Final answer:
A marketing channel involves entities and processes that move goods from production to consumption. Costco uses a warehouse club channel to sell directly to consumers in bulk, which allows for lower prices due to lack of intermediaries and a membership-based model.
Step-by-step explanation:
A marketing channel is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Its purpose is to ensure that goods are available for consumption by transferring them from the point of production to the point of sale.
Costco employs a warehouse club channel, which is a type of direct selling. This channel strategy involves bulk selling directly to the consumer without the intermediary steps that other traditional retail models might use. As a result, Costco is able to offer lower prices and a reduced range of SKUs in comparison to more traditional retail outlets. Costco's method relies on a membership-based system where customers pay an annual fee to access these lower-priced goods in bulk, which characterizes its unique approach to distribution and sales.
Types of Marketing Channels
- Direct Selling
- Retail
- Wholesale
- E-commerce (online sales)
- Franchising