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In the Business Model Canvas, channels aren't just about getting products from point A to point B—they're the critical link between your value proposition and your customer segments. You're being tested on understanding how businesses raise awareness, enable purchases, deliver value, and provide post-purchase support. The channel choices a company makes directly impact its cost structure, revenue streams, and customer relationships, making this one of the most interconnected building blocks on the canvas.
Don't just memorize a list of channel types. Know why a business would choose one channel over another, how channels can be combined into an effective channel mix, and what trade-offs exist between reach, cost, control, and customer experience. When you see an FRQ asking you to design or critique a business model, your channel analysis will reveal whether you truly understand how the nine building blocks work together.
Direct channels eliminate intermediaries, giving businesses complete control over the customer experience—but requiring them to build all capabilities in-house. The trade-off is always between control and scalability.
Compare: Direct Sales vs. Telesales—both enable personal interaction and real-time feedback, but direct sales offers richer relationship-building while telesales scales more efficiently. If an FRQ asks about cost-effective ways to maintain customer relationships, telesales is your go-to example.
Digital channels leverage technology to reach customers efficiently and gather valuable data. The mechanism here is removing geographic and time constraints while enabling personalization through analytics.
Compare: Mobile Apps vs. Email Marketing—both are owned digital channels enabling direct customer communication, but apps require higher development investment while offering richer engagement. Email has lower barriers but competes in crowded inboxes.
Indirect channels use intermediaries to extend reach and capabilities. The core principle is trading margin for access—you give up some profit to gain distribution, expertise, or customer relationships you couldn't build alone.
Compare: Wholesalers vs. Affiliate Marketing—both extend reach through third parties, but wholesalers take physical possession of products while affiliates only drive traffic. Wholesalers suit physical goods distribution; affiliates excel for digital products and e-commerce.
These channels prioritize engagement and community-building over direct transactions. The underlying mechanism is leveraging social proof, user-generated content, and network effects to build brand equity.
Compare: Social Media vs. Direct Sales—both build customer relationships, but social media scales infinitely while sacrificing depth. Direct sales creates stronger individual relationships; social media builds broader brand communities. Consider which matters more for your value proposition.
| Concept | Best Examples |
|---|---|
| High-touch relationship building | Direct Sales, Telesales, Retail Stores |
| Scalable digital reach | Online Platforms, Mobile Apps, Email Marketing |
| Third-party leverage | Wholesalers, Partner Networks, Affiliate Marketing |
| Data collection and personalization | Online Platforms, Mobile Apps, Email Marketing |
| Low marginal cost per customer | Email Marketing, Social Media, Affiliate Marketing |
| Physical product experience | Retail Stores, Direct Sales |
| Community and engagement focus | Social Media, Mobile Apps |
| Performance-based costs | Affiliate Marketing, Telesales |
Which two channel types both enable personalized customer communication but differ significantly in development costs and engagement depth?
A startup with limited capital wants to reach customers nationally without building its own distribution infrastructure. Compare two indirect channel options and explain the trade-offs between them.
How do owned channels (like email and mobile apps) differ from partner channels (like affiliates and wholesalers) in terms of control, cost structure, and customer data access?
If a business currently relies on wholesalers but wants to build stronger direct customer relationships, which channels would you recommend adding to their channel mix, and why?
An FRQ describes a luxury furniture company considering whether to sell through retail stores or online platforms. What factors related to customer experience, cost structure, and brand positioning should inform this channel decision?