he third marketing mix tool is of importance since the success of a company depends not only on its own performance, but also on the total value chain, including the inbound, outbound and reverse (returning faulty products for example) distribution performance.

Two remarks:

good distribution strategies contribute strongly to create customer value companies or brands rarely compete with each other; their entire value delivery networks do !

Marketing channels: what and why?

We distinguish upstream and downstream partners of a company: 

Upstream partners are the parties involved from the supplier of raw material, equipments, information, finance, components and expertise usually known as the supply chain to the company.

Downstream partners traditionally consist of all parties involved that are in between the company and the customer, traditionally known as distributors (or wholesaler and retailer) to the customer

This is however a “make-and-sell approach”. Better is to consider a “sense- and-response” approach involving all parties organized in a system (the value delivery network) in order to improve the entire system performance.

Marketing Channels are thus a set of interdependent organizations that help make the product or service available for consumption or use by the final consumer or the business user. Market channel decisions: 

- affect the other mix decisions (product positioning, branding, price setting, sales force role, communications etc.)
- involve a long-run commitment to other firms: whether upstream or downstream, changes in partners are not fast or easy.

Market channel contribution to the value : 

1. Creates more contact possibilities and product availabilities
2. Transforms the small product assortment of the producer into a large or deep one as wanted by the consumer.
3. (Other key functions) : promote, inform,