In order to choose the best channel marketing strategy, several considerations need to be taken into account. The target market, distribution costs, desired service level, product type, and product identity or positioning are all important factors. A channel marketing strategy works best when it is in alignment with an organization's main goals.
Before a firm can design an effective channel marketing strategy, it needs to consider who it is trying to reach. The attitudes, perceptions, lifestyles and shopping patterns of the target consumer are critical. For example, a company that manufactures high-quality shoes made with premium leather would probably not want to distribute its product through a discount retailer. Instead, the choice of a mid- to high-end department store would better suit the product's image and reach those customers who would more likely be looking for that type of shoe.
Distribution costs come into play when considering the options of using a wholesaler or internal staff to sell directly to retail accounts. Some firms even choose to bypass the retailer and sell directly to the end consumer, which is called direct marketing. An adequate supply of internal resources and efficiency is necessary to employ a direct marketing approach. While distribution costs will typically be higher when using a wholesaler, they may be more efficient and have an established network of relationships in place.
Another important factor in choosing the best channel marketing strategy is the type of product. A company should take great care in choosing a marketing approach for highly specialized or technical products. Niche markets, which are smaller segments that have specialized or unique needs might best be served through a particular type of retailer or mail order catalog. Women who wear shoe sizes that are above the average range is an example of a niche market.
Products that are targeted towards niche markets do not possess the mass consumer buying potential that commodities such as bread and eggs do. It would not be in a company's best interest to choose a channel distribution strategy that focused on mass merchandisers. Instead, the combined use of small, specialty retailers and direct selling might prove to be more profitable. A direct strategy would also probably make it easier to identify the firm's customer base and employ relationship-based marketing techniques.
Desired service level is an important consideration when developing a channel marketing strategy. Some firms might want to differentiate themselves by providing a more personalized experience. They may not be able to accomplish that goal without the use of direct selling. If a higher level of customer education and training is needed in order to use the product, a distribution strategy involving third-party wholesalers and retailers might not be a good fit.
Organizations might choose to use a hybrid form of distribution or multi-channel marketing. This is most commonly seen with firms who distribute their products through both physical retail locations and direct online Internet platforms. A multi-channel approach is best for companies whose products have diverse target markets. For example, a computer manufacturer might distribute its low-end introductory model through a discount retailer, while continuing to offer its high-end models through mail and Internet order.