Designing Channel Systems
Marketing 104
Product and Distribution Management
Designing Channel Systems
Elyssa Lucagan
Julienne Anne Imperial
Channel Design Factors
• Product Mix and Nature of Product
• Marketing Mix Elements
• Width and Depth of market/outlet coverage planned • Long term commitments to channel partners
• Level of customer service planned
• Cost affordable on the channel system
• Channel control requirements of the company
CHANNEL DESIGN AND PLANNING
PROCESS
• Define customer needs
• Clarifying channel objectives
• Looking at alternative systems which can meet objectives • Cost of the channel
• Evaluating alternatives to hone in the ideal channel system
Channel design and Planning Process
• The channel has to be a combination of
REVENUE GENERATION/COMMERCIAL PART and PHYSICAL DELIVERY of goods/services/logistics/supply chain part
• Pay attention to all links in reaching the product from the manufacturer to the enduser
Variables which Affect the Channel Structure
• Market related: the summary of the consumer needs which is aggregated at the market level
• Product related: physical characteristics– size, weight, unit, value, perishability influence the channel structure.
• Company related: based on the size of the company, its products, financial strength (affordability) and managerial capabilities. • Intermediary related: depends on what kind of channels are likely to be available, how much would it cost to run them and what services are they capable of offering
• Environment Related: not in the control of the company which is trying to build a channel system. Including social, cultural, legal, economic, technological framework of the geography where the system is being set up.
Stages in Channel Planning
Segmentation
Positioning
Focus
Development
SEGMENTATION : putting customers in similar groups based on their needs
POSITIONING: creating the ‘right’ channel system to meet the customer needs
FOCUS : on the ones the channel system will address DEVELOPMENT:
Product and Distribution Management
Designing Channel Systems
Elyssa Lucagan
Julienne Anne Imperial
Channel Design Factors
• Product Mix and Nature of Product
• Marketing Mix Elements
• Width and Depth of market/outlet coverage planned • Long term commitments to channel partners
• Level of customer service planned
• Cost affordable on the channel system
• Channel control requirements of the company
CHANNEL DESIGN AND PLANNING
PROCESS
• Define customer needs
• Clarifying channel objectives
• Looking at alternative systems which can meet objectives • Cost of the channel
• Evaluating alternatives to hone in the ideal channel system
Channel design and Planning Process
• The channel has to be a combination of
REVENUE GENERATION/COMMERCIAL PART and PHYSICAL DELIVERY of goods/services/logistics/supply chain part
• Pay attention to all links in reaching the product from the manufacturer to the enduser
Variables which Affect the Channel Structure
• Market related: the summary of the consumer needs which is aggregated at the market level
• Product related: physical characteristics– size, weight, unit, value, perishability influence the channel structure.
• Company related: based on the size of the company, its products, financial strength (affordability) and managerial capabilities. • Intermediary related: depends on what kind of channels are likely to be available, how much would it cost to run them and what services are they capable of offering
• Environment Related: not in the control of the company which is trying to build a channel system. Including social, cultural, legal, economic, technological framework of the geography where the system is being set up.
Stages in Channel Planning
Segmentation
Positioning
Focus
Development
SEGMENTATION : putting customers in similar groups based on their needs
POSITIONING: creating the ‘right’ channel system to meet the customer needs
FOCUS : on the ones the channel system will address DEVELOPMENT: