Marketing Channels and Their Functions in Business


Marketing channels play an important role in the economic activities of companies. A business entity can excel at the production of high-quality goods and services, but if it cannot reach its customers, no profit will be made. In the search for ways of reaching consumers, companies turn to market channels. They are as diverse as the products and services they make available. Therefore, each company utilizes some specific marketing channels depending on the function they perform. Understanding what functions marketing channels have is essential in ascertaining the reasons for the companies’ interest in them.

Literature Review

For the purpose of collecting as much information about marketing channels as needed to accomplish the goal of this paper, eight articles were analyzed. Each of them concerns the topic of marketing channels, yet, there are numerous specifics relating to the problem of marketing channels. They involve both producers and consumers, which raises the question of which perspective is more important. Different studies accentuate various aspects, and in order to achieve the most effective comprehension, different viewpoints have to be compared.

The first article is by Key (2017) – “Domains of digital marketing channels in the sharing economy”. It explores the effect the digital revolution had on marketing channels. Key (2017) argues that as the Internet became the fastest means of communication with clients, companies started to shift towards cyberspace as the main promotion platform. Particularly, e-mail marketing, social media posts, and search engine marketing algorithms became the primary channels used by companies to promote their products and services. Key (2017) also notes that these developments are especially evident in sharing economy, which was spearheaded by the advent of digital technologies.

Kort et al. (2018) also emphasize technological development in the process of digitalization of marketing channels. The authors note that the co-existence of tangible products sold via wholesalers and digital products, which are distributed online, has created a contingent product. At the same time, contingent products also make digital ones more expensive. An example of a contingent product is an iPod, which makes MP3 music markets rise in price, according to Kort et al. (2018). Subsequently, companies strive to create contingent products, which would give more financial value to digital goods.

Andersen et al. (2020) focus on the view of marketing channels from consumers’ point of view. The authors argue that in most cases marketing channels are seen as a one-way trip from businesses to consumers. However, companies fail to take consumers’ perspectives into account. As a result, the channels may be structured to suit the needs of companies, but the products and services will not be delivered to the desired audience. Andersen et al. (2018) state as the majority of marketing channels are digital today, they have full control of them. Subsequently, any failures or deficiencies of these channels are the faults of the companies that operate them. The authors believe that companies make a crucial mistake, which can be corrected with the re-orientation of marketing channels to suit customers’ needs.

Ferrell et al. (2017) also study marketing channels within the context of the sharing economy. The researchers believe that modern economic systems are driven by the advent of technology redefine such concepts as access, ownership, and employment. Subsequently, marketing channels are also affected as the distance between the customer and the producer is negated by instantaneous communication. Ferrell et al. (2017) also write about the underappreciated consumers’ viewpoint on marketing channels. The most unusual aspect of this study is that the researchers frame the sharing economy as “a unique marketing channel” (p. 3). The reason for such a choice of words lies in the structure of the sharing economy, which facilitates communication between providers and customers, which is basically a function of a marketing channel.

The idea of technology-driven changes is further developed by Elliot et al. (2018). The authors believe that technological enhancements reduce the inefficiencies of traditional marketing channels. For instance, in order to access a loan, a customer only needs a mobile phone as opposed to the past procedures, where customers had to use bank services and be physically present. Similar to Andersen et al. (2020) and Ferrell et al. (2017), the authors note that mobile technology is insufficiently customerized despite the indications that adopting it to customers’ needs may actually prevent microfinance failures.

Bellin (2016) offers a different outlook on the marketing channels in that it assumes the viewpoint of companies. He argues that any company has to consider cost, control, and coverage trade-offs when establishing a market channel. Although it may seem self-evident, the marketing channel, which would be most suitable for companies is the one, which demands the least resource, while yielding the most benefits. Bellin (2016) does not name any particular solution but rather states that each company decides for itself, which channel is the most appropriate. It is unusual that this study does not accentuate the Internet and its capabilities as platforms to channels as opposed to the aforementioned authors.

Zemanek et al. (2019) offer a retrospective of marketing channels over the past twenty-five years. They note that over this time frame the marketing environment has become increasingly complex. As the Internet and social media overwhelm users with information, it becomes disproportionately challenging to attract their attention to the products and services offered by companies. The subsequent implication is that in order to compete with the unending informational flows, companies have to utilize social media as well and engage in more direct communication with customers, such as e-mailing, podcasts, and posting.

Alves et al. (2016) further develop the idea of using social media as a marketing channel. The authors note that although social media permeate almost any sphere of communication, few people use them for managing relationships with clients. Little research exists on the opportunities of utilizing social media for marketing purposes from companies’ perspectives (Alves et al., 2016). Subsequently, few recommendations are given to companies, which explains the poor performance of many businesses in the sphere of business marketing on the Internet. It is an evident disadvantage as the Internet’s role as a marketing channel will only grow in the future.

Findings of the Research

Risk Diversification of Marketing Channels

Personally, I have uncovered four common themes in the articles, which have surprised me. First, studies agree that marketing channels facilitate the transition of information from producers and manufacturers to customers. According to Andersen et al. (2020), marketing channels “perform some important functions, such as sales, transportation, sorting, financing, and risk-sharing” (p. 45). Ferrell et al. (2017) define a marketing channel as “a group of individuals and organizations that direct the flow of products from producers to customers within the supply chain”. As a result, marketing channels also enable companies to diversify their risks in the supply chain.

Initially, I assumed that companies use marketing channels because they allow them to connect with their consumers. It also seemed to me that any manner of distribution of information is acceptable since it accomplishes the ultimate goal. However, in reality, a marketing channel is also protected by the company’s interest, which can be jeopardized when it is set inappropriately (Bellin, 2016). This discovery raises another question whether any customers exist who also pose risks to the company. If they do, this implies that companies should make effort to protect their channels from reaching these consumers.

Insufficient Representation of Consumers

Perhaps, the necessity to protect one’s interests lies in the overemphasis on the interests of producers, which is also the second theme uncovered. Apparently, marketing channels do not always execute their primary function. Yet, some of the authors, including Andersen et al. (2020), Elliot et al. (2018), and Ferrell et al. (2017), state that consumers’ perspective on marketing channels is underrepresented both in the research and marketing practice. I have always assumed that companies prioritize customers, yet it seems that in reality, their vision of marketing channels is self-centered to the point of self-detriment.

Digitalization of Marketing Channels

The third theme is probably the least surprising, which is the effect of the digital revolution on marketing channels. However, I did not expect that technology-driven change would be so fundamental. The majority of authors note that more and more marketing channels shift towards the Internet as the primary marketing platform (Key, 2017; Kort et al., 2018; Elliot et al., 2018; Alves et al., 2016). It would seem that the Internet outcompetes or at least has the capacity to drive tangent wholesalers out of the market. Such a possibility raises the question of what happens to the people and organizations, which were responsible for maintaining tangible marketing channels.

Another problem arising from the shift towards the Internet is its overcrowdedness. Any user, whether they are a customer of a certain company or not, is overwhelmed with advertisements, posts, promotional videos, and pictures of other companies. Actually, Zemanek et al. (2019) argue that cutting through the informational noise is already a challenge for companies. Information is perceived by consumers the same whether it is written by companies or social media users. Therefore, it seems that any person is capable of maintaining a marketing channel as long as it promotes some product or an idea.

Context of the Sharing Economy

The final theme is the ever-increasing prominence of the sharing economy. Key (2017) and Ferrell et al. (2017) believe that sharing economy is an inherent part of the modern digital society. In essence, it refers to a system where products and services are constantly shared, such as Uber taxi services, MP3 subscriptions, and other shared commodities. Sharing economy also facilitates marketing, as the Internet streamlines communication between the consumer and the provider. As a result, in order to maximize the efficiency of marketing, companies should invest in social media advertising, as they are the primary marketing channels nowadays.

I was particularly surprised by the reasons for the development of the sharing economy. Whereas previously people preferred to own assets, which they would use for their own gain, the modern generation seems to favor sharing over owning (Ferrell et al., 2017). In my opinion, such a mindset also explains why marketing channels have become simpler and more forward. Naturally, technological convenience has also played its role in the growing popularity of Internet-based transactions, but the fact that so many individuals are inclined to share their assets is indicative of the growing mutual business trust in digital marketing channels.

Recommendations for Future Research

The analysis of the articles has showcased three areas, which require further research. First, some authors argue that companies do not consider the consumers’ point of view when structuring marketing channels (Andersen et al., 2020; Elliot et al., 2018; Ferrell et al., 2017). However, none of them explain how companies should balance the perspective of the consumers and their own interests. Belline (2016) argues that companies protect themselves with marketing channels. Further research is needed to understand how marketing channels can protect companies while conveying the necessary information to consumers.

Second, the impact of the digitalization of the economy on marketing channels is not explored enough. Key (2017), Kort et al. (2018), Elliot et al. (2018), and Alves et al. (2016) are all intent on describing the use of cyberspace as the platform for marketing channels, yet none of them explain the implications of this shift for tangent marketing channels. It is not clear whether companies should retain contracts with wholesalers and physical distribution channels, or whether Internet-driven purchases and delivery are likely to oust physical channels out of the competition. Analysis of this sphere may yield answers to the direction of the development of marketing channels in the future.

The third area, which requires further research, is managing informational flows in social media. According to Alves et al. (2016), the performance of companies in the area of social media is not adequate. Naturally, there are brands, which are successful at utilizing digital marketing channels, such as Uber and iTunes, but the majority of companies are not noticeable in the endless flow of information.

Zemanek et al. (2019) argue that the importance of cyberspace in business and communication will only increase. However, if companies are not able to distinguish themselves from other digital content, they will likely fail to reach their audience. Understanding the tools companies can utilize to make meaningful messages via marketing channels requires more research and studies.


Altogether, the analysis has shown that companies not only use marketing channels for a better connection with consumers, but their functions are more diverse, as they include risk-sharing, sales, transportation and sorting. Almost all researchers agree that technology had a fundamental impact on marketing channels. Specifically, the Internet has facilitated communication and connection between the producers and consumers to such a point that most of such interactions transpire in cyberspace.

The research noticeably lacks input on the manner of balancing between corporate interests and consumers’ perspectives, the proper use of social media as marketing channels, and the fate of the tangent wholesalers, research which will expand the comprehension of marketing channels.


Alves, H., Fernandes, C., & Raposo, M. (2016). Social media marketing: A literature review and implications. Psychology & Marketing, 33(12), 1029-1038. Web.

Andersen, P., Weisstein, F. L., & Song, L. (2020). Consumer response to marketing channels: A demand-based approach. Journal of Marketing Channels, 26(1), 43-59. Web.

Bellin, H. (2016). Which marketing channel is right for your company?. Journal of Marketing Channels, 23(3), 157-161. Web.

Elliot, E. A., Ngugi, B., & Malgwi, C. A. (2018). Mitigating microfinance marketing channels inefficiencies with customization of mobile technology. International Marketing Review, 35(4), 619-636. Web.

Ferrell, O. C., Ferrell, L., & Huggins, K. (2017). Seismic shifts in the sharing economy: Shaking up marketing channels and supply chains. Journal of Marketing Channels, 24(1-2), 3-12. Web.

Key, T. M. (2017). Domains of digital marketing channels in the sharing economy. Journal of Marketing Channels, 24(1-2), 27-38. Web.

Kort, P. M., Taboubi, S., & Zaccour, G. (2020). Pricing decisions in marketing channels in the presence of optional contingent products. Central European Journal of Operations Research, 28(1), 167-192.

Zemanek Jr, J. E., Taylor, E. C., Tran, T. P., & Carl, D. (2019). Two decades of the Journal of Marketing Channels: Impacting the present and directing the future of marketing channel research. Journal of Marketing Channels, 1-12. Web.

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