Scribd
Upload
159 views22 pages

Channel Design

Channel design decisions are critical as they determine how customers can access a company's products and how the products will be positioned in the market. There are several dimensions to consider in channel design including market dimensions, product dimensions, company dimensions, intermediary dimensions, and environmental dimensions. An effective channel design process involves defining customer needs, channel objectives, evaluating alternative channel structures, and selecting an ideal structure based on criteria like effectiveness, efficiency, equity, scalability, and flexibility. The final steps are selecting channel members and partners and determining the type of channel structure.

Uploaded by

VINITHA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
159 views22 pages

Channel Design

Channel design decisions are critical as they determine how customers can access a company's products and how the products will be positioned in the market. There are several dimensions to consider in channel design including market dimensions, product dimensions, company dimensions, intermediary dimensions, and environmental dimensions. An effective channel design process involves defining customer needs, channel objectives, evaluating alternative channel structures, and selecting an ideal structure based on criteria like effectiveness, efficiency, equity, scalability, and flexibility. The final steps are selecting channel members and partners and determining the type of channel structure.

Uploaded by

VINITHA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 22

Meaning of channel

design
Channel design decisions are critical because they
determine a product’s market presence and buyer’s
accessibility to the product. Channel decisions have
additional strategic significance because they entail long-
term commitments. It is usually easier to change prices
or promotion than to change marketing channels.
Dimensions of channel design

Market dimensions
Product
Company dimensions
dimensions Intermediary
Environmental Dimensions
Dimensions
Behavioural
dimensions
1. Market dimensions:

It focuses on customer( market) orientation. In developing


and adapting the marketing mix, then, marketing managers should
take their basic cues from the needs and wants to the target markets
at which they are aiming. Four basic sub categories of market
variables are particularly important in influencing channel
structure. They are:
 Market geography
 Market size
 Market density
 Market Behaviour
2. Product Dimension:
Product variables are another important category to consider
in evaluating alternative channel structures. Some of the
most important product variables are as follows:
 Bulk and weight
 Perishability
 Unit value
 Technical versus non- technical
 Newness
3. Company dimensions:

The most important company variables


affecting channel design are:

 size

 Financial capacity

 Managerial Expertise

 Objectives and Strategies


4. I n t e r m e d i a r y Dimensions: The k e y i n t e r m e d i a r y
v a r i a bl e s r e l a t e d t o channel s t r u c t u r e are:
 Availability.
 Cost
 Services
5. Environment dimension:

Environmental variables may affect all


aspects of channel development and management.
Economic, sociocultural, competitive, technological,
and legal environmental forces can have a significant
impact of environmental forces is one of the more
common reasons for marketing channel design
decisions.
Process of channel design
Defining the customer needs

Defining the channel


objective

Channel alternatives

Evaluation of major
alternatives

Ideal channel structure


1. Defining the customer needs:

In designing the market channel, the marketer must


understand the service output levels its target
customer want. It is essential to capture customer
requirements while designing marketing channel.
It includes the following:
Product information
Product customization
Product quality assurance
Lot size
Product variety
Spatial convenience / availability
Waiting and delivery time
After sales service
Logistics
2. Defining channel objective:
The channel objective vary with product
characteristics:
Perishable products requires more direct
marketing.
Bulky products, such as building materials,
require channels that minimize the shipping
distance and amount of handling.
non- standard products, such as custom-built
machinary and specialised business forms, are
sold directly by company sales
representatives.
High- unit- value products such as generators
and turbines are often sold through a company
sales force rather than intermediaries.
3. Channel alternative:
A company looks at alternatives for its distribution channel
after it has decided on the targeted customers and the
customer service deliverables it desires from its channel
partners to reach these customers. At the time of
deciding the company will scan for:
 Type of intermediaries
- Distributors or re-distribution stockist
- Carrying and forwarding agents
- Logistics service providers.
- manufacturer’s agents, stockist, guarantors
- Financing agencies
- Wholesalers and semi wholsalers
- Retailers and service centres.
Number of intermediaries.
cost of the channel system.
Terms and responsibility of channel
members.
4.Evaluation of major alternative:
The major problem before the producer is to
decide which of the alternatives would be
best satisfy the long term objectives of the
firm taking in view the factors which would
affect the channel decision. For this
purpose, each alternative must be rated
against economic; control and adequate
criteria:
 Economic Criteria
 Control Criteria
 Adaptive Criteria
5. Ideal channel structure:
With the completion of forgoing
steps, the number of alternatives
would have narrowed down
considerably. The firm must
evaluate design and choose the
best among them.
Criteria for effective channel design
The following criteria should
be considered:
 Effectiveness
Efficiency
Equity
Scalability
Flexibility
Channel design
decision
 Selecting the channel member.

Identity of the channel partner


a t each channel level.
Type of channel member .
If you were to buy a car that gave 15kmpl and cost ₹5 lakh,
and were comparing it to another car that gave 12kmpl
and cost ₹4.5 lakh, how would you make the decision?
Most people think that the fuel efficiency between a car
that gives 15kmpl is not that significantly different from a
car that gives 12kmpl.
Behavioural science studies find that making such
calculations is not intuitive for most people. So they tend
to use simple rules of thumb to make quick decisions,
which leads to biases and errors.
if you cover a distance of 100km using a car that gives 15kmpl, you’ll

be consuming 6.67litres of fuel. If you cover a distance of 100km

using a car that gives 12kmpl, you’ll be consuming 8.33litres of fuel.

This doesn’t seem like a big difference, right?

Now imagine you were comparing litres per kilometre (lpkm)

expressed as litres per 100,000km. Then at 15kmpl, you’ll need

6,667litres compared with 8,333litres for the 12kmpl car. That’s a

difference of 1,666litres and at ₹100 a litre, it comes to an additional

fuel cost of ₹166,600.


THANK
YOU...!!!

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy