To illustrate why companies need support from their partners and channels in this hyper-competitive business world, we need to walk through some form of an analogy from the world of fluid mechanics and engineering. Do not worry, for there will be no complicated diagrams, equations, graphs and other forms of representing mathematical truth in this post. This has been written keeping in mind the generic and diverse background of our readers, and the purpose of the illustration is to further elucidate the technical topic we are about to discuss today. While it may seem strange that to explain a topic from management and marketing theories we are bringing examples from the engineering world, but the analogy surely serves the purpose in the best possible way.
All of us has seen overhead water tanks – the monstrous containers which stands with the support from pillars and stores water that we use in our daily lives for different purposes like drinking, cooking, bathing, washing and what not! However, the large tank itself is of little value if the common public for whom these tanks have been erected does not get clean flowing water when they open their taps. The tank is the source of the elixir of life, while the taps are the end points where the consumption happens. There is no value of standalone tanks with large quantities of clean water stored in them, if the common public does not consume the water or pay for it.
But water reaches to the public from these tanks through a complex networks of pipes or channels. These pipes can reach the individual homes and terminate in taps, hoses, toilet flushes. The pipes do the job of transporting the small and required chunks of the fluid to those who consume it and in some form or the other, pay for it, may it be municipal or state taxes or as per the reading in meters installed for water consumption. The collection of the tank, pipes and taps is what makes the system tick; when they are isolated they have no value, but when made to work using definite scientific and engineering principles, it makes civilized life possible. Among all the fundamental principles and properties involved in this system, gravity of earth and viscosity of water forms the basic framework, exploiting which the engineering of such systems are done.
The same is the case for the relationship between companies and their channel partners, especially in marketing and sales. The company on its own can achieve very little, but when it teams up with smaller businesses and leverages their strengths, magic is created through-channel marketing. This being an artificial contract, the guiding rules and frameworks are laid down by the parent company, which is obliged by the company as well as the channels. However, the point is that this arrangement is mutually beneficial – the company can reach its masses and target audiences in markets that would have never been possible in isolation, whereas the channels get a share of the profit while riding on the infrastructure of the parent company. In modern businesses, it is only through-channel marketing that companies can form a network that does the job of reaching out to the public on their behalf, and help bring the money back to the balance sheets.