CHANNEL DESIGN DECISIONS

How should Marketing Channels be designed ?

To design a marketing channel system , marketers analyze the following :

Analyzing Consumer Needs

A. LOT SIZE

Hertz preferred a channel from which it can buy a large lot size

A HOUSEHOLD wants a channel that permits buying a LOT Size of 1.

B. WAITING AND DELIVERY TIME The average time customers wait for receipt of goods. Customers increasingly prefer faster delivery channels .

C. SPATIAL CONVINIENCE

The degree to which marketing channels makes it easy for customers to purchase the product

Example : Chevolet offers greater spatial convenience to its customers

Chevrolet’s greater Decentralization helps customers save on transportation and search costs in buying and repairing an automobile .

D. PRODUCT VARIETY

The Assortment provided by the Marketing channel

E. SERVICE BACK-UP

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

ESTABLISHING CHANNEL OBJECTIVES

Marketers should state their channel objectives in terms of :

Service output levels Associated cost and support levels .

Channel objectives vary with product characteristics :

For say :

Bulky materials require channels that minimum shipping distance and the amount of handling

ECONOMIC DEPRESSION SITUATION LEGAL RESTRICTIONS & REGULATIONS

CONSTRAINTS

IDENTIFYING ALTERNATIVES

Companies can choose from a wide variety of Channels

Channel Alternatives differ in 3 ways which are :

1 TYPES OF INTERMEDIARIES

Sales Force Industrial Distributors Manufacturers’

Agency

2 NO. OF INTERMEDIARIES

1. Exclusive Distribution

2. Selective Distribution

3. Intensive Distribution

Three Strategies based on the no of Intermediaries are :

3TERMS & RESPONSIBILITIES OF CHANNEL MEMBERS

1.Price Policy

2.Conditions of Sale

3. Distributors’ territorial rights

4. Mutual services &

Responsibilities

These slides were Created by Jalaj Garg, IIT Guwahati, during a Marketing internship by Prof. Sameer Mathur, IIM Lucknow.(see www.IIMInternship.com)