Channel design is a strategic marketing tool. Four decisions can be help a firm design a distribution channel:
what role distribution is to play in achieving objectives
what type of channel is needed? with or without intermediaries?
what level of intensity of distribution?
which specific intermediaries to use? which will be best suited to achieve objectives?
Specify the role of distribution within the marketing mix Select type of distribu- tion channel Determine appropriate intensity of distri- bution Choose specific channel members The Well-Designed Distribution Strategy
a tightly coordinated distribution channel designed to improve operating efficiency and marketing effectiveness.
Corporate VMS: One firm owns other firms in channel or the entire channel-- Goodyear, Roots.
Contractual VMS: Independents work together for much greater effectiveness: IGA, IDA.
Administered VMS: Relies on economic power of one channel member-- Rolex, Kraft General Foods. .
INTENSIVE SELECTIVE EXCLUSIVE Distribution through every reasonable outlet in a market Distribution through multiple, but not all, reasonable outlets in a market Distribution through a single wholesaling middleman and/or retailer in a market Intensity of Distribution