The paper 'Applied Channel System Assessment" is a good example of a marketing assignment. There are basically eight universal flows; these include the physical possession, ownership, promotion, negotiation, financing, risking, ordering and payment. According to the channel management schematic, efficient channel responds to the recognition of end-users’ service output requires several takes, including deciding on a channel structure, splitting the workload of the channel among the available channel members, creating and fostering the desired degree of commitment in the channel system and updating channel design to minimize gaps in channel performance.
A basic understanding of how the work of a marketing channel gets done is fundamental in answering questions. Manufacturers, wholesalers, and retailers participate in marketing channels to create the service outputs like bulk breaking, quick delivery, spatial inconvenience and assortment and variety demanded by their target end-users. Just as a production plant produces physical products, the members of a marketing channel are also engaged in productive activity. Specific channel members may specialise in performing one or more flows and may not participate at all in the performance of other flows and may not participate at all in the performance of other flows.
Further, it may be tempting to remove a particular channel member from the channel but the flows performed by that channel member cannot be eliminated. Mary Kay revolves its strategies around independent beauty consultants, who are able to fill the orders on the spot given the fact that the product lines are limited and the distribution system involves only one wholesale sale (from company to consultant) and one retail sale (from consultant to the buyer). This also means that the consultant plays the role of the wholesaler, the distributor and the retailer.
The independent beauty consultants earn their commission from the sales of cosmetics. In effect, this means that the organisation is made up of many entrepreneurs and the success of each consultant’ s business adds to the success of the company. Such arrangements are also known as pyramids. Given the fact that markets have increasingly become more and more splintered, and the fact that sub-segments have slowly evolved, direct sales organisations have been forced into adopting the ownership through leadership option (McKenna, 1991).
This perspective is based on the notion that the true goal of marketing is not merely to create products of sufficient value to allow a profitable operation of the firm. Rather the ownership-through-leadership model dictates a single-minded focus on one part of the market, ultimately resulting in the erection of a significant buffer from competitive forces (Rosenbloom, 1990). Where direct selling is concerned, channel partners tend to specialise in the performance of one or more flows and may not participate at all in the performance of other flows (Kotlet et al. , 2002).
Every flow contributes to the production of valued service outputs but also carries an associated cost. Physical possession, for example, refers to all channel activities concerned with the storage of goods including their transpiration between two-channel members (Coughlan, 2007). Promotion flows in marketing channels can take many forms including personnel selling by an employee or outside sales force, media advertising, sales promotions and other public relations related activities (Coughlan, 2007). Negotiation occurs when terms of sale or of the maintenance of the ongoing relationships with the market are decided.
Financing costs are inherent in the terms of sale from one level to the channel and finally to the end-user. Ordering and payment flow costs are the total costs incurred in the actual purchase of and payment for the product (Coughlan, 2007).
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