What is a channel? We will thoroughly explain the meaning in sales!

Recently, it is said that many companies are entering e-commerce for the first time, and as sales through SNS channels are becoming a trend as well as e-commerce sites, we would like to expand our sales network. There are probably many people in charge. Additionally, in the BtoB field, various efforts are being made to expand the company’s sales network. Therefore, this time, for those who are interested in sales channel strategy, we will introduce what a channel actually means and how to build a marketing strategy related to sales channels.

What is a channel?

According to the

dictionary

, the English word “channel” means a route, transmission line, frequency band, waterway, ditch, route, means, etc. In Japanese, it is called “channel,” but in the fields of communications and IT, it is called channel.

It often refers to physical and logical transmission routes, and in the business field, it refers to the routes and means by which goods and money flow through the market. Recently, we have often heard the term used in the fields of sales, marketing, and advertising to describe a means of reaching customers.

In other words, in the field of sales and marketing, a channel refers to a medium or route for attracting customers. Specifically, it refers to inflow routes such as websites, advertisements, and campaign pages. If there are many channels and the quality is high, it will be easier to attract users, so many companies and consulting companies specializing in attracting customers to websites are taking measures to effectively increase the number of channels.

This article deals with marketing channels in the fields of sales, marketing, and advertising, and specifically introduces sales channels.

There are three types of marketing channels

There are three types of marketing channels: I will explain each of them.

1.Sales channel

A sales channel is a route through which sales occur, and refers to the sales methods and locations where consumers can purchase products or services.

It is a channel for sales and a place where consumers actually make purchases. Specifically, this refers to stores, e-commerce sites, etc.

This is similar to the distribution channel that will be introduced later, but the distribution channel refers to sales channels such as shipping companies. It is similar to a sales channel, which refers to a place where sales are made.

Currently, the types of sales channels are diversified and there are many different types. Typical examples are EC sites and SNS. Recently, e-commerce functionality has been added to Instagram and other sites, and it is said that more and more young people are shopping through Instagram rather than through e-commerce sites.

In addition, sales channels include direct sales, sales through agencies, mass media such as TV shopping and newspapers, and affiliate marketing (ASP).

Sales channels exist not only in BtoC, which is business for individuals, but also in BtoB, which is business for companies. However, the types of sales channels differ greatly between BtoC and BtoB, so when formulating a strategy, it is necessary to take an approach that suits the customer.

In any case, sales channels allow you to approach a wide range of current and potential customers.

2. Distribution channel

Distribution channel refers to the means of distribution.

It is all the means in the distribution route from the seller to the buyer. Specifically, distribution channels include distributors, wholesalers, and retailers.

Specifically, these include wholesalers and retailers who handle the product up until it is sold, as well as logistics companies such as delivery and transportation companies who handle the product after it is sold.

3.Communication channels

A communication channel is a path for transmitting information. In other words, where and how a company communicates with its customers.

Specifically, it covers a wide range of areas such as email, SNS, apps, direct mail, TV commercials, websites, web advertisements, and telephone calls.

Characteristics of each type of sales channel

Now let’s take a closer look at sales channels.

There are many different types of sales channels.

These sales channels can be divided into several stages.

Types of sales channels by stage

Channels have the concept of “stages”. It refers to the number of stages of each layer of distributors that exist between a company and its customers. Here we will introduce you to stages from zero to three.

Zero stage channel [company → customer]

This means that there are no stages, and it is a channel where companies sell directly to customers without going through a distributor. Specifically, this includes sales at directly managed stores, door-to-door sales, web sales, and telephone sales. The advantage of the zero-stage channel is that you can easily control sales activities because you sell directly to customers.

1-level channel [Company → Retailer → Customer]

This is a channel through which a company’s products are sold through retail outlets such as department stores and supermarkets. This is effective in distributing products over a wide area and can keep costs relatively low.

Two-tier channel [Company → Wholesaler → Retailer → Customer]

It is the channel through which wholesalers and retailers come between businesses and customers. By going through a wholesaler, you can expand your sales opportunities and conduct small-volume transactions. On the other hand, the disadvantage of using an intermediary is that margins increase, so reducing costs by cutting out the middleman is attracting attention.

3-level channel [Company → Wholesaler → Secondary wholesaler → Retailer → Customer]

It is a channel through which wholesalers/secondary wholesalers and retailers enter between companies and customers. Secondary wholesalers are intermediate entities that purchase products from wholesalers and sell them to wholesalers at the next level, but they have been on the decline in recent years as they are sometimes required to cut the middle.

What is a marketing strategy that utilizes sales channels?

In recent years, sales channel strategy, which utilizes sales channels to carry out marketing measures, has been attracting attention.

Sales channel strategy is a strategy for effectively creating sales channels and preparing a situation where customers can buy products when they decide to do so.

The optimal sales channel will change depending on customer needs and the characteristics of the product or service. Sales channel strategy is about maximizing profits by developing products in a manner that suits this.

Purpose of sales channel strategy

As mentioned earlier, the purpose of sales channel strategy is generally to expand sales channels and maximize sales. Increase or optimize sales channels to maximize sales.

Benefits of implementing a sales channel strategy

By implementing a sales channel strategy, you can not only achieve the ultimate goal of increasing sales, but also obtain various benefits.

For example, you can acquire potential customers, which can lead to the acquisition of new customers. It can also lead to obvious benefits such as improved customer convenience.

Key points of sales channel strategy

Recently, creating a variety of sales channels has become a widely used method to increase customer contact points. When considering such a sales channel strategy, it is important to take into account key points and general flow.

Clarify your target

An essential step before building a sales channel strategy is to clarify your targets. If your customers span a wide range of age groups or are polarized, the sales channels each demographic will use will change. By first clarifying your target image, the necessary sales channels will naturally emerge. This will enable you to build a sales channel that will lead to better results. For example, if your target audience is students or people in their 20s, you can create a strategy tailored to your target audience, such as using SNS like Instagram as the main sales channel rather than a website.

Consider sales channel stages

As introduced earlier, there are stages in sales channels. At the same time as choosing a sales channel that matches your target, build a strategy that also takes into account costs, such as whether stage 0, stage 1, stage 2 or stage 3 is better, and which is possible for your company. Must be. Naturally, the more stages there are, the higher the price of the product or service, which ultimately affects consumers. The stages must be determined based on the relationship between the price that is affordable for the target group of consumers and the possible pricing. Additionally, as mentioned earlier, distribution will be expanded through retailers rather than direct sales, so if you want to distribute your product more widely, you should consider going to one stage or more.

Embrace omnichannel

“Omnichannel” is something we hear a lot about these days, and is something that many companies are considering. It would be a good idea to actively adopt this omnichannel mindset.

Omnichannel is the provision of multiple channels that serve as points of contact with customers, and by linking them together, it increases customer convenience and improves customer satisfaction. For example, in order to meet the needs of customers who want to receive products purchased on e-commerce sites as soon as possible, many stores offer services that allow customers to pick up products at their nearest store. This is possible because we link two sales channels: the e-commerce site and the store. Enabling customers to move between multiple sales channels as per their convenience is also an essential point when building a sales channel strategy.

E-commerce sites and physical stores are not the only things that need to be linked. There are also examples of purchasing products viewed on SNS by transferring to an e-commerce site.

Plan a sales channel strategy with a customer-first philosophy

This is related to the points I have explained so far, but there is a perspective that is essential when building a sales channel strategy. It’s customer-first. As mentioned earlier, the purpose of sales channel strategy is to increase a company’s sales and, in other words, its profits. Therefore, we tend to think mainly about corporate profits, how to cut costs, and how to sell products efficiently. However, sales channel strategy will never work that way. This is because sales will not increase unless sales channels are optimized for customers.

So what should I do? It’s about putting the customer at the center. This is a so-called customer-first approach. No matter what you think about, think about it from the perspective of what is most convenient and profitable for your customers. By preparing sales channels that meet customer needs, you can encourage customer purchases and increase customer satisfaction. This will create repeat customers, develop sales channels, and become established. Putting the customer first above all else is an essential point when building a sales channel strategy.

Channel strategy roles and steps

So, specifically, what steps should you take to build a sales channel strategy? Generally speaking, there is a way to think of the seven roles of channel strategy as steps. We will introduce each of these seven items.

1. Investigation

First, let’s do some research. When it comes to research, it’s about the product or service you want to sell. We collect information such as images, opinions, and needs of products and services by conducting surveys and interviews with target customer groups. Based on the results of this survey, we will select appropriate sales channels and utilize them in our strategies.

2. Promotion

Promotion literally means conducting sales promotion activities through advertising and PR activities, and since the promotion plan here is promotion in sales channels, we will consider promotional activities carried out together with retailers and other intermediaries. Must be.

3.Contact

Contact refers to how you reach out to prospects and customers. The appropriate means of contact will vary depending on the sales channel. If your target audience is seniors and you need to build a sense of trust, DM may be more suitable than email. When it comes to advertising, there are big differences, such as whether SNS ads, TV commercials, or newspaper ads are better.

4. Negotiation

Negotiation is very important in sales channel strategy. We negotiate prices, transaction conditions, guarantees, etc. with retailers and wholesalers, and reach a final agreement. For sales channels to function properly, smooth coordination with these related vendors is essential.

5. Compatibility/matching

This conformity and matching is also an important item in sales channels. Sales channels must be closely aligned to customer needs. It is necessary to make adjustments so that customers are more motivated to purchase and that their purchasing behavior goes smoothly. This may require coordination with related companies. This is important in realizing a sales channel that better matches the target group.

6.Logistics

Before selling a product, we consider how it will be transported, where and how it will be stored, and the delivery method used to deliver the product to the customer. Although it is related to distribution channels, it is an essential item when building a sales channel strategy.

7.Cost/Finance

This also relates to distribution channels, but it also refers to managing the costs necessary for distribution. Determine optimal funding and allocation.

Example of sales channel strategy

Many companies are already working on sales channel strategies, primarily omnichannel success. By organically linking multiple sales channels, we are able to make them function effectively. Here, we will introduce four successful examples of sales channel strategies that can be helpful.

1. Major clothing brands

A major clothing brand has strengths in sales through physical stores and e-commerce sites. This brand already has multiple sales channels, so they developed their own app as one of their communication channels. With this app, customers can check their purchase history by registering their own information, and it also has the ability to introduce recommended products to each customer. In addition, if the product you want is not in stock at a nearby store, it will be wasted, reducing customer convenience, so to avoid this, there is a function that allows you to check inventory in physical stores and online shops. I also added it. This increases customer convenience and increases customer satisfaction, leading to more purchases at physical stores and online shops.

Additionally, this brand has stores in a variety of locations, some of which sell clothing through vending machines, and has a sales channel strategy tailored to the needs of each store. This can be said to be a measure that carefully examines the specific target needs of each store.

2.Major cosmetics manufacturer

A major cosmetics manufacturer has cosmetic counters in its physical stores, where makeup advisors personally interact with customers and provide them with step-by-step knowledge about makeup and detailed information about products.

While we have a physical store, we also have an online shop full of beauty information. Normally, it operates through two stores: a physical store and an online shop, but this manufacturer is unique in that it provides a huge amount of beauty information.

The purpose of this is to appeal to people who find it difficult to go to a cosmetics counter or who don’t have the time to do so, and in response to the spread of the new coronavirus, people who are discouraged from going to stores to prevent infection. It is said that this is to meet the needs of those who are avoiding it.

Having multiple sales channels means different things to different companies. Due to the nature of cosmetics, this manufacturer also needs to educate people on how to use their products and the need to continue using them. Therefore, it is not just a matter of selling the product, but providing information on the web, which can replace the knowledge taught at the cosmetics counter and provide even more information, is of great significance.

This is a great example of how, by having these two sales and communication channels, manufacturers are able to achieve what they want to offer to their customers while simultaneously increasing customer convenience.

3.Major supermarket

A major supermarket has succeeded in promoting sales by successfully coordinating two sales channels: physical stores and online shops.

In particular, supermarkets target consumers who want to shop in stores and enjoy online shopping at home. This is also due to the fact that many of the products are daily items such as foodstuffs. Such targets are likely to want to utilize both physical stores and online shops at the same time. Therefore, this company succeeded in further promoting sales by successfully linking these two sales channels.

Tablets are placed in physical stores, allowing customers to use the tablets to order products that are not available at physical stores. Of course, customers can use their smartphones to access your online shop, but by providing them with tablets, you can instill in them the idea that your physical store and online shop are linked.

Additionally, we have a unique point system that allows you to earn and use points at both physical stores and online stores.

We are also developing a smartphone app as a communication channel. This also successfully combines physical stores and online shops. We also offer a service where you can read a store’s product POP or flyer on the app and see recipes using that product.

This is an example of success by delivering a system that matches the customer’s lifestyle.

4.Major convenience store

Companies that operate major convenience stores and supermarkets also operate online shops as well as physical stores.

Products ordered from the online shop can be picked up at a convenience store or supermarket near your home, increasing convenience for customers and increasing sales.

We have also developed a smartphone app. Here too, in addition to enjoying online shopping, you can accumulate unique points that can be used at both physical stores and online shops, which has succeeded in promoting purchases and retaining customers.

This case is also a good example of putting customer needs first and developing sales channels more meaningfully.

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This is a very useful example when considering sales channel strategy. We hope this will give you some hints when actually building and proceeding with your sales channel strategy.

summary

◆Channel mainly means a route, transmission line, frequency band, waterway, ditch, route, means, etc. In the field of sales and marketing, it refers to a medium or route for attracting customers.

◆There are three types of marketing channels: sales channels, distribution channels, and communication channels. Among these, sales channels include retail stores, e-commerce sites, SNS, direct sales, TV shopping, mass media affiliates (ASP) such as newspapers, etc.

◆ Types of sales channels by stage include direct sales zero-stage channels, one-stage channels with retailers, two-stage channels with wholesalers and retailers, and three-stage channels with wholesalers, secondary wholesalers, and retailers. There is a channel.

◆Sales can be increased by implementing a sales channel strategy. Key points when building a sales channel strategy include clarifying the target, considering the stages of the sales channel, incorporating omnichannel, and formulating a sales channel strategy that puts the customer first.

◆The roles and procedures of channel strategy include 1. research, 2. promotion, 3. contact, 4. negotiation, 5. adaptation/matching, 6. logistics, and 7. cost/finance, and this also applies to sales channel strategy. It is recommended to carry out according to the following.