frame work for channel analysis
TRANSCRIPT
8/3/2019 Frame Work for Channel Analysis
http://slidepdf.com/reader/full/frame-work-for-channel-analysis 1/21
8/3/2019 Frame Work for Channel Analysis
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Guides the channel managers
--initial design of the channels--ongoing management over time
Creating new channels in already existingmarkets
8/3/2019 Frame Work for Channel Analysis
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INSIGHTS FOR SPECIFIC CHANNEL INSTITUTIONS:Retailing, Wholesaling and Logistics, Franchising
Channel Design Process:
SEGMENTATION: Recognize and respond to target customers·service output demands
DecisionsAbout
Eff icient Channel Response:
CHANNEL STRUCTURE:What kinds of intermediaries are in my
channel?Who are they?How many of them?
SPLITTING THE WORKLOAD:With what responsibilities?
DEGREE OF COMMITMENT:
Distribution alliance?
Vertical integration/ownership?GAP ANALYSIS:
What do I have to change?
Channel Implementation Process:
CHANNEL CONFLICT:Identify actual andpotential sources
MANA
GE
/DE
FUSE
CONFLICT:Use power sources strategically,subject to legal constraints
GOAL: Channel Coordination
CHANNEL POWER:
Identify sources for allchannel members
FRAMEWORK FOR CHANNEL DESIGN AND IMPLEMENTATION
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Producing the channel service outputs to theend users in an efficient way and at a minimumpossible cost.
-to understand what the work of channel is
-what type of intermediaries must beincluded in the channels
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Segmentation
Channel structure decisions
S
plitting the workload Degree of commitment
Gap analysis
8/3/2019 Frame Work for Channel Analysis
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Splitting the market into groups of end-usersdepending upon what type of channel outputsthey need.
The value added services created by thechannel members along with the product arecalled as service outputs.
bulk breaking, product/usage information,customer service, delivery and waiting time etc..,
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Based on the segment the channel structure isdesigned.
STEPS:
1. Types of channel members
2. Identities of specific channel members
3. Channel intensity
(intensive, selective, exclusive)
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Assign channel flows to channel members
Meet target segment·s service output demands
Reliable
Minimize total cost, while meeting service level
minimum cost can be achieved by ActivityBased Costing (ABC)
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Transactional relationships
Pursue individual goals
No guarantee of continued business
Alliances
Enduring connections throughout companies
Pursue common goals
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This is a stage of deciding what to target &what not to target
This keeps the channel focused on key
segments for profitable sales
Reason for not all segments being targeted
Internal: Managerial bounds(unwilling to allocatefunds)
External: Environmental bounds & Competitivebounds
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If no channel, knowledge of optimal channel toreach the segment & the bounds will help
If channel exists then Channel manager should
perform gap analysis
Gap analysis: The difference b/w optimal &actual channel
Gaps exist both on supply as well as demandside.
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Demand side: Service o/p demand not appropriately met
U
nder supplied or over supplied Undersupply will lead to dissatisfaction
Oversupply leads to higher prices for end users
More than one service o/p means several gaps needattention
Supply side: Here gaps means high cost of channels
Leading to low profit margin, high price for end users,reduced sales & market share
It is due to lack of up-to- date expertise in channel flow orwaste in the channel
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There are strategies to close gaps in channel
Closing the gaps is costly & very difficult
So initial channel design has strategicimportance
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Identifying power sources
Identifying channel conflicts
The goal of channel coordination
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Implementing optimal channel design is veryimportant
Channel·s multiple entities may or may not
have same incentives to implement channeldesign.
Failure by one may cause a fatal damage. Eg:
poor transportation system Including all entities is very critical
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Implementing channel design withinterdependent channel partners requirespossession and use of channel power.
Channel member power: Ability to control thedecision variables in marketing strategy ofanother member
I
t will help to deliver the demanded serviceoutput at a lower cost.
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Is common and dangerous for achieving thegoals
Affects overall success of channel efforts &
harm total channel performance
Goal conflict: difference between channelmembers goals & objectives
Domain conflict
:difference over domain ofaction & responsibility in channel
Perceptual conflict: differences in perceptionsin marketplace
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Management should do the following
First: Channel manager should identify theconflict
Second:He should take actions to manage &reduce those channel conflicts
Conflicts are reduced by using channel power.
Eg: Manufacturer and distributor having goalconflict
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It is not a one time achievement
But an ongoing process of analysis & responseto the
market,
competition,
the abilities of the members of the channel
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Retailers
Wholesalers
Logistics firms
Supply chain issues
Franchises