Channel Gap Analysis

 Sources of channel gaps

 Types of channel gaps
 Closing channel gaps
 Gap analysis template
Sources of Gap
 Environmental Bounds: Characteristics
in the market place environment
 Local legal constraints
 Ownership regulation
 Franchise laws
 Sophistication of local physical and retailing
infrastructure
 Roads, warehouses, retail establishments
 lifestyles
Sources of Gap
 Managerial Bounds: Constraints arising
from rules within a company
 Constraint due to lack of knowledge
 Channel flow performance
 Investment levels
 Constraint due to optimization at a higher
level
 Types of Gap
 Demand-side gaps: Service-value Gaps
 SOS<SOD: Amount of service output
supplied is less than that demanded
 Customer dissatisfaction
 Stock outs
 SOS>SOD: Amount of service output
supplied is greater than that demanded
 Profits erode without revenue increase
 Produces non-value added service
 May vary between segments and outputs
 Types of Gap
 Supply-side gaps:
 Results from total high cost for performing
all flows jointly, higher than need be
 Costs of few channels could be higher
 Supply-side gaps can be independent of
demand-side gaps
 High costs are either pushed to customer
resulting in SOS<SOD or channel members
profits erode
 Closing Channel Gaps
 Closing Demand-side gaps:
 Offer multiple tired service output levels to
appeal to different segments
 Expanding or retracting the level of service
outputs provided to target market
 Altering the list of segments targeted
 Closing Channel Gaps
 Closing Supply-side gaps:
 Changing the roles of current channel
members
 Investing in new distribution technologies
to reduce cost
 Bring in new distribution function
specialists to improve the functioning of
the channel
Challenging Env & Managerial
Bounds
 Make all within organization to
participate in channel design process (by
this you can achieve 'buy-in')
 Identify energetic champion to manage
change process
 All changes should be customer driven
 Gap Analysis Template
(Target segment specific)

Bulk Spatial Waiting & Assortment &

Breaking convenience delivery time variety
Level provided (low-ok-high)
Efficiency (ok-high cost)
Source of problem
Environmental-managerial
bounds

Outcome desired

Tactics to close gap

Predicted change in channel
performance