Prateek Kumar (CM15224)

Vaishali Verma (CM15234)

 A channel of distribution comprises a set of institutions which perform all
of the activities utilized to move a product and its title from production to
consumption.

 Channel design decisions are critical because they determine a product’s

presence and buyer’s accessibility to the product. Channel decisions have
additional strategic significance because they entail long-term
commitments. It is usually easier to change the prices or promotion than to
change marketing channels.
 1. MARKET DIMENSIONS
market geography
market size
market density
market behaviour

 2. PRODUCT DIMENSIONS
bulk and weight
perishability
unit value
newness

 3. COMPANY DIMENSIONS
Size
Financial capacity
Managerial expertise
Objectives and strategies
 4. INTERMEDIARY DIMENSIONS
Availability
Cost
Services

 5. ENVIRONMENTAL DIMENSIONS
 Defining the customer needs

Defining the channel objectives

Channel alternatives

Evaluation of major alternatives

Ideal channel structure

 1. DEFINING THE CUSTOMER NEEDS:

It includes:
 Product information
 Product customisation
 Product quality assurance
 Lot size
 Product variety
 Spacial convenience
 Waiting and delivery time
 After sales service
 logistics
 2. DEFINING CHANNEL OBJECTIVES:
 Perishable product requires more direct marketing.
 Bulky products, such as buildings materials require channels that minimize the shipping
distance and amount of handling.
 Non-standard products such as custom built machinery and specialised business forms, are
sold directly by company sales representatives.
 High-unit value products such as generators and turbines are often sold through a company
sales force rather than intermediaries.

 3. CHANNEL ALTERNATIVES:
at the time of deciding, the company will scan for:
i) types of intermediaries
ii) number of intermediaries
iii) cost of channel system
iv) terms and responsibilities of channel members.
 4. EVALUATION OF MAJOR ALTERNATIVES:

 Economic criteria
 Control criteria
 Adaptive criteria

 5. IDEAL CHANNEL STRUCTURE:

 With the completion of forgoing steps, the number of alternatives would have narrowed
down considerably. The firm must evaluate, design and chose the best among them.
 SEGMENTATION

Splitting the market into groups of end-users who are:

1. maximally similar within each group and
2. maximally different between groups

 POSITIONING

Occurs when the channel manager defines the optimal channel to serve the needs of end-
users as segmented by their service output demands.
 TARGETING
At this stage of analysis it becomes important to not only determine what segments to target, but
which segments to ignore.

 ESTABLISH NEW OR REFINE EXISTING

When preexisting channels are in place in the market, it is important to perform a gap analysis. If
a new channel is being formed, the goal is to strive for zero-based.
Gap Analysis = Δ of zero-based vs. actual channels on the demand and supply side.
 IDENTIFY POWER SOURCES
The role of the channel manager is to continuously and dynamically manage channel
initiatives and relationships via realms of influence over channel power.

Listen well, understand, relate:

Get to know the needs of each channel member/segment and the relevant nuances of their interdependent relationships.
(mentally walk a mile in their shoes)

 IDENTIFY CHANNEL CONFLICTS

When one channel member’s actions prevents the channel from achieving its goals:
 Goal conflict
 Domain conflict
 Perceptual conflict
 GOAL OF CHANNEL COORDINATION
A channel is coordinated when:
disparate channel members are brought together to advance the goals of a channel in
harmony in spite of their independent and likely conflicting goals.

This is the ultimate goal of channel management

Decisions about a product’s physical movement and transfer of ownership from
producer to consumer.

 FIRST - Setting channel objectives

 Determine what the company is trying to achieve
 Meet the needs and wants of their target market
 Give their product a competitive edge

 SECOND - Channel members:

– Selection
– Management
– Motivation
– Evaluation
Determine the types of members the belong in the channel, as well as the
channel length (total number of channel members)
 Usually based on the nature of the product
 Factors to consider:
 Create product value that others cannot or are not willing to provide
 Channel the product to its desired market
 Have a pricing and promotion strategy compatible with the product’s
needs
 Offer customer service compatible with the products needs
 Be willing and able to work cooperatively with other members within
the product’s channel
 Determining channel responsibilities
• Members must work together appropriately and perform the tasks they
are best suited for

 The company must sell not only through the intermediaries but also
to/with them
 Develop a cooperative/collaborative and balanced relationship with the
partner
 Understand the partner’s customers – their needs, wants, and demands
 Understand the partner’s business – operationally and financially and
what’s really important to them
 Look at the partner’s needs in terms of customer support, technical
support, and training
 Establish clear and agreed upon expectations and goals
 Develop recognition programs focusing on the partner’s contributions
 Build internal support systems and dedicate resources to the partner
Produces must evaluate intermediaries performance against such standards as:
 Sales quota attainment

 Average inventory levels

 Customer delivery time

 Treatment of damaged and lost goods

 Cooperation in promotional and training programs.

Should constantly evaluate the channel:

 What is working?

 What is not working?

 What can be improved?