Channel Strategy

The broad principles by which

the firm expects to achieve its
distribution objectives for its
target market(s)

Six Fundamental
Strategic Distribution
Decisions

What role should distribution play in the firms

overall objectives and strategies?
What role should distribution play in the
marketing mix?
How should the firms marketing channels be
designed to achieve its distribution objectives?

Six Fundamental Strategic

Distribution Decisions
(Contd)

What kinds of channel members should be

selected to meet the firms distribution objectives?
How can the marketing channel be managed to
implement the firms channel design effectively
and efficiently?
How can channel member performance be
evaluated?

Channel Design

Those decisions involving the

development of new marketing
channels where none had existed
before, or the modification of
existing channels

Channel Design and

Differential
Advantage
The design of the channel should
contribute to the firms quest for
Differential Advantage

Paradigm of the
Channel Design
Decision
Recognize need for channel design decision
Set and coordinate distribution objectives
Specify distribution tasks
Develop possible alternative channel structures
Evaluate variables affecting channel structure
Choose the best channel structure
Select the channel members

Channel Design Decision

Phase 1:
Recognize Need for Channel Design
Decision
Obvious examples pp. 200-201 in text
But many times the need to make channel
design decisions is not obvious

Channel Design Decision

Phase 2:
Set & Coordinate Distribution
Objectives
Become familiar with objectives of firm
Set explicit distribution objectives
Check for congruency

Channel Design Decision

Phase 3:
Specifying Distribution Tasks

Dont underestimate all of the nuts

and bolts necessary to make
products and services conveniently
available to customers

Channel Design Decisio

Phase 4:
Develop Alternative Channel
Structures

Number of levels

Intensity at various levels

Types of intermediaries

Channel Design Decisio

Phase 5:
Evaluate Variables Affecting channel
Structure
Market variables
Product variables
Company variables
Intermediary variables
Environmental variables
Behavioral variables
Heuristics play an important role

Channel Design Decisio

Phase 6:
Choosing the Best Channel
Structure
Product-based models (Aspinwall)
Financial Approach
Transaction Cost Analysis Approach
Management Science Approach
Judgmental Heuristic Approach

Channel Design Decision

Phase 7:
Select the Channel Members
Finding perspective channel members
Applying selection criteria
Securing perspective channel members

Target Markets and Channe

Design Strategy

Work backwards from what the

final customers wants. A bottom
up approach.

Framework for Market

Analysis
Market geography
Market size
Market density
Market behavior
when customers buy
where customers buy
how customers buy
who buys

Who Buys?

Who makes physical purchase?

Who uses the product?
Who influences the buying decision?

Channel
Management

The administration of existing

channels to secure the cooperation
of channel members in achieving
the firms distribution objectives

Motivating
Channel Members

Find out needs and problems

Offer support consistent with
channel member needs
Provide leadership

Learning About Channel

Members Needs and
Problems
Grapevine (informal communications
network)
Inside research
Outside research
Marketing channel audit
Distributor advisory councils

Support for Channel

Members

Cooperative approach
Partnership approach
Distribution programming approach

Product Issues in
Channel
Management

New Product Planning and Development

Product
Strategic

Life Cycle

Product Management

New Product Planning and

Development

Channel member input

Acceptability
Fit with channel member assortments
Education and training
Problems?

Product Life Cycle

What are the channel management
implications during each stage?
Introduction
Growth
Maturity
Saturation
Absolute decline

Strategic Product
Management
Product

differentiation
Product positioning
Product line expansion
and contraction
Trading up and trading
down
Brand strategy
Service strategy

Pricing in Channel
Management
Cost
Market
Competition
Channels

Promotion Through the

Channel
Vs.

Pull versus Push

Promotional Strategy

Classic Push
Promotional
CooperativeStrategies
advertising
Promotional allowances
Displays and selling aids
In-store promotions
Contests and incentives
Special promotional deals and merchandise
campaigns

Kinder and Gentler

Push Promotional
Strategies
Training
Quotas
Missionary selling
Trade shows