What Is Channel Management? (With Benefits and Types)

By Indeed Editorial Team

Published May 22, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Channel management strategies help companies diversify products and improve sales. These strategies help companies capitalize on their relationships with partners and vendors to attract more customers. A company's understanding of how to manage channels can assist its marketing team in creating campaigns and promotions relevant to different customer segments. In this article, we explain channel management, outline the benefits of these strategies, and discuss the various types of channel management systems.

What is channel management?

Channel management, also known as marketing management, is a tool that allows the marketing department of a company to make products and services available using different methods. There are various strategies that employees may use to distribute products, depending on the goals and objectives of the company. Channels are the different means marketers and other employees can use to create product awareness.

Marketing management may involve establishing partnerships and communicating with other individuals and companies. Channels that marketing teams may use typically include wholesalers, retailers, and agents. Before selecting a distribution channel, marketing teams consider the nature of the products and the target market's needs. Companies have varying sales expectations for their products, and they invest in the most valuable channels to increase their profit. The channel system can use physical and online distributors to market goods and services.

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Benefits of using channels

Here are some of the benefits of using channels:

Improves brand awareness

Marketing management lets employees diversify distribution channels and increase the popularity of products. These distribution channels enable marketing teams to increase brand awareness and reach customers outside of their target demographic.

Brand awareness increases the product's value, as customers trust its reliability, and allows the team to collect data about their target audience, which helps them optimize campaigns and make personal recommendations to customers. Multiple channels enable the team to receive feedback about various marketing campaigns and improve advertisements. In addition, marketing management systems allow the publicity team to create unique and exciting products for their existing customers.

Eases the purchasing process

A channel system offers consumers opportunities to purchase goods and services through different means. It can help consumers receive their products more conveniently and reduce the burden of distribution on employees. Marketing teams can even create discount packages and credit arrangements for productive wholesalers and retailers to encourage them to improve their sales.

A channel system provides wholesalers and retailers with technology to place and track supply orders and improve efficiency. It enables wholesalers to order and deliver products that cater to their customer niche, reducing the backlog and improving sales. The system also saves employees time by delegating the purchase and delivery process to wholesalers.

Increases direct purchases

A marketing management system ensures that the marketing team creates distribution channels according to the company's size and objectives. Some teams may supervise wholesalers and retailers' sales processes and provide them with marketing campaigns. While these campaigns improve sales for the wholesalers, they also increase direct purchases for the brand. Potential customers become familiar with the brand through the campaigns of wholesalers and may decide to purchase products directly from the company. If direct purchases increase, the marketing team can evaluate why customers make these purchases and use their findings to create a more efficient seller strategy.

Helps customers engage with the brand

Marketing channels allow a team to integrate publicity tools and engage with the target market. These channels create publicity for the brand and communicate the marketing team's brand message to share its vision. This allows customers to understand and engage with the brand, which can lead to customer loyalty if they believe in the company's values. Marketing teams can create personalized campaigns using the market analysis that wholesalers and retailers may provide. This can improve customer engagement by having them feel more connected to the brand.

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Ensures inventory and pricing accuracy

A good marketing management system can improve the inventory process, provide accurate pricing, simplify product tracking, and ensure accuracy in both inventory and pricing. Employees can create separate pricing categories for wholesalers and retailers. Some marketing teams prefer to implement dynamic pricing among distribution channels. Dynamic pricing allows the sellers in the distribution channels to set flexible prices according to the demand for products or services. The marketing team can create sellers' guidelines to integrate pricing and marketing efforts and can evaluate the various channels' performance and review or remove them as necessary.

Aids company growth

Distribution channels typically improve a company's sales by helping them market products to a larger audience. This increase in sales contributes to the overall growth of the company. For instance, the marketing team can design a channel to create customer segments and, based on them, provide personalized solutions and prices. Creating more profitable channels can also encourage investors to fund a company and establish it as a significant player in its industry.

Allows for remote operations

Employees use various software tools to handle the needs of a marketing management system. This technology can track inventory, manage supplies, and calculate prices. These tools allow employees to remotely operate the channel system and handle inquiries or complaints from wholesalers and retailers.

Types of channel management

Here are some types of marketing management systems:

Channel architecture

This system determines the structure and framework of the marketing channels. It describes how the marketing team outlines the process of delivering goods to the customers. There are different forms of channel architecture that the team can implement. Some teams decide to sell products to wholesalers rather than to retailers or customers directly. Marketing teams may also sell products to value-added resellers, who customize the products before selling them to customers.

Sales management

Sales management includes the plans, programs, and incentives employees can use to manage sales teams and partners who are crucial to the success of the channel system. Marketing teams may introduce a performance metric to assess the sales and profits of the channels, so they only invest in the most productive channels. They may also offer discounts to effective partners and vendors.

Sales and operations planning

This marketing management system typically ensures that the production of certain goods and services matches their demand at a particular time. For example, if the marketing team notices that sales of a specific product increase during the holiday season, they may ensure that the company increases production during that period. They may also schedule production to match sales events and campaigns that the retail channels or partners have planned.

Distribution

This marketing management system focuses on delivering products and services through the channel. For instance, if the company's channels include both physical and online retailers, its products' delivery processes may differ, and the team may consider this when creating the distribution structure. The marketing team may deliver campaign ideas to channel partners and wholesalers. The goal of the distribution system is to ensure that customers receive products and understand the brand's values through the company's channels. The distribution system also manages the logistics relating to product returns and exchanges.

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Brand experience

This channel system focuses on ensuring a consistent brand experience across different channels. The brand experience is crucial to customers' perception of the company and its products. This system ensures that customers engage with the brand. For instance, the marketing team of a cosmetics company may run different promotions for online and physical channels to ensure consistency in the customers' brand experience. For physical stores, they may encourage retailers to provide free samples to help customers understand how the product works; while online, they may post videos that show the effects of the products.

Related: What Are Branding Strategies? (With Definition and Benefits)

Revenue management

The revenue management system emphasizes the optimization of revenue to accommodate the company's inventory at any given time. A practical example of this is offering discounts on seasonal items near the end of that season. This reduces their supply and allows employees to ensure the availability of more in-demand items.

Pricing

This management system focuses on price strategies in the different channels. The marketing teams typically review the customer chain to understand the varying prices in channels. The customer chain is a system that reflects the customers' perception of the end price that retailers and wholesalers provide. The location of a store might affect its pricing, as customers in the area may be willing to pay more for the products. The marketing team might create different product and campaign segments to provide for their varying customer base.

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