Channel Levels – Consumer and industrial marketing channels

December 23, 2024 | By Hitesh Bhasin | Filed Under: Marketing

Channel levels consist of consumer marketing channels or the industrial marketing channels. A factor common among both channel levels is that both include the producer as well as the end customer.

Table of Contents

1) Zero Level channel / Direct Marketing Channel

Consists of a manufacturer directly selling to the end consumer. This might mean door to door sales, direct mails or telemarketing. Dell online sales is a perfect example of a zero level channel marketing.

2) One Level channel

As the name suggests, the one level channel has an intermediary in between the producer and the consumer. An example of this can be insurance in which there is an insurance agent between the insurance company and the customer. Even E-commerce is an excellent one channel level example – wherein the companies tie up directly with E-commerce portals and then sell in the market.

3) Two level Channel

Two level channel involves the movement of goods from the company to an intermediary, from from the intermediary to another and then to customer. This is also commonly known as “breaking the bulk” in FMCG market. A widely used two level marketing channel especially in the FMCG and the consumer durables industry which consists of a wholesaler and a retailer. So the goods go from company to distributor, distributor to retailer and retailer to consumer.

Looking at real-world examples can deepen our understanding of channel levels.

Case Study: Amazon effectively utilizes multiple channel levels to reach its customers. While it sells products directly to consumers through its platform (zero-level channel), it also serves as a marketplace for third-party sellers (one-level channel). In 2020, third-party sellers accounted for 54% of paid units sold on Amazon (Amazon Annual Report, 2020), demonstrating the success of combining different channel levels to meet diverse consumer needs.

Case Study: Tesla’s direct-to-consumer sales model is a prime example of a zero-level channel. By bypassing traditional dealerships and selling directly to customers, Tesla maintains greater control over pricing and customer experience. In 2020, Tesla delivered nearly 500,000 vehicles worldwide, a 36% increase from the previous year (Tesla Annual Report, 2020), highlighting the effectiveness of their direct sales approach.

Also Read What is Boundary Spanning? Definition, Examples & Uses to an Organization

4) Three level channel

Again observed in both the FMCG and the consumer durables industry, the three level channel can combine the roles of a distributor on top of a dealer and a retailer. The distributor stocks the most and spreads it to dealers who in turn give it to retailers.

In the three level channel, the example can be taken of Ice cream market. Because of the manufacturing levels required, Ice cream markets have C&F agents who stock the ice cream in refrigerated cold rooms. These ice creams are then transported to local distributors who also have refrigerated cold rooms. The distributors then transport to local dealers who will have 10-12 small freezers. And finally it is transported to the retailer who will have 1-2 freezer of each company.

Here are perfect representations for channel levels between consumer marketing channel and an industrial marketing channel.

Liked this post? Check out the complete series on Distribution

About Hitesh Bhasin

Hitesh Bhasin is the Founder of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about.

Comments

iftekhar khan says

sir please tell me something about channel sale and difference between the distributor and wholesaler
sai poojitha says

Hi Sir I am student pursuing my MBA i need a few articles on levels of distribution strategy for my project purpose could you please help me on the same
- Hitesh Bhasin says
  
  Here is an article on distribution strategies – https://www.marketing91.com/distribution-strategies/
minlwin says

I would like to learn how to get more sales knowledge and good sales
veerabhadra says

what is the buying process of nestle maggi ? ( both in the view of company sales and consumer
buy)
Maria Kuenz says

Hello,

I am neophyte . My boss asked me to go out Market for our sandwich shop. He want me to go face to face and tell people about the food store. Any suggestion. Truly Idk do I handout coupons. Please help me.

Sincerely,

Maria…
- Hitesh Bhasin says
  
  There are multiple marketing tactics you can use. Start a whatsapp group. Giving handouts is one of them. Marketing on food aggregator apps. Doing a google my business optimization. Theres many ways for it.
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