alliance — agreement between firms to sell products through each other's channels.
- Exporting — selling products directly to foreign customers or businesses.
- Franchising — allowing others to use a company’s business model and brand for a fee.
- Licensing — permitting another firm to use patents or trademarks for a fee.
- Joint Venture — two or more firms share ownership and control of a new business.
Action Items / Next Steps
- Review why some products are better suited to direct channels than others.
- List examples of companies using multiple marketing channels.
- Reflect on the value intermediaries bring to marketing channels.
- Study the main challenges companies face when entering foreign markets.