University of Santo Tomas
College of Commerce and Business Administration
Marketing Management Department
1st Term AY 2023-2024
MODULE # 6
Lesson Coverage UNIT 2: DEVELOPING MAREKTING CHANNEL
Designing in Marketing Channels
Lesson Timeline: Week 8: Oct.4,6-7, 2023 (Onsite); Oct.3 & 5,2023 (Online)
College Professor/Instructor Hans Christian U. Mondejar, LPT, MBA, SMRIEDR
Lesson Overview: The Channel design refers to those decisions involving the development of new
marketing channels where none had existed before or to the modification of existing channels.
I. Designing a Channel
• Analyse customer needs and want – Here we need to find out:
what the target customer needs from the channel,
what provides the fastest delivery, the greatest assortment, and the services may not be possible
and practical.
• Establish the channel objectives and constraints- objectives in terms of the target level of
customer service. Which segments to serve and the best channels to use in each case.
• Identify major channel alternatives- When the company has defined its channel objectives,
it should next identify what are these alternatives in terms of :
the type,
the number of intermediaries, and
its responsibilities.
• Evaluating major channel alternatives- It involves economic criteria, control issues and
adaptability criteria.
II. Major Channel Alternatives Evaluation
• ECONOMIC CRITERIA – a major channel alternative evaluation factor wherein compare ratios, such as
what's going to be expected sales, the costs, and the profitability.
• CONTROL ISSUES- a major channel alternative evaluation factor wherein if we are going to give more or
less control to the intermediaries.
• ADAPTABILITY CRITERIA- a major channel alternative evaluation factor wherein often involve a long-
term commitment.
Modules in MM5710(Distribution Management)
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UST College of Commerce and Business Administration
University of Santo Tomas
College of Commerce and Business Administration
Marketing Management Department
1st Term AY 2023-2024
III. The Concept of Market Density and Efficient Congestion
Market density refers to the number of buyers or potential buyers per unit of geographical area.
This market dimension should also be considered in channel design strategy because of its relationship to
channel structure.
Efficient Congestion a concept suggests that (high-density) markets can promote efficiency in the
performance of several basic distribution tasks, particularly those of transportation, storage,
communication and negotiation.
With respect to transportation and storage, a high geographical concentration of customers enables goods
to be transported in large lots to the concentrated markets and stored in a relatively small number of
inventories capable of adequately serving the compact markets. For markets characterized by low levels
of density, smaller quantities of goods have to be transported and smaller inventories are needed.
References:
Fernando, J. (2023, March 17). What Is a Distribution Channel in Business and How Does It Work?
Investopedia. [Link]
Luther, D. (2023, March 14). What Is Wholesale Distribution? Benefits, Examples & Tips. Oracle
NetSuite. [Link]
distribution.
Muñoz, A. (2023, March 21). Guide to Distribution Channels and Product Success | Sales Layer.
[Link]
Publisher, A. R. A. R. O. O. (2015, October 27). 8.2 Typical Marketing Channels. Pressbooks.
[Link]
Modules in MM5710(Distribution Management)
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UST College of Commerce and Business Administration
University of Santo Tomas
College of Commerce and Business Administration
Marketing Management Department
1st Term AY 2023-2024
Assessment of Learning for Module 6
PART 1: TRUE OR FALSE
Direction: Read each question carefully. Write TRUE if the answer is correct, If the statement is False
underline the statement that makes it incorrect and write the correct answer on the blank provided before
the number. Two (2) points each answer.
__________1. Analyze customer needs and want emphasize what the target customer needs from the
channel, what provides the fastest delivery, the greatest assortment, and the goods may not be possible
and practical.
__________2. Establish the channel objectives and constraints emphasize the objectives in terms of the
target level of customer product and which segments to serve and the best channels to use in each case.
__________3. When the company has defined its channel actions, it should next identify what are these
alternatives in terms of: the type, the number of intermediaries, and its responsibilities.
__________4. In economic evaluation a major channel alternative evaluation factor wherein compares
ratios, such as what's going to be expected sales, the costs, and the loss.
__________5. In control issues analyses if the business is going to give more or less control to the
manufacturer.
__________6. The adaptability criteria are a major channel alternative evaluation factor wherein often
involve a short-term commitment.
__________7. The Market density should also be considered in channel design strategy because of its
relationship to channel member.
__________8. Market density refers to the number of buyers or potential buyers per segment of
geographical area.
__________9. Efficient Congestion a concept suggests that (high-density) markets can promote efficiency
in the performance of several basic distribution tasks, particularly those of transportation, storage,
communication and transformation.
__________10. For markets characterized by high levels of density, smaller quantities of goods have to
be transported and smaller inventories are needed.
Modules in MM5710(Distribution Management)
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UST College of Commerce and Business Administration