How channel members add value

Why do producers give some of the selling job to channel partners?

It happens because giving up some control over how & to whom they  sell their products . Producers  seek intermediaries because they're  the only one who bring products to market  through their contracts,  experience,  specialization  & scale of operation, intermediaries.

In this section , three manufacturers are found . Everyone use direct marketing to reach three customers .This system requires needs nine different contacts.

Above figure shows that three manufacturers working through one distribution channel; this distributor contacts three customers. It needs only six contacts. In this above way, distributors reduce the work of both producers & customers. 

From the economic's system point of view, the role of marketing intermediaries always transfer the product into different categories & provide to customers  how many or how much they want. At first , producers produce large quantities of product under narrow assortment but consumers  want large assortments of product into small quantities.  That's why marketing intermediaries work for it. They buy large quantities from producers & break them down into the smaller quantities or desired by consumers.

For example: Unilever every week produce large quantities of toothpaste, soap,shampoo, hand wash. Their marketing intermediaries play an important role of distribution this product according to matching of demand & supply.

Marketing channel member add value by making product available  to consumers. Members also have available time, place, possesion gaps that separate goods & services from those who use them. Marketing channel members perform many key functions.  This're:-

● Information :- It is a way of gathering & distributing information about consumers, producers, suppliers & other forces of marketing environment;  They needed do planning & aiding exchange.

● Promotion:-This is the way of developing  & spreading persuasive communication  about an offer .

● Contact:- It's finding & communicating with prospective  buyers.

●Matching :It 's mainly shaping offers to meet tbe buyees needs incluing activities shch as manufacturing, grading , assembling & packaging.

● Negotiation:- They reach an agreement on price & other terms so that ownership & possession can be transferred easily.

●Physical  distribution:- This is actually transporting & storing goods.

● Financing:- It's acquring & using funds to cover the costs of the channel work.

● Risk taking:- Measuring the risks of carrying it the channel work.

It's not necessary to perform all the functions  but who  maintain  all this probably  it costs go up then price must be higher. If some are not perform then costs & prices may be lower . Here, one thing we should mention that the various functions should be assigned to the channel members who can add the most value for the cost.