Marketing Channel Strategy

The OmnI-ChAnnel eCOsysTem
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Total sales through such channels represent approximately one-third of the 
world’s annual gross domestic product, so understanding and managing these 
marketing channels is critical for most businesses.
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 For example, raw material and 
component product manufacturers often rely on distributors and manufacturer 
representatives to sell their offerings to original equipment manufacturers (OEMs), 
so that they can outsource various necessary functions like sales, business develop-
ment, education (or information), logistics, contracting, and order processing and 
financing. In addition, these intermediaries may share risk and help manage the 
customer relationship. Then the end-customer—that is, the OEM—assembles the 
components into finished products and services, which it sells to wholesalers and 
retailers, and the retailers ultimately make the products available to consumers. 
Figure 1.1 outlines some varied channel functions. A marketing channel strategy 
specifically defines the design and management of a channel structure to ensure 
that the overall channel system operates efficiently and effectively.
The end goal of any channel system is to make products and services available 
and easy for users to buy, in accordance with their preferences. Otherwise, the firm’s 
reach and attractiveness to buyers will be limited, with negative effects on firm 
sales. For example, a movie’s success strongly depends on the number of screens 
on which it is shown, so it is in the interest of movie producers to manage their 
distribution systems effectively. But any channel system also must be efficient and 
cost-effective.
The Changing Channel Landscape
Technological advances significantly affect channel landscapes, and as the role 
of physical stores changes, manufacturers and retailers face new conundrums. 

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