Choosing the best channel marketing strategy involves considering factors such as target market, distribution costs, product type, and desired level of service. A company must also consider whether to use a wholesaler or direct marketing, and whether to use a hybrid form of multi-channel marketing.
To choose the best channel marketing strategy, several considerations need to be considered. Target market, distribution costs, desired level of service, product type, and product identity or positioning are all important factors. A channel marketing strategy works best when it aligns with an organization’s core goals.
Before a business can design an effective channel marketing strategy, it must consider who it is trying to reach. The attitudes, perceptions, lifestyles and purchasing patterns of the target consumer are fundamental. For example, a company that produces high-quality shoes made with fine leather probably wouldn’t want to distribute their product through a retailer. Instead, choosing an upper-middle-range department store would better fit the product image and reach those customers who were likely to be looking for that type of shoe.
Distribution costs come into play when considering the options of using a wholesaler or in-house staff to sell directly to retail accounts. Some companies even choose to bypass the retailer and sell directly to the end consumer, which is called direct marketing. An adequate supply of internal resources and efficiency are required to adopt a direct marketing approach. While distribution costs are generally higher when using a wholesaler, they can be more efficient and have an established network of relationships.
Another important factor in choosing the best channel marketing strategy is the type of product. A company should be very careful when choosing a marketing approach for highly specialized or technical products. Niche markets, which are smaller segments with specific or unique needs, might be best served through a particular type of retailer or mail order catalog. Women who wear oversized shoes are an example of a niche market.
Products aimed at niche markets lack the potential for mass consumer purchases of goods such as bread and eggs. It would not be in a company’s best interest to choose a channel distribution strategy focused on mass merchandising. Instead, the combined use of small specialist retailers and direct sales could prove more profitable. A straightforward strategy would also likely make it easier to identify the company’s customer base and employ relationship-based marketing techniques.
The desired level of service is an important consideration in developing a channel marketing strategy. Some businesses may want to differentiate themselves by providing a more personalized experience. They may not be able to achieve this without the use of direct selling. If a higher level of customer education and training is required to use the product, a distribution strategy involving third-party wholesalers and resellers may not be suitable.
Organizations may choose to use a hybrid form of multi-channel marketing or distribution. This is most commonly seen among companies that distribute their products through brick-and-mortar retail outlets and online direct internet platforms. A multi-channel approach is best for companies whose products have different target markets. For example, a computer manufacturer might distribute its low-end introductory model through a discount retailer, while still offering its high-end models through mail and Internet ordering.
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