Transcripts
1. Introduction : Channel Marketing: Hello everyone. We are going to learn how to create a complete marketing
strategy together. And we will explore different
verticals of marketing. What is different in
this series of courses, we are going to provide hands-on data-driven
exercises to combine concepts and
implementation of marketing. This is our sixth class. If you did not watch
the previous clusters, which are introduction
to marketing, market segmentation,
market research, product management, or
marketing communications. Please have a look
on Skillshare. Today, we will learn where
to sell your product, also known as channel marketing. And we will cover what
is channel marketing, channel marketing
strategies and also benefits and risks
of these strategies. How to decide the best
channel strategy. Lastly, we will deep dive into a real-life example
of channel marketing. Enjoy the important steps of building a complete
marketing strategy and stay tuned are following clusters will be
available on Skillshare
2. What is Channel Marketing with Benefits & Risks?: Hello everyone. In our previous section, we covered marketing
communications, also known as promotion of
four P's of the marketing. As we previously mentioned. When people think
about marketing, marketing communication
is the first thing that they think about marketing. Because everyone thinks
that the promotion, making the communication
of your product, etc, equals to marketing. However, we know that there are other verticals of
marketing strategy. We will cover one of the other piece of four
P of marketing today, which is place, also known as. So we'll discover how to build
some channel strategy for your own brand and how to crack more sales while keeping your
brand image in high levels. A quick wrap-up for
previous section. We covered what is
marketing communication. And we had a closer look to ATL, BTL and TTL terms. With some examples, we did go through the steps of writing a powerful brief to make your marketing strategy and
communication powerful. Which was one of the most important steps
of two last section. Also we had a closer look
to an award winning brief. We check the examples
of digital marketing. And also we covered two all
important marketing terms. Lastly, we had a few
exercise focusing on analysis of incremental
impact for your campaigns. Now, let's continue with our new section,
channel marketing. Let's start. So what is channel marketing? Channel marketing is basically the practice of working with a third party to take your products or
services to the market. Basically, you are asking
to the third parties. You're telling them,
sell my product in your own stores or sell my product to your own
digital channel, etc. This toward parties ask you, as the product producer, they tell you that if you
pay pay my commission, yes, I can sell your product
as a part of my channel. So imagine that you are the
owner of a clothing company, like marketing expert
of Zara or H&M, etc. And you found a
good-quality store which sells different brand
products in there. And you approach them and you ask them to sell your
product as well. And for each cell you are paying some commission
to that store. So what is the key benefits for the product owner
here, for the brand here, you are having more
touch points with the customer because you
are opening a new store, basically you are utilizing the customers who goes to a
store which is not yours. So in the end of the day, you expect higher sales amounts. What is the key benefit for the third party for the channel? And they are getting some revenue or commissions for the products that they sell. Actually they don't produce
or they don't design. So there are some benefits
and risks in this structure. Benefits are, this is a cost effective way to
increase your sales amounts because you don't need
additional headcount or you don't need to open
a new channel or store. Whereas you can use it with
zero upfront investment. Brand recognition. When you work with some well-known third
parties or channels, they also run their own
marketing campaigns so your brand can be more recognized through their
marketing activities. Lastly, volume and
variety of marketing. When you have more amount of channel side or the partners, you will be getting
more amount of sales. This will increase your volume. And in the end of today, they will run their own
marketing campaigns. So you will have the
variety of marketing, but also it comes
with some risks. The first risk is
you are not able to access to the
analytics properly. Not always. Because not every partner that you are working
with may not be measuring their campaigns or their customer insights, etc. The second risk is less
advanced marketing strategies. You can be a big brands while running your own
marketing campaigns, you can have your budget. You can make your
brand recognition in the high levels with
proper positioning. However, think about a small
store, thinking about it. Small digital channel owner. They may not have proper advanced marketing
strategies and your brand might be ending up as a part of this less advanced
marketing strategy. The third one is lack
of expertise or stuff. It's hard to keep
everyone up-to-date with your every new product or every new brand
recognition strategy. There might be new
hirings for a channel. So you need to go there and make sure that they are
also trained and selling your product properly because now they're also
face of your product. Lastly, lack of control. So some inaccurate
message can go through the customer because
they might be doing some stuff
that you don't know, only to be able to
sell your product. And this may blow back negatively your
brand and business. So you need to be
careful while designing your channel
strategy and picking up right third party owners. So this should be parallel
with your brand image. And you should be able to measure at least
how they approach to customer and what is the success rates coming
through that channel? We will have a look
in a closer way for structuring this channel
strategy in the next lecture. Thank you so much. See you there.
3. What are the Types of Channel Marketing Strategy? : Real Life Examples: Hello everyone. Now we are going to cover how to structure your channel marketing
and what are the types or methods to construct your
channel marketing strategy? So now let's see the
types and the ways, how you can sell
your product with or without the third
party or partner. So the first way of doing
this is manufacturer's sales. The product directly
to their customers. Think about it.
You're a brand owner. You are manufacturing
some products and you are selling this without
any third party in between. Direct, the customer. We are calling this method
of selling as direct sales. And the channel is
the direct channel. If you go to one of the
shops of Zara or H&M, and if you buy your
products through debt, own store of that brand, this is a direct sales. Or similarly, if you
are going to buy an Apple product from
official Apple Store, this is they are
directional as well. Or simply, if you are a bakery
owner and you are selling your bread in your bakery store to the customers directly. There is no third party. So this is a direct sales
or direct channel as well. Second one is manufacturer sells the product to a retailer. This is a similar example
in our previous lecture. You are a clothing company
owner and you are selling your clothes through
third-party retail owner, because that retail owner sells other brands products so they can sell your stew and
you are utilizing, this is a new channel for you. The third one is
manufacturer sells their product through a
wholesaler to the customer. Think about that. You
are an electronic device company and you are selling
your product, true? Alibaba. Your customers. Alibaba is a good example of a wholesale third party in-between you and
your customers. The fourth one is manufacturer, sells or distribute their products to
different resellers. And these resellers sell your
product to the customer. For example, big brands, big producers are manufacturers, has some official distributors. This can be Apple,
this can be HB, This can be some, even other services companies
like Microsoft, etc. They distribute their products. The resellers like
careful, for example, HP through their
distributors lens steel product to care for
and anyone visits car for, they can buy your HP
product from careful. In this chain of sales.
Think about that. You are giving commission
to your distributor to find out the proper resellers
and to sell them. This is the first one that
you need to pay commission. And then this reseller needs to also get some commission
while selling your product. Because this gives them aim
to sell your product, right? And similarly in every
chain, in this way, this retailer also gets
their commission and the wholesaler also gets
their own commission. This can be different
for each channel, or even between the
same type of channels. There might be different stores getting different commissions. This is up to your
negotiation with your channels and also
thinking that how will be representing your
brand properly or what will be the incremental impact other than sales that they're
bringing to the table. For example, will there be
any marketing communication? Will there be proper
representation of your product through the proper staff
and the locations? So brands can pick up
one of these methods. They can go all in
with the direct sales, or they can go both direct
sales and plus retailer, etc. Or a brand can pick up
all of these ways and try to reach their customers in a way as much as possible. But as we mentioned before, this comes with a
high amount of risks. You need to be careful while
picking up your channels. In next lecture, we will have an exercise while building this channel marketing
strategy with some numbers. Thanks so much. See you there.
4. Exercise : Let's Decide the Best Channel Strategy for a Manufacturer: Hello everyone. Now we are going to learn how to build the channel
strategy for a brand. Welcome to our Exercise 18. Imagine that you are a
company owner and you are manufacturing 1,000
products on monthly basis. And you have some
direct salesperson who only works for you
to sell your products. One of the salespersons can sell average hundred
products in a month, except the first month. Because first month it at the period that they
are learning business, learning your product,
how to sell, etc. So let's assume
that they can sell average 34 day or first month. And you have already for
salespeople in your team. So they are able to sell 400 products already
because they're on-boarded. They're selling
for a few months. And you are selling 400 products without any issue through your direct channels. And cost of S direct salesperson
is $5,000 in a month. And product margin for each
product is hundred dollar. When they sell a product, you are getting a
hundred-dollar as a profit. Now, you see that there
is some left product in your storage because this for salespersons can only
sell for hundreds. But you started to
manufacturer 1,000 product, so 600 left in your storage. So you think to enhance your sales strategy or your channels with some
new opportunities. And you are getting in touch with different
third parties. And also you're
considering to hire new salesperson is
a direct channel. Let's see the
assumptions for this. You've found a retailer
can sell monthly 300s, but they ask for commissions
as $30 per sales. Also, you found a wholesaler can sell for
hundreds in a month, but asked for commissions
as $40 per sales. Also, you found the distributor, which works with
several resellers. They can sell monthly up to 600, but they asked for
Commission as $70 per sales. What should be your
channel strategy for the next three months? Let's see the solution. So there are some options. We need to put our
options and we need to calculate how much
money we are going to make and how much money
we are going to pay as commission to the options
of sales channels. Let's start with the
remaining items we mentioned that we have
for direct salesperson, they can sell hundred monthly. So you're selling 400 directly, but you're manufacturing
capacity is 1,000. So the remaining items are 600s. If you go with the option
one, hiring new salespeople, you need to hire six people
because they are going to start selling hundreds
starting from the second month. But in their first month, the cost will be
six, which is this, which is the people that
you hired, and 5,000, which you are money
paying for their salary. In the first month revenue, you are going to sell only 30 through the
each salesperson. So 180 will be your
sales amounts and your product margin will
be hundred. Second month. Similarly, six
multiplied with 5,000, which is their salary. But now they're able
to sell hundreds. Because first months past, they learned the business.
They learn their product. They can sell up to 100, so 600 products you're
selling and you're getting hundreds as a margin
on third month. Similarly, the similar
shape, six people, 5,000 cost, and 600 sales
hundred product margin. Is there any stock remained? Yes, there is. The first month they only sold 180 because remember that they were able to sell only
taught in the first month. So 420 remained in your
stock from the first month. And total revenue that you have made through the
sales is 48,000. Option to retailer. We mentioned that retailer
can sell up to 300 for each month and
they only asked for $30 as their commission. And you are making 300
multiplied with hundred, which is your product margin. And similarly for the other
second and third months, and your remaining stock will be 900s because they can
only sell 300, right? But you are getting 600 surplus monthly as not sold,
not address product. So 300 from here, three on the second mountain than three on that
from third month, there are 900 remaining stock
that you need to manage. And you are making 63,000 as a total revenue from the sales of the products
through the retailer. Third option, wholesaler. Wholesaler can
sell 400 products. We mentioned in that way, but they're asking us
$40 as the commission. You're paying them there $40 and you are getting hundred
as your product margin. And this continues for the
second month and third month. And there is, remains
stuck as 600, because 600 watts the remaining items and you
are selling only 400, 200 remaining from
first month or so, 200 remaining from second and
202, meaning from Turkey. So in total, 600 stock
left your storage, but you get around
72,000 revenue from this channel partner
for adoption reseller. So this reseller and distributor is able to sell up to 600. And the cost of sales, the 600 products are 70. This was the commissioner
amount that they were asking. The revenue that we're making is the product margin
is same as hundreds. So it continues similarly for
the second and third month. And there is no stock left
because you are selling all of the remaining
stock as 600 on monthly basis
and no stock left. But the total revenue
that you're making is even less than retailer or wholesaler because this reseller is asking too much
money as Commissioner. So what we're going to do, we can basically pick up wholesaler and we can
get like seven to 2000. But the problem is
we will be having some additional product
left in our storage. What we're gonna do with them. So instead of going only with one channel partner,
as we mentioned, we can combine more than one to finish our stocks and get the highest revenue
that we can get. In this sense, what
we need to do, which of these channels are
getting less commission? Because if they are
getting less commission, we will be getting
high product margins. Let's say that this is
the retailer, right? Because they are getting
only $30 for sales. So our first partner
will be retailer. We are going to sell 300 products through
the retailer option. As you see here, we're going
to pay 30 for the each cell. And this will continue for
the three months and we will get 63,000,
which is same here. But what will happen
for the remaining 300? We will go with the second
lowest commission option to get the highest
profit profitability, which is the wholesaler
in this picture. So we are going to have a partnership with wholesaler
and we're going to sell our 300 product with
the help of this wholesaler. And we will pay $40
is commission per cell and we will get $100
as the product margin. And this will continue for
each month and we will get 54,000 as revenue in the end of our partnership
with wholesaler. So we don't have any
remaining amount, right. Because we know salt 600s, which was the remaining
amount monthly, and 117,000 is the revenue that we are getting when it's compared with these options. This is the highest one. So what we have done is we
combined two channels in the way that we will get the
highest revenue margins. Because not having any stock left is so important while
managing a business. Because there are also costs which are coming from the
management of this stock. There can be some
warehouse management. There can be some head count
to manage that warehouse, or some operational costs, or some depreciation costs because you left that
product there, etc. This is how we can do, or how we can pick up
the right channels to be able to get the highest
revenues or margins. But imagine that if we would be manufacturing 2000 products instead of 1,000,
what would happen? There will be still
remaining amount. Then we will need to find
new channel partners. But a brand can work
with a lot of channel or a lot of type of third parties. Is it possible? Yes, it is possible. And we are going
to explore this in our next session.
Thanks so much. See you there.
5. Successful Channel Marketing Strategy : Real-Life Example: Hello everyone. So let's have a look for a brand which utilize all channels
in a successful way. Also, they have a proper
brand and channel strategy. Apple. As a manufacturer,
Apple tries to sell their products through their direct channels
to the customers, which we mentioned previously. The official Apple stores
are their own channels, which they manage as a
direct sales channel. They sell their own
products through their official stores
to the customers, their own employees, with their own brand image and
the quality of service. They tried to increase
the amount of sales through direct
channels day-by-day because they make sure that the service quality is
high and they don't pay any commission to
any third party if they sell through
their own channels. Only the cost of operation
of their own stores. As of 2021 total six per cent of overall Apple product sales happens through the
direct channels. And this amount is getting
increased year-by-year. Or they are using
some retailers to sell their products to
the customers as Walmart. Or they have some official wholesale or
distribution partners which cells or distribute the
products to the customers. But it doesn't end here. They equalize the old
possible channels to meet with customers, especially the digital ones. In today's world, any brand should utilize the
digital platforms. It can be a website, it can be an application, it can be an app store
or a digital store, etc. To be able to get
high amount of sales. And Apple use their
digital channels to sell their products
in a good way. They navigate customer
well and they care about the journey
that they're getting into. For example, in their
own official website, there are some navigation
tools which helps customer as showing them where
to buy the Apple product. What is the closest reseller
or Apple Store to you? You can put your address,
city, postcode, etc. The product type that
you're looking for because it's checking
the stock as well. And it tells you that you can go to this store or this reseller. It is only like 1 km, three kilometer to you, etc. But it doesn't enter
the ear here either. They also utilize
telecom companies to reach and utilize
these companies base. Because as a mobile phone
manufacturer company, they know that telecom companies have big base of customers. There are a lot of customers, there's a lot of subscribers
in the monthly packages. And also these telecom
companies have a lot of stores in every
corner of cities. So they want to utilize both
the subscription structure of telecom companies
and their web, the sales web, their stores, and their own digital channels. How they do this, how they utilize the subscription
subscription method. Basically, when you get into a telecom company
as a subscriber, you are giving some
commitments for 12 months, 24 months, et cetera. And Apple is positioning
their product. As a part of this commitments. That customer can pay monthly small amounts to
purchase the products. They are giving easy payment
options to the customer. And also they make sure that customer is using their phone for their through
their lifecycle for 12 months or 24 months. Even they end last step to this chain as a renewal process. For example, in the end of your commitment as
to all 424 months, they give you an
opportunity to renew your phone or upgrade your
iPhone to the new model. So you can give your phone back and you can
get the new model. And they make sure that
you continuously using their device once you get into the structure
as a subscriber, these kinds of methods can help a lot of brand to increase their base with proper marketing or sales channel activities. So in summary, through out your channel
marketing strategy, you should be looking for
any possible channel to reach more customers and
sell more of your products. But you should be careful. We mentioned a lot of risks. So you should be
careful not to dilute your own channel sales and not to damage
your brand image. So always work with
the proper channels or third parties and make sure the service quality that
your customers are getting. Thank you so much. See you in the next session. Bye bye.
6. Summary: Hello everyone. Welcome to our summary lecture
for channel marketing. We have covered and
we have defined channel marketing as a practice of working with a
third party to take your products or
services into market. Basically, you are going
to a third party to sell your product to their
own customers who are telling them sell my
product on your own store. And they are accepting this
in return of a commission. In this way, there are benefits of following
these strategies. But you need to
be really careful because benefits are
coming with risks. What are the benefits? The method of channel marketing
can be cost-effective. Why? Because you are reaching more customers through
less operations cost. You don't need to
open a new store, but you can make your product
available on the store. Or you can make your
brand recognized more through these different
stores or third parties. And lastly, you can
increase your volume of sales through these
different channels. But as we mentioned, there are also risks. These third parties have
their own way of selling. So you have lack of control. Or also, you can know
that they provide the same expert ties as you
provide to your customers. And they might be following different
marketing strategies which are not in line
with your own strategies. And also, they may
not have advanced analytics technologies
to provide you the right data of who's
interested in with your product, how many sales they close, etc. Types of channel
marketing. We deep dive. There are basically
two main types, direct or indirect,
but there are different approach
in indirect side, especially if a
manufacturer sale sells their products to customers directly without any
third party in between, this is a direct sales. Basically, a bakery store
can be an example for they make their product and sell to the customer
in their own store. If a manufacturer
gives their product to a retailer so that they can sell it to their own customers. This is an indirect method and the retailer
is a third party. In this picture, you can
think about a retail shop which sells several
different cloche. They sell H&M, they sell
zara at the same time, etc. Or if manufacturer gives their
product to a wholesaler, and this wholesaler as
a third party cells, this product to customers, this is also indirect. And you can think about
Alibaba as an example for it. Lastly, a little bit
more complicated. And manufacturer can have
distributors to provide the products to
different type of reseller in different
locations, etc. And these resellers sell these
products to the customer. This is also an
indirect methods. And you can think that
HP, as a manufacturer, has their own distributors and these distributors to provide it to different car for stores. And if a customer
goes to the car for and buys an HP laptop. This is an indirect method. However, you need to
provide commissioned to distributor reseller as well. And your margin will be less. Although your volume is higher, your margin, your profit
margin will be less. So you need to be careful while designing your
channel strategies, as we also covered with a
few examples in our course. Lastly, we said that
a brand can do all of these strategies at
the same time in different proportions. So maybe they tried to
focus on more direct sales, but at the same time they
want volumes as well. So they go with indirect to Apple can be an
example for it. They sell their products
through their own stores. However, there are other
distributors or resellers or even wholesalers sells Apple
products to the customers. Thank you so much for being
with me in this course. And please have a look
on the previous courses as well as we covered the
marketing communications, product, market research, etc. And stay tuned are following classes will be
available on Skillshare. By
Tonguc Akbas, Marketing Expert
