What is a Channel???
Before a consumer buys any product, it must be passed through a chain of organization called “channel”. Channel means employed to distribute goods or services from producers to consumers.
A channel in finance and economics can either mean:
- The system of intermediaries between the producers, suppliers, consumers etc for the movement of a good or service.
- The trading range between support and resistance levels that a stock price has oscillated in for a specific period of time.
The channels vary considerably in complexity depending on the product. Producers selling their products directly to a consumer (like a farmer selling their goods at a farmers market) are the most basic type of distribution channel. Other channels are much more complex, with products sometimes passing from producers to brokers to wholesalers or retailers before finally reaching the consumer. Each step of the distribution channel increases the cost of getting the product to the consumer.
Not all channels move directly toward consumers: business-to-business marketing channels involve transactions between two companies. For example, a technology company may manufacture an internal item, such as a computer chip and sell that product to other manufacturers that use it to assemble hardware components.
A product is usually made by a brand at a factory. The brand then sells this product to a national distributor which sells it to a state level distributor which sells it to a retailer which sells it to a customer. This is an example of a Retail Channel.