Financing and Marketing Management

Unit 13 - Marketing Channel Functions and Flows

13.2. Number of Channel Levels
Marketing channels can be characterized by the number of channel levels. Each middlemen that performs some work in bringing the product and its title closer to the final buyer constitutes a channel level. Since the producer and final customer both perform some work, they are part of every channel. We shall use the number of intermediary levels to designate the length of a channel. Fig 7(a) illustrates several consumer-goods marketing channels of different lengths.

A zero-level channel (also called a direct- marketing channel) consists of a manufacturer selling directly to the final customer. The four major ways of direct marketing are door to door, home parties, mail order, and manufacturer owned stores. A one-level channel contains one selling intermediary, such as retailer. A two-level channel consists two intermediaries. In consumer markets, they are typically a wholesaler and a retailer. A three-level channel consists three intermediaries. For example, in the meatpacking industry, wholesalers sell to jobbers, who sell to small retailers.
High level marketing channels are also found but with less frequency. From the producer’s point of view, the problem of obtaining information about the end users and exercising control increases with the number of channel levels, even though the manufacturer typically deals only with the adjacent level.
Fig 7(b) shows channels commonly used in industrial marketing. An industrial-goods manufacturer can use its salesforce to sell directly to industrial customers. Or it can sell to industrial distributors who sell to industrial customers. Or it can sell through manufacturer’s representatives or its own sales branches directly to industrial customers, or use them to sell through industrial distributors. Thus zero; one and two-level marketing channels are quite common in industrial marketing channels