What is a Marketing Channel – and Where an Affiliate Marketer Resides in It

How An Affiliate Marketer Helps  Overall Sales Performance in a Marketing Channel

Photo by Joey Kyber

In this article:
- Introduction: From producer to customers
- The marketing channel
- Types of marketing channel
- Channel function and strength
- Position and function of an affiliate marketer
- The power affiliate marketers have in the marketing channel
- What an affiliate marketer can do
- The future of marketing channel
- Summary

Introduction (From Producers to Customers)

To make products, companies need supply of raw materials and other resources from their suppliers. The needed materials come from a supply chain. In the other direction, produced items are distributed through a marketing channel. While supply chain is an upward link from the suppliers, marketing channel is a downward link looking toward the customer.

An affiliate marketer sits somewhere in the marketing channel chain before the goods and services reach the consumers. Knowing in which position an affiliate marketer resides in the chain is quite important. It will tell us what functions are supposed to run, what are the strength and advantages, and will allow affiliate marketers to make the best use of the strength and position for successful sales.

The Marketing Channel

Photo by David Dibert

What is a marketing channel? A marketing channel is a channel where the product flows toward the customers. It usually consists of marketing channel members, in a series of distribution points where each member takes products from an upstream member and delivers it to the next downstream member.

However, at a rare circumstance, a producer may use direct marketing channel, where they directly have contact and sell to the customers. Such direct marketing channel is beyond the discussion in this article. This article discusses only indirect marketing channels consisting several marketing channel members.

For many producers, usually such direct customer handling is not efficient. For efficiency, producers need to “put out” their products with specific requirements, which differ from consumer’s requirements to “take in” the products.

For example: producers want to move their products in  minimum large quantity in a specific time period. Thus a marketing channel is needed to ‘absorb’ such requirement and adjust to the demand from the consumer..

The indirect marketing channel may consist of one or more members in the chain.

A typical marketing channel ‘chainline’ consist of producer-wholesaler-retailer-consumer. This marketing channel ‘bridges’ the various products producers demand to sell to the kind wanted by consumers. Producers may want to move their products in a specific (large) quantity and method, while the consumers want products in smaller quantity different specific ways (for example, assortment of products in low quantity and different payment terms). The marketing channel bridges this gap and thus helps making the products sell at the most optimal rate. A marketing channel must set up a marketing channel strategy to succeed in channeling the products down to consumers.

Using a marketing channel does add expense to product price. But overall, it helps producers in efficiency of handling customers and distributes goods. While direct-to-consumer online selling is blooming widely, generally it is still more efficient for producers to use marketing channels due to the functions delegated to them.

To make the flow of goods as smooth and quick as possible, an established and well-maintained relationship with every member in the marketing channel must be built. Producers must manage the relationship, training, motivation, resources, and support needed by the marketing channel.

Each channel member has its own capability and limitation. A producer must be careful to choose which channel (and how many members are there) to use according to various factors. Such factors may include product suitability, channel coverage, channel’s customer base and customer service record.

Types of Marketing Channel

Some marketing channels comprise one or more members between the producers and customers. A channel member might not directly in contact with the end customers. An example is a wholesaler that receives goods from the producer, and delivers them to a retailer. The retailer, in turn, is the channel that has direct contacts with the customers.

The channel member could be independent or third party entity, or can also be the manufacturer’s official representatives under control of the manufacturer itself.

Whatever format or status a channel bears, it must manage its relationship upstream (with its suppliers) and downstream (its buyers /customers). Thus must expend its capability and runs its functions as an intermediary between the two links.

Marketing Channel Functions and Strength

Each marketing channel member brings the product and service one step closer to the target consumer. Each channel member works in connection from upstream (supplier) and downstream (delivery) counterparts.

Each of them bridges the time, place, and possession gaps that separate the goods and services from those who supply the products and those who will receive them. Each channel has the capability and function in (1) gathering information; (2) executing promotions; (3) managing contacts; (4) matching the offers (supplies they receive) to demand from buyers; (5) completing negotiations.

There are also other marketing channel functions. They may also handle warehousing, financing, delivery, and risk taking of the merchandise. In their operation, the channels may receive information /training /resources they need (or a required to take) from their upstream suppliers /producers. Often, the rules, training, and resources are arranged by the producer.

The channel member, especially the last before the customers, may also collect valuable information from them. This market information could later become a very powerful strength for the channels.

This channel member can identify their customers and detailed market demand. The collected information will tell them what the customers actually want, such as where the customer’s demand is heading, which product that does and does not actually suit the market, which product market is fading way, and also other customer’s need, such as type of needed financing.

Since the end member of the marketing channel is the one with the closest relationship with the customers, it may also serve as the first-line complaint handler. Therefore the producers must really have a good relationship with their channel or else they can miss their customers’ grief and risk failing to satisfy them and lose the market.

Another strength the marketing channel member has in possession is location practicality. Place in the marketing mix is another factor bridged by a marketing channel between producer’s location and the customers. A retailer, as a marketing channel, can have business location which is more easily accessible for the customers. This is also a very significant feature since customer’s convenience and limited available time are very important for today’s customers.

Position and Function of an Affiliate Marketer

In a marketing channel, an affiliate marketer sits as a promotor of a retailer, which is the last line toward the customer.

A retailer itself is “the last mile” before a product reaches the consumers. To get in line with the upstream channel member,  the retailer and affiliate marketer must also recognize the segmentation, targeting, differentiation, and positioning adopted for them. Affiliate marketers enhances a retailer’s efforts to assure the consumer to make the purchase.

Current market segmentation trend is that the market is getting more segmented and requires more focused marketing efforts. This is where affiliate marketing has a unique capability.

At the operating post of the sales endpoint, affiliate marketers among else serve the following functions:

• Helps the marketing channel taking products one step closer to the customer.
• Finding new customers: getting new customers through its specific marketing interface, which are through affiliate sites.
• Collecting and managing information. The information might include customer data (such as buying preferences, needed financing, demand trend, etc.).
• Enhancing customer preference. Can be in form of extending the upstream channel /producer promotional events to the consumers. May also create own promotional event.
• Running customer service. Handling and managing questions and complaints as the front liner toward the affiliate’s customers.

For some other functions, affiliate marketers do not assume much or the functions are beyond their coverage. These might include: physical distribution /delivery, financing, transfer of title /risk on products.

The Power Affiliate Marketers Have in the Marketing Channel

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An affiliate marketer serves the online market. In the market, consumers are empowered by the digital world. Consumers have tremendous access to a lot of references before they make a decision. They can even communicate with other consumers to find preferences.

With this circumstance in mind, affiliate marketer’s power lies with the position as an enhancer and doorstep of the retailer in the digital world, an affiliate marketer bears the power as follows:

• The final decision point of purchase. Affiliate marketers make the critical point on purchase decision. They could make the purchase happen or break. They can be where customer loyalty is built or not.
• Customizer of customer’s wants. With direct contact with the customer, an affiliate marketer knows best what combination of products a specific customer may want or need. This may also include inherent services, such as warranty and suitable financing need.
• Final arranger of producer /marketing channel promotion. An affiliate marketer is the place where  the promotion reaches the customer.
• First line complaint handler. Looking from the consumer side, an affiliate marketer becomes the first line complaint handler. A consumer may see the affiliate marketer as representation of overall channel up to the producer.
• Market data collector. Affiliate marketers can collect important data from or about customers, which data may be used to improve services and product (customer value). The data may also be forward upward the marketing channel.

Overall, an affiliate marketer plays a significant role in the delivery of customer value and building customer satisfaction.

What An Affiliate Marketer Can Do

With the functions and strength affiliate marketers have in the marketing channel, here’s what we can do to improve channel’s performance and sales, and help enhancing overall marketing performance.

• Prepare and arrange good customer service, pre and post purchase. Affiliate marketers must really know the offered value in the products and services for the customers. They should answer all questions related to the customer’s needs and wants, while maintaining the demand from the marketing channel.  
• Coordination with upstream channel /producer on product assortment to stock. As the ‘bridge’ between producer’s demand and customer’s wants, affiliate marketers must also consider how to balance between incoming products and market demand. An affiliate marketer must be careful not to push ‘fading’ products toward the market.
• Coordination with other channel members /producer on promotion. An affiliate marketer must watch and be keep himself updated with available promotional events, especially from the producers, which in the end will also boost affiliate sales.
• Prepare to handle complaint. As the first line in dealing with customers, aside from praise and appreciation, customers may also propose  complaints. Affiliate marketers must prepare complaint handling which may include complying with standard complaint policy as set by the producers, having its own extra complaint service, or even preparing some sort of compensation to maintain consumer loyalty.
• -     Collect and analyze market data. This is the power an affiliate marketer must manage. The collected marketing data can be used to design future marketing efforts and prepare for the market condition to come.

Overall, an affiliate marketer plays a significant role in the delivery of customer value and building customer satisfaction.

The Future of Marketing Channel

Shorter communication link

With existence of the Internet, communication links have become shorter (more direct), and fast. Customers can now directly explore producer’s site, as opposed to retailer’s store,  to find their needs. They can also make contact with the producer company’s executives or customer service. They can also collaborate with other customers to discuss their needs, demanded products, advantages and weaknesses of a particular product (review) which allow them to make much better decision on purchase.

More (and more) efficient marketing channel

The market are also demanding more and more efficient product distribution, which dictates more efficient marketing channel. On one side, this also means a demand for the shortest marketing channel as possible. Again, with the digital power in customer’s hands, each of the shorter marketing channel members has more duties and must work faster to serve the demanding market.  Affiliate marketers must really prepare to deal with customer’s demand, questions, and complaints. And quick fast response is a must for the now impatient customers.

Highly empowered customer

With the communication devices and the Internet, customers are getting much more empowered. They can quickly fetch information on things related to their needs. These could be about a product, its price, financing options, warranty, producer and seller credibility, and all other aspects. They can also easily connect with other customers and build own opinion. They can also directly contact the producer to ask questions for advice or complaint. Customer’s impact on market interaction is like a giant wave shaping the beach contour.

Differing from the old communication media, modern information media channel information works both ways. Gone are the days where producers or sellers do the talk and customers can only mostly listen. It is easier now for the customers to find answers to their questions. Producers or sellers must be cautious so that customer’s questions are not given wrong answers by irresponsible parties.

Blending of new and traditional media

There is a more gradual blending of new and traditional media. The ‘old’ dictating, slow reacting media are being supplemented by digital, two-way, instant response communication media. However the digital media cannot work alone. ‘Classic’ media have its own merits that will still be needed and exist in the market.

Summary

A marketing channel is needed to make products or services flow from producers to customers. An affiliate marketer sits at the end of the marketing channel chain to enhance the functions of the retailer. Thus the affiliate marketers gain the unique power from its direct contact from the customers. Because the affiliate marketer is the party the customer may contact with, the affiliate marketer must also prepare to handle the customers, before and after sales.

The market is getting more fragmented and demands shorter marketing channel and immediate response. Every marketer, including the members of marketing channel must learn and know how to act in this new kind of market. An affiliate marketer must also know how to handle a more personal, more focused target market, which is also a unique preposition and advantage of affiliate marketing.

Every marketing channel member must always remember that each has the duty to take products and services one step closer toward the customer and channel the feedback one step upward. Thus with a good coordination, it will create a better value for a better market handling in the future.

I hope this article is useful for the readers. Have a happy selling. Leave your comment or questions below.

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