Channel Design & Implementation
Decisions Involved
New channel Design Modification of the existing channel
Channel Design Includes
The number of channel to employ The number of levels to be included The type of intermediaries The number of channel intermediaries at each level
Channel Design decision
Is based upon target segment Positioning of the company Product category Alternatives available Goals of the channel member
Other factors influencing choice of channel design
uyers needs Retailers requirements Legal requirements Distribution requirements
Framework for meeting Buyers needs to Channel Design
Grocers & General Merchant Target Segment Middle income group upwards Monthly shopping
Supermarkets
Chemists
Middle income group upwards Trial and variety seeking behavior
Middle income & floating population Impulse buying
Buyers behavior satisfied
Way of Evaluation
Channel Strategy Company showroom Franchisee Cost Middlemen Profitability NA Control Adaptability
High
High
Low
Medium
Moderate
High
High
Framework for designing the channel
Target Group
Buyers Needs
Product Features
Retailers Needs
Legal issues
Reach
Distribution Needs Feasible alternative
Functions to be performed by the Channel
Case
Dell Computers in recent times has started selling computers through Retail distribution channel in addition to online channel.
Lets assess the relevance of the new channel
Channel Design Parameters Target Group Buyers needs
Online Channel Tech Savy consumers Recent up to date features and a chance to customize Supply chain partners
Retail channel General Consumers Novice people looking for brand comparison and retailers advice Technical specifications Margins Brand Pull Selling support Tier 1 & Tier II towns (medium to high) Availability Explaining the product factors Push the product Provide brand comparison yes
Retailers Needs
Reach Functions to be performed by the channel
Accessibility to net/phone etc Information, timely supply etc.
Feasible & Distinct
Yes
Channel Modification (issues involved)
Assess the suitability of the existing channel (channel evaluation) Determine does it need complete makeover or make over of certain components Identify the components to be modified Establish the objective for modification Identify the change agent & Change target Undertake/undergo the change process Carry out evaluation/feedback
Implementing Channel Design
Channel Member selection process
Identify the criteria for selecting channel members Develop guidelines for collecting information Find prospective channel members Collect information Applying selection criteria to determine the suitability of prospective channel members Appointing these partners as channel members
Framework for Selecting the channel Members
Category 1: Shortlisting criteria
Brands
Category 2: Essential Criteria capacity Span of Control Attitude Reliability Financial Strength
Investment
Category 3: Situational Criteria
Storage
Kept Product Kept (past experience)
space Location Infrastructure Capability Salesforce
Track Record
Business capabilities Investment Reach Cultural feasibility Willingness to venture Systems
Physical attributes Location Infrastructur e Scalability Sales force
Principal companies associated with Line of industry and operational compatibility
Exercise
List down the selection criteria for choosing the following for an Agri Inputs Company (Fertilisers & Pesticides).
Distributors Dealers Direct Selling Agents
List down the selection criteria for choosing the following for a dairy products company (cheese, margarine, butter etc.)
Distributors Dealers
Information Sources
Initial Criteria
Sales force Existing dealers Advertisements Directories Past dealings Bank Reports Subjective assessment of individual sales manager External sources
Essential Criteria
Exercise
ABCL Mobile Ltd. wants to spread its wings into rural India and wants your help in identifying the right subdistributor for smaller towns who will be able to take care of rural areas as well as other nearby smaller towns. They will be working under existing distributors based out of Large District headquarters/Cities. They will work on a fixed percentage determined on the basis of turnover. Establish the selection criteria
For evaluation
Establish the distribution objective Establish the objective criteria Establish the subjective measures Rate various parties Select after deliberations
