Framework for channel design & implementation

‡ It is of paramount importance to ask what is the ideal marketing channel for a particular product or service because:
± The cost of establishing or changing a existing marketing channel is very high ± And any mistake in the designing / revisiting of the channel could prove to be detrimental & very costly

Tasks involved in channel design & implementation Design: ‡ Segmentation: > Defining the service output demands (SOD¶s) by segments > Identify environmental characteristics & constraints ‡ Positioning > Define channel flow performance for each segment > Define optimal channel structure for each segment .

Tasks involved in channel design & implementation ‡ Targeting > Choose segments to target based on : Environmental bounds : Managerial bounds : Competitive benchmarks ‡ Establish new channels > Channel flow performance > Channel structure .

Tasks involved in channel design & implementation ‡ Refine existing channels > Gap analysis > Channel flow performance > Channel structure ‡ Channel Implementation > Identify power sources > Identify channel conflicts > Use power to manage conflicts ‡ Goals > Channel co-ordination .

Channel Design Segmentation of the market is ‡ Splitting of the market into groups of end users who are a) maximally similar & b) maximally different ‡ Or segments can be defined on the basis of demands for outputs of the marketing channels which as understood before is service outputs ‡ On the basis of environmental characteristics & constraints of consumers service outputs or SOD¶s can be classified as ‡ ‡ ‡ ‡ Bulk breaking Spatial convenience Waiting & delivery time Assortment & variety .

Selective distribution. as if there are no preexisting channels in the market which results in the SOD¶s of the segments being met at a minimal cost .. exclusive distribution ± The above channel structures of type. identity & number of channel members should be done keeping in mind minimization of costs of channel flows which can be done on the basis of Activity based costing or ABC ± These channel profiles are called as zero-based channel because it is designed from zero base of operations ie. The identity of the channel partner at each level Number of channel members i.Channel Design ‡ Positioning ± Is the designing of the marketing channel to meet the segments demands ± The optimal channel is the necessary channel flows that must be performed in order to generate the specific segments SOD ± Each product or service selling situation can have its own unique set of SOD by segment ± The channel structure designing has the following elements ± ± ± ± Who are the channel members from the retailing perspective. Who are the channel members from the distribution perspective.e Intensive distribution .

Channel Design Targeting ‡ Is the explicit understanding of the segments to be targeted & those that need to be ignored for better channel efficiencies based on the segmenting & positioning exercise learning's ‡ This could be influenced by ± Managerial Bounds ± Environmental bounds & competitive bounds .

the SOD¶s are not being met properly ‡ On the supply side the gap could be one of lack of expertise in any of the channel flows which could result in the costs being higher than that the customers are willing to pay & waste of channel resources/ profits ‡ Hence it becomes very important to study these gaps before setting up the marketing channels which when attempted to at a later stage could cause severe setbacks to the organization ..e.Channel Design Establishing new channels or refine existing channels ‡ The channel manager now has to decide if the zero-based channel design has to be implemented in the market place or study the existing channels in the market which would be a gap analysis ‡ Gap analysis is the study of the difference between the zerobased channels & the actual channels on the demand & supply side ‡ On the demand side it could be a situation of undersupply or oversupply i.

‡ There usually is a most important member in the channel who is called as Channel Captain who manages the channel. ‡ And that channel members powers are called Channel Powers which can be defined as ³ its ability to control the decision variables in the marketing strategy of another member in a given channel at a different level´ ‡ It becomes important for this channel power to be successfully influenced over the entire channel for delivery of SOD¶s at a low cost . it is important to induct all the members to implement the channel design appropriately.Channel Implementation Identifying power sources ‡ As has been understood marketing channels is a set on interdependent organizations who specialize in certain activities .

Channel Implementation Identifying channel conflicts ‡ Channel conflicts arise when one or more channel members action prevents the channel from achieving its goals. ‡ Channel conflict can arise because of the following reasons ± Goals conflict ± Domain conflict ± Perceptual conflict ‡ It is important for the channel manager to identify if the conflict is because of poor channel design or poor implementation .

‡ When all the independent organizations are brought together to achieve similar goals and made interdependent the channel becomes coordinated which is the goal of channel implementation .Channel Implementation The goal of channel implementation ‡ Is to ensure that the channel designed with target end users segment's SOD in mind and channel power appropriately applied to ensure the smooth implementation of the optimal channel design.

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