Chapter 9

Selected areas for directional marketing planning:

distribution channels in wholesale and retail marketing
SECTION 4
9.5 Directional planning for distribution channels
9.5.1 Overview of distribution channel planning

 Directional distribution planning can be described as an

all-inclusive and incorporated planning process to
accomplish competitive advantage through consumer
service and better value to achieve consumer satisfaction.
 A marketing channel is described as a set of
interdependent enterprises involved in the process of
making a product or service available for use or
consumption.
9.5.1 Overview of distribution channel
planning
 Distribution channel planning must make products and
services available in the right quantities and location, and
on time, requires careful planning because
consumers/customers may have various needs as they
make different purchases. .
9.5.2 Directional planning process for distribution
9.5.2.1 Introduction
 

 Directional distribution planning consists of four

processes, namely:
1. the situation analysis;
2. setting objectives and controls;
3. selecting target market intermediaries;
4. developing a tactical plan to serve as a guide for the
operational distribution managers.
9.5.2 Directional planning process for distribution
9.5.2.1 Introduction
 

 The tactical plans may include:

 modifying current channels;
 adding on a new channel;
 specific promotion campaigns;
 pricing tactics and staffing requirements. 
9.5.2 Directional planning process for distribution
9.5.2.1 Introduction
 

 The steps in directional distribution planning are basically the same as for all
other directional planning, namely:
 environmental analysis;
 setting objectives;
 identifying target markets;
 deciding on the role of distribution;
 determining the number of intermediaries needed;
 selecting a suitable channel type;
 negotiating channel arrangements, and establishing the distribution channel.
9.5.2.2 Environmental analysis  

 Economic environment;
 Competitive environment;
 Sociocultural environment;
 Technological environment;
 Legal environment.
9.5.2.3 Setting objectives 

 Channel objectives differ according to product

characteristics.
 The distribution channel objectives should be formulated
in terms of the service output levels required in the
different market segments
9.5.2.4 Identifying target markets

 Market geography
 Market size
 Market density
 Market behaviour
 Deciding on the role of distribution
9.5.2.5 The number of intermediaries needed

 The number of intermediaries needed to distribute a

product depends on the decision whether to use a direct or
indirect channel.
 Two or more target markets or if it wants to avoid total
dependence on a single contract.
 The enterprise normally uses multiple distribution
channels when it wants to achieve its distribution
objectives
9.5.2.6 Select suitable channel type

 Selecting a channel the channel manager must consider the

market, the product, the intermediary and the enterprise.
 The nature of the target market, consumer buying patterns
play role and product considerations need to be analysed
9.5.2.7 Negotiate channel arrangements

 The manufacturer must analyse the marketing objectives

and the kinds and levels of support needed from channel
members to achieve the distribution objectives.
 When formulating an objective the channel manager must
ensure the he will be able to negotiate the arrangements
necessary to reach the objective.
9.5.2.7 Negotiate channel arrangements

 The channel arrangements, in short, includes: the physical

inventory situation; market conditions; services available;
organisational changes; promotions; pricing; product
characteristics; transport; storage; training of staff; and
financing.
9.5.2.7 Negotiate channel arrangements

 A more detailed aspect to consider and arrange is the

performance on the side of the manufacturer such as:
 The length of the promised order-cycle time
 Meeting promised delivery dates
 Manufacturing and finishing quality of products
 Warranties
 After-sales services
 After-sale follow-ups by representatives
9.5.2.7 Negotiate channel arrangements

 Flexibility of credit policies to meet special situations

 Inventory management counselling and assistance
 Assistance with floor layout
 Conditions regarding updated and current price data
 Cooperative advertising allowances
 Contests
 Allowances for warehouse functions
 The store or distributor’s name mentioned in manufacturer’s
advertising
 Specifications and promotion materials provided by the manufacturer.
9.5.2.8 Establishment of the distribution channel

 Discussions of the mutual needs of all the channel

members (to clarify that the objectives can be achieved),
the manufacturer’s distribution manager must have
consensus on the detail involved in the performance of the
channel.
 This consensus must be reached to assure that everyone is
working together to launch an effective distribution
channel to achieve the directional distribution plan
objectives.