The document discusses the design and implementation of pharmaceutical product distribution channels in India, emphasizing the roles of manufacturers, intermediaries, and end-users. It outlines the importance of regulatory compliance, logistical considerations, and effective channel management to optimize product flow and market accessibility. Additionally, it highlights future trends such as digital transformation and personalized medicine that could influence channel strategies.

1. PHARMA PRODUCT CHANNEL DESIGN

2. Marketing Mix Activities

3. Motivational consideration for channel members:

4. Channel Design
• Channel is often used broadly to signify the routes
to communicate with customers.
• Drugs are manufactured at production sites. They
are then transferred to wholesale distributors.
• The products are stocked at various types of
pharmacies, including retail and mail-order.
• Pharmacy benefit management companies
negotiate prices and process drugs through quality
and utilization management checks.
• Requires Strategic Planning and Implementation of
Distribution Channels

5. Channel Members
• Manufacturers – The Producer
• Intermediaries - Middle men , Agents, Stockists etc
• End users – Consumers
• Facilitating Intermediaries – Warehouses,
Advertising Agencies, Research agencies etc.

6. Additional Expectation
• Navigating Regulatory requirements
• Addressing Logistical Challenges
• Adapting to the Unique Characteristics of India
Market
• Optimize the flow of Products
• Maximize Market Reach and Profitability

7. Role of Channel Members
Facilitate the search process of buyers and sellers
Sorting
Making transactions routine
Contractual efficiency

9. Channel Functions
1 - Facilitating the strategic aim of channel
members
2 - Fulfilling the interaction process
3 - Market coverage and product availability
4 - Market development
5 - Technical support
6 - Market information
7 - Inventory management
8 - Risk taking

10. Importance of Effective Channel Design

11. Importance of Effective Channel Design
1. Geographical Diversity
2. Regulatory Compliance
3. Market Access
4. Competitive Advantage
5. Customer Convenience
6. Cost Efficiency

12. Importance of Effective Channel Design
1. Geographical Diversity
India is geographically vast and diverse, with urban, semi-urban, and rural
areas. An effective channel design ensures that pharmaceutical products
reach customers in all regions, including remote and underserved areas.
2. Regulatory Compliance
India has stringent regulations governing the pharmaceutical industry. An
effective channel design takes into account these regulations, such as
licensing requirements and pricing regulations, to ensure compliance and
avoid legal issues.
3. Market Access
India has a large and growing pharmaceutical market with diverse
customer segments. A well-designed distribution channel provides access
to these diverse customer segments, including hospitals, pharmacies,
healthcare providers, and consumers.

13. Importance of Effective Channel Design
4. Competitive Advantage
In a highly competitive market, effective channel design can provide
a competitive advantage by ensuring timely delivery of products,
efficient inventory management, and superior customer service.
5. Customer Convenience
A well-designed distribution channel makes it convenient for
customers to access pharmaceutical products, whether through local
pharmacies, online platforms, or other channels, enhancing
customer satisfaction and loyalty.
6. Cost Efficiency
Efficient channel design helps minimize distribution costs, such as
transportation and inventory holding costs, thereby improving
profitability for pharmaceutical companies.

14. Regulatory Environment and its impact on Channel Design

15. Regulatory Environment and its impact on Channel Design
1. Licensing Requirements
2. Pricing Regulations
3. Quality Assurance
4. Packaging and Labeling Requirements
5. Distribution Practices
6. Reporting and Documentation

16. Regulatory Environment and its impact on Channel Design
1. Licensing Requirements
Licensing requirements are Central Drugs Standard Control Organization (CDSCO)
and State Drug Regulatory Authorities.
Channel design must ensure that all channel partners, including wholesalers,
distributors, and retailers, possess the necessary licenses to operate legally.
2. Pricing Regulations
National Pharmaceutical Pricing Authority (NPPA) regulates price in India.
Ensure compliance and avoid penalties. Pricing regulations may influence Channel
Partner Selection and Pricing Strategies.
3. Quality Assurance
Must incorporate quality assurance measures to ensure that products are stored,
handled, and transported according to prescribed standards to maintain their
efficacy and safety.

17. Regulatory Environment and its impact on Channel Design
4. Packaging and Labeling Requirements
Channel design must ensure that products are packaged and labeled
correctly throughout the distribution process.
5. Distribution Practices
Regulatory authorities may impose restrictions on certain distribution
practices, such as the sale of prescription drugs without a valid
prescription. Channel design must ensure legal compliance and ethical
distribution practices.
6. Reporting and Documentation
Pharmaceutical companies are required to maintain accurate records and
submit reports to regulatory authorities on various aspects of distribution,
including sales, inventory levels, and adverse events. Channel design
should facilitate the collection and reporting of relevant data to meet
regulatory requirements.

18. Also Includes
Compliance Costs
Ensuring compliance with regulatory requirements adds to the operational
costs associated with channel design, including obtaining licenses,
conducting quality assurance activities, and maintaining documentation.
Risk Management
Non-compliance with regulatory requirements can result in legal penalties,
reputational damage, and disruption of business operations. Channel
design must incorporate risk management strategies to mitigate regulatory
risks effectively.
Market Access
Regulatory compliance is essential for gaining and maintaining market
access in India. Channel design that ensures compliance with regulatory
requirements enhances market credibility and facilitates market entry and
expansion.

19. Overview of the Channels

20. Overview of the Channels
1. Wholesalers/Distributors
2. Pharmacy/Retail Outlets
3. Hospital Supply Chains
4. Online Pharmacies/E-Commerce Platforms
5. Institutional Sales
6. Direct Sales Force
7. Export Markets

21. Overview of the Channels
1. Wholesalers/Distributors
- Wholesalers and distributors play a crucial role in the pharmaceutical supply chain by purchasing
products in bulk from manufacturers and distributing them to pharmacies, hospitals, and other
healthcare providers.
- They typically operate warehouses and logistics networks to store and transport pharmaceutical
products efficiently.
- Wholesalers and distributors may specialize in specific therapeutic categories or geographic regions.
2. Pharmacy/Retail Outlets
- Pharmacies and retail outlets serve as the primary point of contact for consumers seeking
pharmaceutical products.
- They procure products from wholesalers or directly from manufacturers and sell them to consumers.
- Pharmacies may include independent pharmacies, chain pharmacies, and hospital pharmacies.
3. Hospital Supply Chains
- Hospitals and healthcare institutions have their own supply chains for procuring pharmaceutical
products.
- They may directly purchase products from manufacturers, wholesalers, or specialized distributors to
meet the needs of patients within the healthcare facility.

22. Overview of the Channels
4. Online Pharmacies / E-Commerce Platforms
- With the rise of e-commerce, online pharmacies have emerged as a convenient channel for consumers to purchase
pharmaceutical products.
- Online pharmacies procure products from manufacturers or wholesalers and deliver them directly to consumers'
homes.
- They offer a wide range of products and often provide additional services such as prescription refills and
consultations with healthcare professionals.
5. Institutional Sales
- Pharmaceutical companies engage in institutional sales to supply products to institutions such as government
agencies, non-profit organizations, and corporate entities.
- Institutional sales teams work directly with institutional buyers to fulfill their procurement needs.
6. Direct Sales Force
- Pharmaceutical companies may employ a direct sales force to promote and sell products directly to healthcare
professionals, such as doctors, clinics, and hospitals.
- The sales force builds relationships with healthcare professionals to drive product adoption and usage.
7. Export Markets
- Indian pharmaceutical companies export products to international markets through various distribution channels.
- Export channels may include direct exports to foreign distributors, contract manufacturing agreements, and
partnerships with international pharmaceutical companies.

23. Role of Channel Players

24. 1. Manufacturers
Manufacturers produce pharmaceutical products,
including drugs, vaccines, and medical devices.
They are responsible for research and development,
manufacturing, quality control, and regulatory
compliance.
Manufacturers may sell products directly to
wholesalers/distributors, pharmacies, hospitals, or
through their own sales force.

25. 2. Wholesalers/Distributors
Wholesalers and distributors purchase pharmaceutical
products in bulk from manufacturers and distribute them to
downstream channel partners, including pharmacies,
hospitals, and online retailers.
- They maintain warehouses and logistics infrastructure to
store and transport products efficiently.
- Wholesalers and distributors may provide value-added
services such as inventory management, order fulfillment,
and credit facilities to their customers.

26. 3. Pharmacies/Retailers
Pharmacies and retail outlets serve as the primary point of
contact for consumers seeking pharmaceutical products.
They procure products from wholesalers/distributors or
directly from manufacturers and sell them to consumers.
Pharmacies may dispense prescription drugs, over-the-
counter medications, and other healthcare products, as
well as provide patient counseling and medication
management services.

27. 4. Hospitals/Healthcare Institutions
Hospitals and healthcare institutions procure
pharmaceutical products to meet the needs of patients
within their facilities.
They may purchase products directly from manufacturers,
wholesalers/distributors, or specialized distributors.
Hospitals maintain their own supply chains and inventory
management systems to ensure the availability of
pharmaceutical products for patient care.

28. 5. Online Pharmacies/E-Commerce Platforms
Online pharmacies procure pharmaceutical products from
manufacturers, wholesalers, or distributors and sell them to
consumers through e-commerce platforms.
They offer a wide range of products and provide convenient
ordering and delivery options to customers.
Online pharmacies may also offer additional services such
as prescription refills, virtual consultations with healthcare
professionals, and medication reminders.

29. 6. Institutional Buyers
Institutional buyers, such as government agencies, non-
profit organizations, and corporate entities, purchase
pharmaceutical products in bulk for use within their
organizations.
They may procure products directly from manufacturers or
through specialized distributors.
Institutional buyers may have specific procurement
requirements and may negotiate pricing and terms directly
with suppliers.

30. 7. Exporters
Exporters facilitate the sale of pharmaceutical products to
international markets.
They may represent manufacturers or
wholesalers/distributors in export transactions and manage
logistics and regulatory compliance for cross-border
shipments.
Exporters play a crucial role in expanding the global reach
of Indian pharmaceutical products and accessing overseas
markets.

31. Challenges and Opportunities

32. 1. Manufacturers
Challenges:
Increasing competition from domestic and international
players.
Pressure to reduce manufacturing costs while maintaining
product quality and compliance.
Opportunities:
Expansion into emerging markets with growing healthcare
needs.
Investment in research and development to innovate and
develop new drugs and therapies.

33. 2. Wholesalers/Distributors
Challenges
Margin pressures due to pricing regulations and
competitive dynamics.
Complex regulatory compliance requirements, including
licensing and documentation.
Opportunities
Diversification of product portfolio to offer value-added
services such as cold chain logistics and inventory
management.
Adoption of technology to enhance operational efficiency
and customer service.

34. 3. Pharmacies/Retailers
Challenges
Intense competition from online pharmacies and large
retail chains.
Regulatory constraints, including licensing and drug pricing
regulations.
Opportunities
Expansion into niche markets or underserved regions.
Integration of technology to improve patient care and
medication management services.

35. 4. Hospitals/Healthcare Institutions
Challenges:
Budget constraints and cost containment pressures.
Supply chain inefficiencies leading to stockouts and
wastage.
Opportunities:
Adoption of value-based care models to improve patient
outcomes and reduce costs.
Collaboration with pharmaceutical manufacturers and
distributors to streamline procurement and inventory
management processes.

36. 5. Online Pharmacies/E-Commerce Platforms
Challenges
Regulatory uncertainty and compliance requirements.
Trust and safety concerns related to online medication
purchases.
Opportunities
Rapid growth potential driven by increasing internet
penetration and digital adoption.
Expansion into telemedicine and healthcare services to
offer a comprehensive healthcare ecosystem.

37. 6. Institutional Buyers
Challenges
Budget constraints and funding uncertainties, particularly in
the public sector.
Procurement complexity and bureaucratic hurdles.
Opportunities
Collaboration with pharmaceutical companies to negotiate
favorable pricing and supply agreements.
Investment in healthcare infrastructure and technology to
improve patient care delivery.

38. 7. Exporters
Challenges
Compliance with international regulations and quality
standards.
Market access barriers and trade restrictions in target
countries.
Opportunities
Expansion into high-growth international markets with
unmet healthcare needs.
Differentiation through product innovation and
customization for specific markets.

39. Factors Influencing Channel Design

40. Factors Influencing Channel Design
1. Geographic Considerations
- India's vast and diverse geography, including urban, semi-urban, and rural areas,
influences channel design.
- Distribution channels must be designed to reach customers across different regions,
taking into account infrastructure, transportation networks, and access to healthcare
facilities.
2. Regulatory Environment
- Stringent regulatory requirements governing pharmaceutical distribution in India impact
channel design.
- Licensing, pricing regulations, quality standards, and documentation requirements
influence the selection of channel partners and distribution practices.
3. Competitive Landscape
- Intense competition among pharmaceutical companies in India affects channel design
strategies.
- Companies must differentiate themselves through effective channel management,
product positioning, and customer service to gain a competitive edge.

41. Factors Influencing Channel Design
4. Customer Preferences and Behavior
- Understanding the preferences and behavior of healthcare professionals, patients,
and other end users is crucial for designing effective distribution channels.
- Factors such as product accessibility, affordability, brand perception, and
convenience influence channel selection and design.
5. Product Characteristics
- The nature of pharmaceutical products, including their therapeutic category, shelf-
life, storage requirements, and packaging, impacts channel design.
- Specialty drugs, biologics, and temperature-sensitive products may require
specialized distribution channels and handling procedures.
6. Channel Partner Capabilities
- The capabilities and infrastructure of channel partners, including wholesalers,
distributors, and retailers, influence channel design decisions.
- Factors such as geographic coverage, storage facilities, transportation fleet, and
technology adoption affect the efficiency and effectiveness of distribution channels.

42. Factors Influencing Channel Design
7. Supply Chain Efficiency
- Ensuring supply chain efficiency is essential for designing effective distribution channels.
- Factors such as inventory management, order fulfillment, transportation logistics, and reverse logistics
impact channel design to minimize costs and lead times.
8. Technology Adoption
- The adoption of technology, including digital platforms, e-commerce, and supply chain management
systems, influences channel design.
- Leveraging technology can enhance channel visibility, transparency, and efficiency, enabling real-time
tracking of products and transactions.
9. Government Policies and Initiatives
- Government policies, initiatives, and reforms in the healthcare and pharmaceutical sectors can influence
channel design.
- Incentives for promoting generic drugs, healthcare infrastructure development, and public-private
partnerships may impact channel selection and distribution strategies.
10. Market Dynamics
- Market trends, including demographic changes, healthcare spending patterns, and emerging therapeutic
areas, influence channel design.
- Companies must adapt their distribution channels to meet evolving market demands and capitalize on
growth opportunities.

43. Way Forward

44. Way Forward
1. Market Analysis
- Conduct thorough market research to understand the target audience,
competitive landscape, and market dynamics.
- Identify customer segments, their preferences, and buying behaviors to tailor
distribution channels accordingly.
2. Channel Selection
- Evaluate various distribution channels available, including wholesalers,
distributors, pharmacies, hospitals, online platforms, and institutional buyers.
- Select channels that align with the target market segments, product
characteristics, and regulatory requirements.
3. Channel Partner Evaluation
- Assess the capabilities and reputation of potential channel partners, including
their geographic coverage, infrastructure, experience, and financial stability.
- Establish criteria for selecting channel partners and negotiate favorable terms
and agreements.

45. Way Forward
4. Channel Integration
- Integrate multiple distribution channels to create a seamless and efficient distribution network.
- Implement technology solutions such as supply chain management systems, inventory tracking, and order
management to enhance channel integration and visibility.
5. Inventory Management
- Develop robust inventory management processes to optimize stock levels, minimize stockouts, and reduce
excess inventory.
- Implement forecasting techniques to anticipate demand fluctuations and ensure product availability across
the distribution network.
6. Logistics Optimization
- Streamline logistics operations to minimize transportation costs, reduce lead times, and improve delivery
reliability.
- Leverage third-party logistics providers or establish distribution centers strategically to enhance logistics
efficiency.
7. Regulatory Compliance
- Ensure compliance with regulatory requirements governing pharmaceutical distribution, including licensing,
pricing regulations, quality standards, and documentation.
- Stay updated on regulatory changes and adapt channel design and practices accordingly to mitigate
compliance risks.

46. Way Forward
8. Customer Engagement
- Develop strategies to engage with customers through various channels, including
direct sales, marketing campaigns, and customer service.
- Provide educational materials, product information, and support services to enhance
customer satisfaction and loyalty.
9. Performance Monitoring
- Establish key performance indicators (KPIs) to measure the effectiveness of
distribution channels, such as sales performance, inventory turnover, and customer
satisfaction.
- Implement regular monitoring and reporting mechanisms to track channel
performance and identify areas for improvement.
10. Continuous Improvement
- Continuously evaluate and refine the pharmaceutical product channel design based
on feedback from customers, channel partners, and market trends.
- Adapt to changing market conditions, technological advancements, and regulatory
requirements to maintain competitiveness and optimize channel effectiveness.

47. Future Trends and Opportunities

48. Future Trends and Opportunities
1. Digital Transformation
2. Personalized Medicine
3. Value-Based Care Models
4. Supply Chain Innovation
5. Direct-to-Consumer (DTC) Marketing
6. Collaborative Partnerships
7. Regulatory Harmonization
8. Healthcare Ecosystem Integration

49. 1. Digital Transformation
The adoption of digital technologies, including
- e-commerce platforms,
- mobile applications, and
- telemedicine
Online Pharmacies and Digital Health Platforms
offer convenient access to Healthcare Products and
Services, providing opportunities for Direct-To-
Consumer Distribution Channels.

50. 2. Personalized Medicine
Advances in Genomics and Precision Medicine are
driving the development of personalized therapies
tailored to individual patient profiles.
To accommodate specialized distribution channels
for personalized medicine, including
- Genetic Testing Kits,
- Targeted Therapies, and
- Companion Diagnostics.

51. 3. Value-Based Care Models
Shift towards Value-Based Care Models emphasizes
outcomes and patient-centric care rather than
Volume-Based Transactions.
Channel design may focus on Integrated Care
Delivery Models, collaboration between Healthcare
providers and Pharmaceutical companies, and
outcome-based reimbursement models.

52. 4. Supply Chain Innovation
Emerging technologies such as Blockchain, Internet
of Things (IoT), and Artificial Intelligence (AI) are
revolutionizing SCM in the pharma industry.
Channel design may leverage these technologies to
Enhance Visibility, Traceability, and Efficiency across
the supply chain, including
- Inventory Management,
- Logistics Optimization, and
- Counterfeit Prevention.

53. 5. Direct-to-Consumer (DTC) Marketing
Increasing consumer empowerment and demand
for healthcare information are driving the growth of
DTC marketing initiatives by pharma companies.
Channel design may incorporate direct-to-consumer
distribution channels, including
online platforms,
social media, and
patient education programs,
to engage with consumers directly and promote
brand awareness.

54. 6. Collaborative Partnerships
Collaboration between pharmaceutical companies,
healthcare providers, technology firms, and
regulatory agencies presents opportunities for
innovative channel design.
Strategic partnerships may include joint ventures,
alliances, and consortia to develop and implement
novel distribution channels, such as specialty
pharmacies, tele-health networks, and virtual
clinical trials.

55. 7. Regulatory Harmonization
Efforts to harmonize regulatory standards and
streamline approval processes for pharmaceutical
products across international markets create
opportunities for global channel design.
Channel design may focus on
- standardized distribution channels,
- regulatory compliance frameworks, and
- cross-border partnerships
to facilitate market access and expansion.

56. 8. Healthcare Ecosystem Integration
Integration of pharmaceutical distribution channels
with broader healthcare ecosystems, including
electronic health records (EHRs), medical devices,
and digital health platforms.
Channel design may encompass inter-operable
systems, data sharing mechanisms, and
collaborative care models to enhance patient
outcomes and population health management.

57. CHANNEL FUNCTIONS
• Involves all the activities of which products flow from
manufacturer to end users.
• The product is transformed from basic raw material to final
product.
• Channel functions determines Channel Structure.
• Functions of a marketing channel is exchange, supply or
logistics and facilitating.
• Buying and selling are part of the exchange function.
• The logistics function includes transportation and storage
• Facilitating includes standardization and grading, financing,
risk bearing and providing market information.

58. Functions Performed
1 - Facilitating the strategic aim of channel members
2 - Fulfilling the interaction process
3 - Market coverage and product availability
4 - Market development
5 - Technical support
6 - Market information
7 - Inventory management
8 - Risk taking

59. Designing Channels
• As a long-term commitment
• The design is influenced by factors like technological
advancement, changing demographics and
competition.
• There are 2 dimensions
1. The Channel Length -- the number of
intermediaries between the producer and the
customers.
2 Channel Breadth -- the number of outlets
available to customers.

60. • A channel design decision is made taking into
consideration the channel structure, channel
intensity and the type of intermediaries used at
each level.
• While channel structure refers to the number of
levels of channel intermediaries (distributor,
wholesaler, retailer),
• Channel intensity refers to the total number of
channel intermediaries required at each level.
Designing Channels

61. Designing Channels

62. Channel Structure
1. Direct Channel
A direct channel is a channel in which the producer sells
directly to the customer. Direct channels can be used to
reach large markets quickly.
The disadvantage of a direct channel is that it can be
costly to set up and maintain.
2. Indirect Channel
An indirect channel is a channel in which the producer
sells through an intermediary. Indirect channels can be
used to reach small markets quickly.
The disadvantage of an indirect channel is that it can be
difficult to control.

64. Channel Structure
• The channel structure adopted by a company
depends on the number of intermediaries it uses to
distribute its products to end users.
• These intermediaries give rise to channel levels.
• The length of a channel, differs from consumer
markets to industrial markets.
• The possible channel levels are zero level, one level,
two levels and three levels.

65. Zero Level Channel,
The manufacturer directly sells to the end customer
through door-to-door selling, telemarketing and so
on.
Companies like Eureka Forbes and Amway reach
their customers through direct selling.
These companies use a zero level channel to make
their products get to customers‘ hands.

66. One Level Channel,
• The Manufacturer distributes the products directly to the retailer,
who in turn, sells them to end-users.
• A single channel intermediary – the retailer – exists between the
manufacturer and customers.
• One level marketing channels are mostly used by automobile
manufacturers and petroleum companies.
• For example, Maruti Udyog Limited (MUL) directly supplies its cars
to dealers, who sell them to customers.
• Showroom dealers serve as the single channel intermediary for
MUL.
• In the case of petroleum companies like Bharat Petroleum
Corporation Limited, Hindustan Petroleum Corporation Limited, etc,
the company supplies fuel to dealers, who then sell it to consumers.

67. Two Level Channel,
• Present between the manufacturer and the
customer.
• These are the Wholesaler and the Retailer.
• The manufacturer sells the goods to the wholesaler,
who sells them to the retailer.
• The retailer then sells the goods to consumers.
• A typical two- level marketing channel is that used
by manufacturers of fast moving consumer goods
such as Hindustan Lever Limited, Dabur, Bajaj,
Godrej, etc.

68. Three Level Channel,
• Presence of three channel intermediaries between the
manufacturer and the customer.
• The three channel intermediaries in a three level marketing
channel are the wholesaler, the agent and the retailer.
• An agent mediates between the wholesaler and the
retailer.
• These channels are commonly found in the pharmaceutical
industry.
• In this industry, medical representatives act as agents of
pharmaceutical companies and persuade retail drug stores
to purchase from the manufacturer, drugs manufactured
by their company.

69. Factors to Consider When Selecting Channel
Members

70. Factors to Consider When Selecting Channel Members
1. Compatibility
2. Capability
3. Commitment
4. Cooperation
5. Communication
6. Coordination

71. Factors to Consider When Selecting Channel Members
1. Compatibility
The channel members should be compatible with each other. They should have similar
business philosophies and be able to work together to achieve the objectives of the
channel.
2. Capability
The channel members should have the capability to perform their roles in the channel.
They should have the necessary resources and skills to support the channel.
3. Commitment
The channel members should be committed to the success of the channel. They should
be willing to invest the time and resources necessary to support the channel.
4. Cooperation
The channel members should be willing to cooperate with each other. They should be
able to work together to achieve the objectives of the channel.
5. Communication
The channel members should be able to communicate with each other. They should be
able to share information and ideas in a way that is clear and concise.
6. Coordination
The channel members should be able to coordinate their activities. They should be able
to work together to achieve the objectives of the channel.

72. Approaches to choose the Best Channel Structure:

73. Approaches to choose the Best Channel Structure:
1. “Characteristics of Goods and Parallel Systems”
2. Financial
3. Transaction Cost Analysis (TCA)
4. Management Science
5. Marketing Mix
6. Judgmental-Heuristic

74. Approaches to choose the Best Channel Structure:
1. “Characteristics of Goods and Parallel Systems” Approach
According to this approach, the decision on which type of channel structure to use is based on the characteristics of the
goods. The Aspinwall model was first developed in the 1950s by Aspinwall.
The main consideration for channel structure selection should be product variables, according to this design. Each item
characteristic is labeled with a distinct hue on the spectrum. Different variables involved in this are replacement rate,
adjustment, gross margin, time of consumption, searching time, etc.
2. Financial Approach
The financial approach is based on the idea that the best channel structure is the one that minimizes costs and
maximizes profits. Channel structures should be evaluated based on their ability to generate revenue and control costs.
3. Transaction Cost Analysis (TCA) Approach
The transaction cost analysis approach is based on the idea that the best channel structure is the one that minimizes
transaction costs. Transaction costs can include search costs, information costs, negotiation costs, and monitoring
costs.
The crux of TCA is on the expenditures incurred by a corporation in order to complete its distribution operations.
4. Management Science Approaches
Management science approaches to channel structure selection are based on the idea that the best channel structure is
the one that maximizes efficiency.
Channel structures should be evaluated based on their ability to optimize resources and minimize waste.
5. Marketing Mix Approach
The marketing mix approach is based on the idea that the best channel structure is the one that maximizes the
effectiveness of the marketing mix. Channel structures should be evaluated based on their ability to reach the target
market, communicate with the target market, and sell to the target market.
6. Judgmental-Heuristic Approaches
Judgmental-heuristic approaches to channel structure selection are based on the idea that the best channel structure is
the one that best meets the needs of the company. Channel structures should be evaluated based on their ability to
support the company’s business objectives.