Global Marketing Channels
Marketing channels are crucial both on a global and domestic level, and ultimately create utility for the customers. The physical flow of goods or services through channels is how companies can distribute and market their brand. Channels are made up of a coordinated group of individuals or firms that perform functions that add utility to a product or service. This leads to the crucial question, what is utility to the consumer?
There are different types of utility, including place, time, form and information. The first is place utility which is availability of a product or service in a location that is convenient to a potential customer. Time utility is when a product or service is available when it is desired by a customer. For example, Amazon’s global distribution and supplier networks allow for their brand to reach consumers on a global level, by getting products to customers when they want it, in an extremely convenient fashion.
The third form of utility is form utility. This represents the availability of the product processed, prepared, in proper condition or ready to use. Finally, information utility is the availability of answers to questions and general communication about useful product features and benefits. Utility is critical for successful global marketing channels to be in place, and there are many supporting activities to global marketing channels and to the company’s value chain. These include transportation/physical distribution, supply chain management, logistics management, order processing, warehousing and inventory management.
Marketing Channel Choice
These channel decisions are extremely difficult to manage globally because of the variation in channel structures from country to county. It’s important to have a channel strategy that aligns with the firm’s core competencies if they hope to develop a competitive advantage in new markets. One channel innovation that has grown in popularity is piggyback marketing. This is when one manufacturer distributes products by utilizing another company’s distribution channel. This requires that the combined product lines be complementary and appeal to the same customers. This can be further broken down into B2C marketing and B2B marketing. Business-to-consumer marketing utilizes consumer channels and may be relatively direct, utilizing direct mail or selling, as well as manufacturer-owned stores. Where on the other hand business-to-Business Marketing employs industrial channels to deliver products to manufacturers or other types of organizations. Finally, one that is extremely relevant to today is peer-to-peer marketing, where the internet serves as a great resource for a global marketing channel and is very accessible to everyone.
One major global trend is the rise of many successful retailers who are increasingly expanding around the world, including department stores, specialty retailers, supermarkets, and many more (one of the biggest of them all being Amazon). Amazon achieved success on a global scale through e-commerce and reaching its customers via the Internet. However, with the acquisition of Whole Foods and launch of Amazon Go, Amazon marketing channels expanded even further through various methods of global retailing. There are many competencies that have to be used strategically to enter a new market such as selection price, store location, and customer service. Global retail expansion can be achieved through many marketing channels such as organic growth, franchising, acquisition and joint venture. Amazon was able to utilize its expansive marketing channels in order to stimulate massive growth domestically and globally.