How should channels be designed ?

ANALYZING CUSTOMER NEEDS

AND WANTS

1

LOT SIZE : The number of units the channel permits a typical customer to purchase.

WAITING AND DELIVERY TIME : Average time the customer waits for the receipt of goods.

SPATIAL CONVENIENCE : The degree to which the marketing channel makes it easy for customers to purchase the product. Toyota offers better spatial convenience than Lexus because it has more dealers.

PRODUCT VARIETY : The assortment provided by the marketing channel.

SERVICE BACKUP : Add-on services(credit, delivery, installation, repairs) provided by the channel.

ESTABLISHING OBJECTIVES AND CONSTRAINTS2

The objective is to maximise the profit, minimise the costs and still provide desired levels of service.

Designed to fuel excitement for the brand, Apple lets people touch their products. They target tech-savvy customers with in-store product presentations and workshops.

IDENTIFYING MAJOR CHANNEL

ALTERNATIVES

3

TYPES OF INTERMEDIARIES

An electronic company that produces satellite radio sells it to automobile manufacturers, through a direct sales force or distributors or company stores or online retailers or mass merchandisers.

NUMBER OF INTERMEDIARIES

Three strategies based on the number of intermediaries are exclusive distribution, selective distribution and intensive distribution.

Exclusive distribution means severely limiting the number of intermediaries.

Selective distribution relies on only some of the intermediaries willing to carry a particular product.

Intensive distribution places the goods or services in as many outlets as possible.

TERMS AND RESPONSIBILITIES OF CHANNEL MEMBERS

Each channel member must be treated respectfully and given the opportunity to be profitable.

Price Policy calls for the producer to establish a price list and schedule of discounts and allowances.

Conditions of sale refers to payment terms and producer guarantees.

Distributors territorial rights defines the distributors territories and the terms under which the producer will enfranchise other distributors.

4EVALUATING

MAJOR CHANNEL

ALTERNATIVES

ECONOMIC CRITERIA : Each channel alternative will produce a different level of sales and profits.

CONTROL AND ADAPTIVE CRITERIA : Using a sales agency may pose a control problem.

Created by NILESH RANA of IIT BHU under the guidance of Prof. SAMEER MATHUR , IIM LUCKNOW

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