What Are the Characteristics of Marketing Channels?

Marketing channels have several key characteristics. Companies must properly match those characteristics with their products and customers when deciding on a distribution strategy. One consideration when choosing a distribution channel is control. A small company has less control if it uses multiple channels or a more extensive distribution network. The upside is that small businesses may benefit from the expertise of certain distributors.

Direct or Indirect

Marketing channels can be direct or indirect. For example, online retailers sell directly to customers, as do movie theaters, beauty salons, independent grocers and hardware stores. However, some small manufacturers use channels such as wholesalers and retailers to sell their products. They may sell to wholesalers -- who, in turn, sell to retailers -- or sell directly to retail stores. The number of channels is largely based on a product's markup or profit margin. Small companies use fewer marketing channels when profit margins are lower. The reason is that wholesalers and retailers must also profit from the sales.

Independent or Dependent

                                                                                                                                                          Small companies may also use independent or dependent marketing channels. A manufacturer's representative is an example of an independent marketing channel. A manufacturer's rep usually sells similar products for multiple manufacturers. He tries to push the better selling brands in retail stores, but he's not dependent on sales of those particular brands. He'll gladly sell other brands because he's still profiting. On the other hand, small manufacturers are dependent on wholesalers to market their products to retailers. They also rely on retailers to properly execute their promotions and sales.
Specialized

Marketers must also consider using specialized or select channels to sell their wares. For example, a small women's fashion company may sell its higher-priced clothing and accessories in select boutiques or women's specialty stores. That way the fashion company can better target its customers, who likely have higher incomes or more expensive tastes in clothing. Alternatively, a manufacturer that sells less expensive clothing may have more options for selling its products.

Exclusivity

                                                                                  

Some small manufacturers may only allow one dealer to carry its products. The dealer may earn its exclusivity as a result of its expertise and training methods. Moreover, some small manufacturers or wholesalers might not rely on any distributors or external channels to sell their products. Instead, they may create their own retail stores to sell the products. This is a common practice with electronics and cell phone companies.