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    How Channel Members Add Value

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    Subrata Bakshi
    This document discusses how channel members add value in marketing. It explains that channel members bridge time, place, and possession gaps between producers and consumers by breaking down large product quantities into smaller amounts wanted by consumers. Producers rely on intermediaries for their experience, contacts, and scale of operations. Channel members perform key functions like information gathering, promotion, negotiation, physical distribution, and financing to complete transactions and fulfill orders. Functions are assigned to channel members who can perform them most efficiently to add value at the lowest cost.

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    How Channel Members Add Value

    Uploaded by

    Subrata Bakshi
    79 views5 pages
    This document discusses how channel members add value in marketing. It explains that channel members bridge time, place, and possession gaps between producers and consumers by breaking down large product quantities into smaller amounts wanted by consumers. Producers rely on intermediaries for their experience, contacts, and scale of operations. Channel members perform key functions like information gathering, promotion, negotiation, physical distribution, and financing to complete transactions and fulfill orders. Functions are assigned to channel members who can perform them most efficiently to add value at the lowest cost.

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    This document discusses how channel members add value in marketing. It explains that channel members bridge time, place, and possession gaps between producers and consumers by breaking down large product quantities into smaller amounts wanted by consumers. Producers rely on intermediaries for their experience, contacts, and scale of operations. Channel members perform key functions like information gathering, promotion, negotiation, physical distribution, and financing to complete transactions and fulfill orders. Functions are assigned to channel members who can perform them most efficiently to add value at the lowest cost.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    79 views5 pages

    How Channel Members Add Value

    Uploaded by

    Subrata Bakshi
    This document discusses how channel members add value in marketing. It explains that channel members bridge time, place, and possession gaps between producers and consumers by breaking down large product quantities into smaller amounts wanted by consumers. Producers rely on intermediaries for their experience, contacts, and scale of operations. Channel members perform key functions like information gathering, promotion, negotiation, physical distribution, and financing to complete transactions and fulfill orders. Functions are assigned to channel members who can perform them most efficiently to add value at the lowest cost.

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    Bangabandhu Sheikh Mujibur Rahman Science

    and Technology University

    An assignment
    On
    How Channel Members Add Value

    Course Title: Seminar on Principle of Marketing


    Course Code: MKT 151

    Submitted to

    Mr. Tapas Bala

    Lecturer

    Department of Marketing

    Bangabandhu Sheikh Mujibur Rahman Science and Technology University

    Submitted by

    Name: Pritha Das

    ID No: 20150118010

    1st Year, 2nd Semester

    Session: 2015-2016

    Department of Marketing

    Bangabandhu Sheikh Mujibur Rahman Science and Technology University

    Date of submission: 04/01/2017

    How Channel Members Add Value


    In making products and services available to consumers, Channel members add value by bridging the
    major time, place, and possession gaps that separate goods and services from those who would use
    them. Some Producers sell their goods to final users. But most use intermediaries to bring their
    products to market.
    Producers use intermediaries because they create greater efficiency in making goods available to
    target markets. Intermediaries offer the firm more than it can achieve on its own through their contacts,
    experience, specialization, and scale of operations.

    From the economic system’s point of view, the role of marketing intermediaries is to transform the
    assortment of products made by producers into the assortment wanted by consumers. Producers make
    narrow assortments of products in large quantities, but consumers want broad assortments of products
    in small quantities. Marketing channel members buy large quantities from many producers and break
    them down into the smaller quantities and broader assortments wanted by consumers.

    Figure A shows three manufacturers, use direct marketing to reach to the customers.
    Figure B shows the three manufacturers working through one distributor, which contacts with the
    customers.
    In this way, intermediaries reduce the amount of work that must be done by both producers and
    consumers.

    For Example: KOHINOOR CHEMICAL CO. (BD) LTD makes 10,00,000 pieces of Tooth-paste each
    day, but you want to buy only one at a time. So big food, drug, and discount retailers, such as
    Superstore, Shoppers Drug Mart, and Wal-mart, buy tooth-paste by the truckload and stock it on their
    store shelves. In turn, you can buy a single tooth-past, along with shopping cart full of small quantities
    of toothpaste, shampoo, and other related products as you need them. Thus, intermediaries play an
    important role in matching supply and demand.

    Members of the marketing channel perform many key functions.


    Some help to complete transactions:

    1) Information: Gathering and distributing marketing research and intelligence information about
    actors and forces in the marketing environment needed for planning and aiding exchange.
    2) Promotion: Developing and spreading persuasive communications about an offer.
    3) Contact: Finding and communicating with prospective buyers.
    4) Matching: Shaping and fitting the offer to the buyer’s needs, including activities such as
    manufacturing, grading, assembling, and packaging.
    5) Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or
    possession can be transferred.

    Others help to fulfill the completed transactions:


    1) Physical distribution: Transporting and storing goods.
    2) Financing: Acquiring and using funds to cover the costs of the channel work.
    3) Risk taking: Assuming the risks of carrying out the channel work.

    And a new item that has been added to the list of functions to be performed within the supply chain is
    environmental sustainability.
    The question is not whether these functions need to be performed they must be but rather who will
    perform them. To the extent that the manufacturer performs these functions, its costs go up and its
    prices must be higher. When some of these functions are shifted to intermediaries, the producer’s costs
    and prices may be lower, but the intermediaries must charge more to cover the costs of their work. In
    dividing the work of the channel, the various functions should be assigned to the channel members who
    can add the most value for the cost.

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