Wellness & Health Innovation, Hillington Park Innovation Centre, 1 Ainslie Road, Glasgow G52 4RU E: rowan.norrie@innovationcentre.org W: www.wellnesshealthinnovation.org T: 0141 585 6300

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11 Cs for Channel Selection

Customer characteristics: Who is the customer? What are their needs? Where would they buy your product?

Culture: What is the ‘norm’ in the targeted country? How this would influence sales of your product?

Competition: what is the alternative for your product? What are customers currently using? How strong is the competition in each country?

Company objectives: What are the company objectives for market share and profitability in short term? Medium term? Long term?

Character: What is the nature of your product? How is it positioned?

Capital: What capital do you have to invest in new markets?

Cost: What does it cost to produce your product? What is the price to customer?

Coverage: What is your current/future geographic coverage? Does your product require intensive, selective or exclusive distribution coverage?

Control: How much control would you like to retain on your product with regards to the product/quality/image?

Continuity: How important is it to maintain continuity in the marketplace?

Communication: How and what needs to be communicated about your product? How complex is this task? Who is best placed to carry out this task?

Introduction When looking to expand internationally, one of the most difficult decisions is which channel of entry to select. The options are:-

� production in the home market with direct export via a foreign distributor or agent;

� production in the home market followed by indirect export via a trading company or to piggyback with an associated product;

� foreign production with contract manufacture, licensing, assembly, joint venture, 100% ownership;

� combinations of the above.

The answer depends on factors specific to your industry (for example, where the customer will purchase the product and the extent of your competition) and some factors that are specific to your company (for example, what your goals regarding international business growth).

Simple Decision Tool One systematic approach is to use the 11 Cs for Channel Selection tool (see right). Select each of the 11 Cs in turn, consider the questions and create a list of criteria.

Now create a matrix with the evaluation criteria down the left-hand column and the channel options along the top row; Excel is ideal for this (see Table 1). Now complete the matrix by scoring each channel option for each criteria. The scoring can be from 1 to 5, with a 1 scoring low and a 5 scoring high. You can create weighted options for each criterion if some are more important than others. In this case you would set up the matrix to multiply the score by the weighted factor.

Once you have completed the matrix, add up the scores to see which channel comes out as the top option. More research would be required, but the Matrix Tool is a useful first step for channel selection to ensure that you have considered all the key issues.

Indirect export

Direct export

Local assembly Licensing

Joint venture

100% owned

operation Number of markets Market penetration Customer contact Investment required Flexibility Control etc

Table 1 - Sample Matrix for Channel Selection

Useful links:- Scottish Development International www.sdi.co.uk/ UK Trade and Investment www.ukti.gov.uk/export.html

Wellness and Health Innovation Tools International Channel Selection Tool