Marketing channels are a vital part of any business, as they are responsible for the physical exchange, ownership transfer, promotion, negotiation, financing, risk, ordering and payment of products. Most companies are not in a position to handle all of these tasks themselves, so they rely on marketing to move, manipulate and store their products. Decisions regarding these activities are taken in conjunction with the company's overall marketing strategy and are designed to ensure that customers receive the best possible service. For example, larger companies can offer lower retail prices than their smaller competitors, thus increasing their market share.
Promotion is another important flow in marketing channels and involves the use of persuasive communication such as advertising, personal selling, sales promotion and public relations. Catalog marketing is when companies send out product catalogs to selected addresses that have a high chance of placing an order. In markets where product differentiation has been reduced, success in physical distribution activities can provide a competitive advantage. Retailers are learning that success is not just about increasing market share but also about satisfying and retaining customers who can bring in substantial benefits.
Wholesalers provide producers with extensive market coverage and information on local market trends in an efficient manner. Manufacturers may also use their own sellers to sell to industrial buyers. It is important to note that channel selection is not a static decision but rather an ongoing part of marketing planning. In an advanced economy, most goods produced include wholesale in their marketing channels.