Marketing channel Definition A marketing channel is a

Marketing channel � 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.

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 producer to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the producer). �

A marketing channel can be short as being direct from the producer 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. �

The Examples of Trade Channel

1(c) the producer sells his product through more - than one middleman If Producer 2(a) Whole seller Retailer Consumer Industrially User Producer Sells Representative Production Cell , Whole seller Industrial user

� Roles of marketing channel in marketing strategies: Links producers to buyers. Performs sales, advertising and promotion. Influences the firm's pricing strategy. Affecting product strategy through branding, policies, willingness to stock. Customizes profits, install, maintain, offer credit, etc.

Factors to be consider in selecting middleman � � � Producer should consider these points in selecting middleman in order to sell his goods. i. Number of Consumer If the number of consumer is not scattered , then direct sell is possible. But if the numbers of consumers are scattered 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 be possible, But if the area of a product is larger and the sell is large, then direct sell will not be possible,

� � � iii. Amount of purchase The amount of purchase and choice of consumer influence the middleman performance. If the volume of purchase is large then middlemen can be appointed. iv. Nature of Market If the product can be sold in consumer market then direct sell can be possible. If the product is suitable for industrial market, then agent should be appointed. v. Unit Price If the unit price is higher, but number of producer is smaller, then the product can be sold by the own sales man. But If the unit price is lower, and number of producer is larger, then the product can be sold by the middlemen.

� � vi. Sequences of buyer If the Buyers are clustered in a particular point, then own sales man is enough, otherwise middleman is necessary. vii. 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.

Functions of an Intermediary 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: �

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 buyer-seller 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. ). � 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.

Advantages of using an intermediary � � � 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.

� 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 midand small-scale producers.

Disadvantages of using an intermediary 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: �

fear of losing control fear of losing customer contact fear of losing customer ownership fear of opportunistic behavior fear of inadequate communication 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

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. �

Marketing Channel of Rice

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. � 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 broker and have commission from both buyer and seller. �

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. �

Marketing channel of jute Wholesaler Producer Bangladesh Jute mill Bapari/Faria Jute Mill Aratdar/Broker Kacha Baler Bangladesh Jute Mill Corporation Pacca baler Bangladesh Jute Export corporation Exporting agent Foreign Purchaser Fig: Marketing channel o f Jute Retailer

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 jute marketing those middleman are the first linkage. They buy loose jute and sell these to Kacha baler or Aratdar or directly to jute mills. � Aratdar and 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’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. �

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 purchaser are occurred from Kacha bale to 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 marketable amount and their expected price & tentative purchasers are also selected by them. �

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. �