Channel Marketing Strategy – The Basics
Benefits of channel strategies for distribution
While each channel strategy has its own distinct benefits, all channel strategies share a few of the same advantages. A well-developed channel strategy can help you:
What is a channel strategy?
A vendor’s plan to move a good or service through a chain of commerce to the consumer is known as a “channel strategy.” Channels serve two primary functions. Selling a customer a good or service comes first, and providing a good customer experience comes second. Companies can use direct or indirect channels to distribute their products and services. Here is how each of these types of channels operates:
All the steps a vendor takes to connect with their target customers through various platforms or channels are included in a comprehensive channel strategy. Depending on a company’s overarching marketing and sales objectives, each channel strategy may have a different objective.
A new business might want to develop a channel strategy that focuses on building brand awareness, while an established business might prefer to concentrate more on entering an untapped market. Depending on the goods and services it offers, the size of its target market, and whether it is a B2B or B2C company, an organization can tailor its channel strategy.
Types of channel strategies
To reach their customers, sell their products, and deliver a great customer experience, businesses can choose from a variety of channel strategies. Some of the most common types of distribution channel strategies are listed below:
Retail
A business that uses retail as a distribution channel has the option of selling its goods to customers directly in-person, online, or over the phone. Additionally, it might sell its products on a third-party online marketplace. Some benefits of using retail as a distribution channel include:
Wholesale
The wholesale distribution channel is used by businesses to distribute their goods to various retailers or outlets in large quantities. These outlets and retailers then resell the products to consumers. Because wholesale distributors save money on labor and transportation by placing larger orders, they can sell their goods for less money. Some benefits of using the wholesale distribution channel include:
Direct to consumer
Many businesses decide to market their goods directly to customers. Direct-to-consumer businesses frequently reach their customers by using catalogs, telemarketing, social media advertisements, or in-person sales. Utilizing the direct to consumer distribution channel has some advantages, such as:
Business to business (B2B)
Businesses use the business-to-business (B2B) distribution channel when they want to sell their products to other businesses. This distribution channel is distinct from the wholesale distribution channel because the companies buying the goods intend to use them rather than resell them to additional customers. For instance, a business that manufactures teleconference equipment may sell its goods directly to a business that intends to use them for meetings. Some benefits of using the business-to-business distribution channel include:
Franchising
Companies may decide to use the franchising distribution channel in place of constructing their own physical storefronts. A company does this by selling a person the rights to their brand name, product, or service in order for them to open a franchise location. Even though the franchise location is owned by the individual, the company still has a lot of control over it thanks to contractual arrangements. Some benefits of using the franchise distribution channel include:
Dealer network
Companies that use the dealer network distribution channel contract with a network of dealers, agents, and brokers to sell their products on their behalf. This replaces the need for an in-house sales team. If you want to quickly establish connections with a particular industry and have a niche product, using the dealer network distribution channel can be advantageous. As an illustration, an auto insurance provider might employ a wide network of brokers to locate potential clients and sell them insurance plans. Some benefits of using the dealer network distribution channel include:
Value-add resellers
Many businesses opt to sell their inventory to value-add resellers (VARs), who could upgrade or bundle the products with other goods to raise their value. For businesses with specialized products, this distribution channel is effective. Some benefits of using the value-add resellers distribution channel include:
What is an omnichannel distribution strategy?
Multiple distribution channels are used in an omnichannel distribution strategy to give customers different ways to buy the same product from a business. For instance, a manufacturer of cell phone cases might decide to sell wholesale to enable customers to buy their products from a sizable third-party retailer while also selling their products online through an e-commerce website.
There are a few logistics that businesses need to take into account to make sure the consumer experience is seamless from one distribution channel to the next, even though using an omnichannel distribution strategy can help businesses reach more consumers and boost sales. The following capabilities of consumers should be taken into account by logistics companies:
Tips for creating a channel strategy
Here are some pointers to assist you in developing a successful channel strategy:
Identify your target audience
By creating a target audience, start by identifying your ideal customers. The group of people most likely to buy your product is known as your target audience. Analyze your current audience to help you pinpoint the essential demographics, interests, beliefs, and objectives shared by your target market.
You might also think about the kind of person who would benefit most from using your product. Finally, to assist you in creating a target audience that is diverse, research the consumer base of your competitors. In order to better serve your customers, you can use this information to understand their needs and preferences.
Determine what channels your consumers use
By figuring out how your ideal customers buy things, you can figure out what channels they use. For instance, a business that sells shoes might realize that customers buy their apparel items from stores and online marketplaces, whereas a business that sells accounting software might discover that the B2B distribution channel is the most effective way to reach their target market.
Although you might discover that your customers buy your products through a variety of distribution channels, try to start out with fewer channels. By doing so, you can strengthen your channel strategy and lay the groundwork for potential future growth.
Analyze your in-house capabilities
Spend some time analyzing your internal resources, including your workforce’s size and skill set, your budget, your inventory storage area, and your overall capabilities. This can assist you in determining which channel distribution strategy will benefit you the most. For instance, a laptop manufacturer may decide to use the retail distribution method by opening their own brick-and-mortar location or online store, but after assessing their internal capabilities, they may realize that selling their goods wholesale would lower their inventory costs and improve their ability to reach consumers.
Define your business goals
Decide which channel strategy will best help you achieve your business goals by defining them. You might think about your goals, such as boosting sales, acquiring lifelong clients, building brand awareness, or profit margins. Selling your goods wholesale can help you reach a wider audience and build brand awareness, whereas selling directly to customers can give you more control over your brand and result in higher profit margins.
Develop a customer journey map
Companies create customer journey maps to comprehend the steps customers take prior to making a purchase from them. Typically, a customer journey map starts with the first time they interact with a brand and ends when they make a purchase. Based on your current distribution channels, think about the stages your customers go through as you create a customer journey map. Some stages you might include are the:
This can help you find areas where your distribution channel strategy has room for improvement, enhance the customer experience, and boost sales.
Measure your progress
Create a set of key performance indicators (KPIs) that you can use to gauge each distribution channel’s effectiveness. This can help you identify which channels perform the best. Some KPIs you can use include:
FAQ
What are the elements of a channel strategy?
- Email.
- Social media.
- Your website.
- Content marketing.
- SEO.
- Direct mail.
- TV ads.
- Print ads.
What are the 4 channels of distribution?
- Your Organization: The foundation is your organization’s operations and structure.
- Alliances: Both Direct Alliances and In-direct alliances. …
- Distributors: Your most important middle-man. …
- Reseller: Where your product is actually sold to a customer.
What is a channel strategy in sales?
Direct selling, selling through intermediaries, dual distribution, and reverse logistics channels are the four different types of distribution channels that exist. Each of these channels consists of organizations whose aim is to control the exchange of goods physically and through transactions.
