This document discusses channel design and planning processes. It outlines factors that determine channel structures like product nature, customer location and competition. The planning process involves segmentation, positioning, defining customer needs and designing channel objectives. It evaluates channel alternatives based on costs, control, coverage and adaptability. Key considerations in selecting channel partners include location, infrastructure, financial strength, market coverage, reputation and past performance. The document also discusses motivating, training and managing channel partners as well as allocating tasks and defining performance metrics.

1. Lior Power
Designing
Channel Systems

2. Introduction
Factors that determine the nature of the
distribution channel
Nature of the product or service
Location and nature of the customers
Nature of competition and distribution
systems
Intensity of distribution required
Nature of the markets being targeted

3. Channel design and planning process
1. Channel Stages in channel planning
Segmentation stage
Positioning stage
Focus stage
Developing the right channel alternative

4. Channel design and planning process
2. Defining the customer needs
Lot size
Waiting time
Choice to the consumer
Place utility
Service support

5. Channel design and planning process
Designing channel objectives
Industrial products require direct-marketing by the
company
Consumer products should be available in large no of
outlets
Selling will need rural distribution
Multi level marketing will require their distributors to
appoint further distributors

6. Channel design and planning process
Channel Alternatives study
•Business intermediaries currently available
•The no and type of intermediaries required
•Any new member to be specially developed
•Roles of each channel member

7. Channel design and planning process
Cost of channel system
•Margins of the channel partners
•Cost of transportation of goods between the co and
the end user
•Cost of order booking and execution
•Cost of stock returns/ date expired stocks taken back
•Cost of reverse logistics required (getting empties
back)

8. Channel design and planning process
Current intermediaries
Distributors or redistribution: stockiest of some other
companies
C&F agents: can be further utilized for collections and
other work

9. Channel design and planning process
Number of intermediaries
Should be adequate for expected coverage of the target
markets at the same time should not be too much to dilute
the effort and add to the costs.
Its not easy to get rid of channel members

10. Evaluation of Major alternatives
Cost:
Every channel will have different costs associated with
Ability to manage and control
Considering coverage, frequency, productivity, inventory,
credit, merchandising, distribution, promotions, after-sales-
service, pre-sales-sales, channel salespeople, stock points
Adaptability
Sensitivity of channel to addition, elimination of products,
additional service, new territory coverage, generating leads,
handling price change, stock rationing
Range and volume to be handled
Ability to handle large range of products and volumes.

11. Selecting channel partners
Location of the party
In or close to main market of the company
Location of the warehouse
Close to a major market
Outside octopi limits
Should have proper road/ transport access
Labor availability
Utilities support
Connected by phone
Past experience
As a C&FA for a similar company
As a transporter should have access to a good warehouse
History of past business
Should have handled similar but non-competing companies
Ability to maintain confidentiality of transactions
Selecting Carrying and Forwarding agent

12. Financial strength
To handle all operating expenses till re-imbursement
Insurance
IT capability
Adequate own hardware
Trained staff to handle simple programmers' and repairing formats
Flexibility
In operating hours daily
To handle peak loads
Transportation facilities
Reliability, consistency in source of vehicles
Additional volumes to be handled at short notice
Attitude, commitment
To be of the highest order/ positive
Willing to expand the business
Disciplined

13. Selecting channel partners
Selecting Distributor
Size of the channel partner
Current business portfolio
Financial strength/ asset ownership including personal assets of
partners
Own sales force
No of sales people
Qualifications, background, experience
Current business
Products handled, volume handled
Should be of similar products but non-competitive
Product quality, compatibility and complimentary
Reputation
Leadership in the market
Integrity, fairness in dealings
Market coverage
Territory/ intensity
Regularity, reliability
Relationship, productivity
Beat plan adherence
Value of institutional business handled if any

14. Credit extended in the market
% of outlets
& of current business
Bad debts, if any
Stock distribution
Ready stocks or order booking
Infrastructure availability
Warehouse
Distribution vans
Hardware/ personal computers/ connectivity
Sales performance
On current business
Awards, prizes, certificates won on performance
Management of business
Educational background, qualification of partners
Market working
Efforts on merchandising, displays
Handling sales promotions
Past experience
Inventory management
Adherence to stock norms recommended by the company

15. Change of channel members
Why to change channel members?
Training channel members
 On the job training
 Class room training
 Special meetings to launch new products
 Training on submitting reports
 Statutory requirements
 Product related responsibilities of channel members
 Training on technicalities
 Training on specifications, installments, repair and maintenance
 Training on after sales service

16. Motivating channel partners
Efforts in designing capacity building programmers
Training
Promotional support
Marketing research
Working along with company people

17. Channel power
Referent power: Power out of eminent position of the company
Expert power: Power out of special knowledge of the company
Legitimate power: Power of legal agreement with company
Support power: Support in the form of promotions, subsidies, additional help
Competition power: Comparison with other channel members
Reward power: Incentives, special incentives
Coercive power: Power of ‘threat’

18. Channel design implementation
Document channel objectives for sales people and channel partners
Define the profile of the customers to be services
List down all the customer service levels in detail
List the tasks in sequence which will drive these service levels
Get benchmark of good practices from knowledge of competition
Define channel structure and channel partners who constitute it
Allocate the tasks among the channel partners
Work out cost of delivering CS levels and prepare a budget
Advice the channel partners on the tasks and their benefits
Define channel partner performance appraisal system and share it
Define criteria for appointment of channel partners
List down reports, records and frequency from each channel partner

19. Lior Power Electrical Pvt Ltd
3/266/22, Lior House, Sector-3, Vidhyadhar Nagar, Jaipur, Rajasthan 302039.
Tele. – 011-45823696, 022-61094528. Mobile- +91-9214567383.
Email- info@liorpower.com & support@liorpower.com
Website- www.liorpower.com