FIN 404 LESSON 8 MARKETING CHANNELS AND THE

EFFECT OF TECHNOLOGY

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Marketing Channels and the Effects of Technology
3.2 Overview of Marketing Channel
3.3 Classification of Marketing Channel
3.4 Types of Marketing Channel
3.5 Technology and Marketing Channel
4.0 Conclusion
5.0 Summary
6.0 Tutor Marked Assignment
7.0 Reference/Further Reading

1.0 INTRODUCTION

In the last two decades, the concept, structure, formation, and interactivity
of marketing channels have witnessed tremendous reformation from the
tradition channel design (Da Silva, 2008). The core to this transformation is
the application of information technology in managing the channel system.
This information is driven by technology, offer new scope of customer
relationship management and channels members‘ collaboration (Van
Bruggen, 2010).

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 explain the concept of marketing channel

 identify types and classification of marketing channel
 explain the influence of technology on marketing channel

3.0 MAIN CONTENT

3.1 Marketing Channels and the Effect of Technology

3.2 Overview of Marketing Channel

Conventionally, a marketing channel is a structure that is composed of

several interconnected bridges (Channel members) to deliver the product
from the manufacture to the end user or customer. According to Bucklin

57
MKT 402 MARKETING OF FINANCIAL SERVICES

(2000), a marketing channel is an organized network of agencies and

institutions that are functionally dependent. More so, Balocco (2012),
asserted that marketing channel is entirely denoted to performance of
certain activities that ensure the product or service distribution to the right
customer at the right time and place and in the most efficient and effective
way. Given the above definitions, it is pertinent to mention that the prime
objective of marketing channel is the movement of product from the
manufacturers through to the end consumers. A recent innovation in the
marketing channel system has brought about tremendous changes with the
application of internet and mobile technology.

3.3 Classification of Marketing Channel

A typical marketing channel can be classified into two-direct and indirect

channel. A channel is said to be direct when goods and services are sold by
manufacturers directly to final consumers without activities of the middle
men. In this case, producers transact business directly with end users. These
end users could be government, institutions, churches, educational
institutions, commercial businesses, companies, or even individuals.

On the other hand, an indirect channel entails a system whereby the

activities of middlemen are required in the movement of goods and services
from manufacturers to end users. According to Iyer (2003), an indirect
channel exists when intermediaries are inserted between the producer and
consumers and they perform numerous channel functions.

3.4 Types of Marketing Channels

There are basically four types of marketing channels. They are zero level,
one level, two levels, and three level channel. A zero level channel is also
known as a direct channel whereby no intermediaries are involved in the
movement of goods to consumer. A one level channel is when one
intermediary (either a wholesaler or retailer) is involved in the distribution
system. Furthermore, a two level channel involves activities of both
wholesalers and retailers in getting the product to the final user. Finally, a
three level channel exist where agents, wholesalers, and retailers are highly
needed in pushing the product to consumers.

3.5 Technology and Marketing Channels

The traditional view and structure of the marketing channel was amended
and restructured after the invention of the internet technology (Bucklin,
2000). This alternative channel that is pertinent to the virtual environment
is termed ―online channel‖. According to Boundless (2015), the
characteristics, functionality, interactivity, distribution flow and association
of different channel members, and the overall marketing strategy for this

58
MKT 402 MODULES

unique channel have drastically changed the marketing channel concept. It

may not be far from the truth to say that conventional channel manager has
really gotten momentum through the inclusion of the information
technology.

It is important to also say that mobile marketing and other marketing

decision support systems have assisted marketers and channel managers to
effectively and efficiently manage the marketing channel system. This has
brought about cost reduction, a more coordinated channel structure,
efficient dissemination of information to stakeholders or channel numbers,
and ultimately, enabled the consumer to get product with minimum stress
and at the right time and price.

SELF-ASSESSMENT EXERCISE

Identify the benefits of Technology in marketing channel

4.0 CONCLUSION

Based on scholarly works in this area and practical marketing channel

practices, this report has proven that technology has impacted positively on
marketing channel. This importance and benefits were highlighted to
further confirm the need to continually apply technology inventions in
managing the marketing channels.

5.0 SUMMARY

As can be deduced in this report, marketing channel has witness

tremendous changes especially with the growing application of technology
in businesses. These changes have been noticed in the way channel
members relate and interact with each other in a bid to satisfy both the end
uses of the product and other stakeholders within the channel structure.
Technology has undoubtedly provided better ways of managing the
marketing channel. Hence, its benefits are vividly highlighted in the body
of this report.

6.0 TUTOR-MARKED ASSIGNMENT

Identify and explain the different levels of marketing channel

7.0 REFERENCES/FURTHER READINGS

Buckhim, L. (2000). Theory of distribution channel structure: Institute of

Business and Economic Research, University of Califonia. Business
and Research 23(2), 124-144.

59
MKT 402 MARKETING OF FINANCIAL SERVICES

Balocco, R. Ghezyi, A. Rangone, A. and Totetti, G. (2012). A Strategic

Analysis of the European Companies in the ICT Sales Channel.
International Journal of Engineering Business Management, 4(2).1-
10.

Boundless (2015) Impact of Technology on Marketing Boundless

Marketing.

Iyer, G and Villas-Boas, J. (2003). A bargaining Theory of Distribution

Channels. Journals of Marketing Research 40(1), 80-100.

Van Bjuggen, G. (2010). The Impact of Channel Function Performance on

Buyer- Sector Relationships in Marketing Channels International
Journal of Research in Marketing 22(2), PP. 141-158.

Da Silva, A. (2008). Distribution Channel Structure: an Overview of

Determinants. Pearson Education.