Marketing Intermediaries, Distribution Channels, and Promotion Strategies

Posted on Nov 13, 2025 in Marketing

Types of Marketing Intermediaries and Characteristics

Agents

The agent, as a marketing intermediary, is an independent individual or company whose main function is to act as the primary selling arm of the producer and represent the producer to users. Agents take possession of products but do not actually own them. Agents usually earn profits from commissions or fees paid for the services they provide to the producer and users.

Wholesalers

Wholesalers purchase products in bulk and store them until they can resell them. Wholesalers generally sell the products they have purchased to other intermediaries, usually retailers, for a profit.

Distributors

Distributors are similar to wholesalers, but with one key difference. Wholesalers typically carry a variety of competing products (for instance, Pepsi and Coke products), whereas distributors only carry complementary product lines (either Pepsi or Coke products). Distributors usually maintain close relationships with their suppliers and customers. Distributors take title to products and store them until they are sold.

Retailers

A retailer takes title to, or purchases, products from other market intermediaries. The retailer sells the products it has purchased directly to the end user for a profit.

Franchising, VMS, and E-commerce

Franchising

Franchising is a business model in which many different owners share a single brand name. A parent company allows entrepreneurs to use the company’s strategies and trademarks. In exchange, the franchisee pays an initial fee and royalties based on revenues. The parent company also provides the franchisee with support, including advertising and training, as part of the franchising agreement.

Vertical Marketing System (VMS)

A Vertical Marketing System (VMS) is one in which the main members of a distribution channel—producer, wholesaler, and retailer—work together as a unified group to meet consumer needs.

E-commerce (Electronic Commerce)

E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the Internet. These business transactions occur either business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C), or consumer-to-business (C2B).

Distribution Channel Management and Competition

Defining Distribution Channel Management

Distribution channel management involves a group of individuals and organizations that direct the flow of products from producers to consumers. Key considerations include:

  • Point of Sale: Determining where to sell products/services (e.g., shops, catalogs, online, door-to-door, showrooms). We must consider where customers expect to buy them.
  • Logistics: Planning how to reach the customer, including transportation, warehousing, packaging, refrigeration, distribution centers, costs, planning routes, reliability, and customs.

Types of Distribution Channels

  • Direct sales to end customer
  • Wholesalers
  • Retailers
  • Agents
  • Direct Marketing
  • E-commerce

Influencing Factors in Channel Design

  • Organizational objectives and resources
  • Culture
  • Product attributes
  • Market characteristics

Competition Between Distribution Channels

Understanding channel competition is crucial for managing conflict and influencing members:

  • Horizontal Competition: Occurs when the same type of channels compete (e.g., retailer vs. retailer).
  • Vertical Competition: Occurs between different levels of the channel (e.g., retailer vs. wholesaler).
  • Channel System Competition: Occurs when one channel system competes with another parallel channel system.
  • Intertype Competition: Occurs between similar channels of different type or size (e.g., small outlets compete with large retailers).

Intermediary Functions and Service Level Agreements

Key Functions of Intermediaries

  • Bulk Buying: Purchasing large amounts of product.
  • Large Assortment of Goods: Providing variety to customers.
  • Information Utility: Useful for informing about foreign markets and consumer trends.
  • Improved Efficiency: Grouping products into a portfolio to facilitate larger, cheaper sales volumes.
  • Ownership Utility.
  • Time Utility: Offering faster delivery than alternative logistic systems.
  • Accessibility.
  • Specialist Services: Offering additional services like financial support or accounting.

Service Level Agreement (SLA)

A Service Level Agreement (SLA) is a standardized service contract where a service is formally defined. Particular aspects of the service—scope, quality, and responsibilities—are agreed upon between the service provider and the service user. A common feature of an SLA is a contracted delivery time (of the service or performance).

International Distribution Channels

(This section addresses distribution channels operating across national borders.)

Promotion and the Role of Marketing Communications

Promotion in the Marketing Mix (The 4 Ps)

Promotion refers to raising customer awareness of a product or brand, generating sales, and creating brand loyalty. It is one of the four basic elements of the marketing mix, which includes the four P’s: Product, Price, Place, and Promotion.

Roles of Marketing Communications

  • Differentiate the product or brand.
  • Remind and reassure customers.
  • Inform the target audience.
  • Persuade potential buyers.
  • Facilitate attitude change.

Marketing Communication Strategies

Strategies define how communication influences stakeholders:

  • Pull: Influence end-users (consumers).
  • Push: Influence trade channel buyers (intermediaries).
  • Profile: Influence the whole range of stakeholders (corporate reputation).

Pull Strategies

Pull strategies aim to encourage buyers to seek out the product. They:

  • Create awareness of the brand.
  • Create brand associations and position the brand.
  • Convey the brand’s promises.
  • May be supported by incentives to encourage trial.

Overall aims include increasing awareness, changing or reinforcing attitudes, reducing risk or encouraging involvement, and provoking action.

Push Strategies

Push strategies aim to get the product onto the retailer’s shelves or into the wholesaler’s warehouse, ensuring the brand is seen as profitable by intermediaries.

Profile Strategies

Profile strategies do not focus particularly on specific products or different messages. They are designed to build awareness, perception, attitudes, and reputation using targeted communication. They are aimed at a range of stakeholders, often using different messages for each group.

Integrated Marketing Communications (IMC)

The overall marketing communications strategy incorporates Pull, Push, and Profile approaches.

Defining Integrated Marketing Communications

Integrated Marketing Communications (IMC) is the application of consistent brand messaging across both traditional and non-traditional marketing channels, using different promotional methods to reinforce each other. The components often relate to the 4 C’s (Customer needs, Cost, Convenience, Communication).