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First , the channel structure must be designed to accomplish desired marketing objectives.
Difficulty to selecting channel
the alternatives are numerous
marketing goals differ
the variety of business market segments often requires that separate channels must be employed concurrently.
Second , once the channel structure has been specified, the business marketer must manage the channel to achieve prescribed goals.
Channel Component Dimensions Marketing channels
The link between manufacturers and customers is the channel of distribution.
Channel management centers on these questions: which channel tasks will be performed by the firm and which tasks, if any, will be performed by channel members?
Channel Alternatives in the Business Market Marketing channels
1. The customers are large and well defined. Direct Sales Approach is Viable When: 2. The customers insist on direct sales. 3. Sales involve extensive negotiations. 4. Control of the selling job is necessary to ensure proper implementation of the total product package and to guarantee a quick response to market conditions. Marketing channels
Indirect Distribution is Generally Found Where
Markets are fragmented and widely dispersed.
Low transaction amounts prevail.
Buyers typically purchase a number of items.
E-Channel Use Level 1: Information Platform. Level 2: Transactional Platform. Level 3: Platform for Managing Customer Relations. Marketing channels
They stock and extensive variety of products.
Focus on one line or on a few related lines.
Operates in two markets: industrial and consumer.
Three Primary Distributor Classifications Marketing channels
Channel design is the dynamic process of developing new channels where none existed and modifying existing channels.
Channel design is an active rather than a passive task.
The Channel Design Process Marketing channels
Frequently, the manager has little flexibility in the selection of channel structures because of trade, competitive, company, and environmental factors.
The decision on channel design may be imposed on the manager.
Factors Limiting Choice of Industrial Channel
Availability of Good Intermediaries
2 Traditional Channel Patterns
4.Company Financial Resources
6.Geographic Dispersion of Customers
Channel Alternatives Issues
1. The number of levels to be included in the channel.
2. The types of intermediaries to employ.
3. The number of channel intermediaries.
4. The number of channels to employ.
Manufacturer-Rep Channel Used When:
The product is not standard but is closer to made-to-order.
The product tends toward technical complexity.
The gross margin is not large.
A relatively few number of customers, concentrated geographically and concentrated in a few industries.
Customers order relatively infrequently and allow fairly long lead times.
Evaluating Alternative Channels
Takes into account all the elements of the channel design process as well as important customer requirements.
Approach is to create an “ideal” channel system that fully addresses customer needs.
Channel participants must be selected, and arrangements must be made to ensure that all obligations are assigned.
Members must be motivated to perform the tasks necessary to achieve channel objectives.
Conflict within the channel must be properly controlled.
Performance must be controlled and evaluated.
Motivating Channel Members
Margins and Commission
International Market Three Distinct Channels
American-based export intermediaries.
Company-managed and company-organized sales force.