Channel Design and Gap Analysis

Overview

The marketing channel challenge

involves…

1. Understanding gaps in your channel design.

2. Adjust or re-design

3. Monitor performance of channel members

FIVE STEP CHANNEL ANALYSIS

Step 1 - Segmentation

• Define and profile service output demands (SOD) by segment.

– Value added services performed by your

channel members

• Identify environmental characteristics and constraints

– Limited infrastructure, government constraints,

economic, technological

Step 2- Positioning

• Position yourself in the channel (know your strengths / weaknesses)

• Which segments are a good target (channel resources are limited)

– Segments must be profitable, accessible,

actionable and measurable

Step 3 - Targeting

• Knowing what segments to ignore in one’s channel design and where to apply managements effort.

• Focus on key segments that reap the profitable sales.

• Be aware of– Managerial bounds

– Environmental bounds

– Competitive benchmarks

Step 4 (a) and (b) – Establish new or refine

existing channels

• Gap analysis

– Demand side

– Supply side

Gap Analysis

• What gaps in the service outputs of the ideal,

existing, and management bounded

distribution systems should the firm try to

eliminate?

• Figure 7.3 identifies three situations that

require corrective action. Source: (Stern, Sturdivant and Getz, Accomplishing Marketing Channel Change: Paths and Pitfalls, 1987)

Figure 7.3 Gap Analysis in Distribution System Design

Management

Bounded

Distribution

System

Ideal

Distribution

System

Existing

Distribution

System

Situation A: Strategic Fit

Interpretation: Any distribution related problems result from poor execution,

not poor design of the system.

Necessary Actions: Sharpen performance; maintain existing system.

Figure 7.3 Gap Analysis in Distribution System Design

Management

Bounded

System

Existing

Distribution

System

Ideal

Distribution

System

Interpretation: Management has designed a system which reflects its needs,

but has given inadequate attention to customer needs.

Necessary Actions: Investigate validity of management constraints and

objectives, and analyse customer requirements and expectations.

Situation B: Partial Fit

Gap

Figure 7.3 Gap Analysis in Distribution System Design

Existing

Distribution

System

Management

Bounded

Distribution

System

Interpretation: End-user satisfaction can be improved by improving service

outputs.

Preferred Actions: Examine certain management criteria to assess the

possibility of bringing the existing systems even closer to the ideal distribution

system.

Situation C: Complete Misfit

Ideal

Distribution

System

Gap Gap

Step 5 – Channel Implementation

• Communicate changes and improvements

• Identifying power sources

• Identifying channel conflicts and resolve

• Coordinate, Control and manage relationships with channel partners.

Summary

• Its important to review your distribution channels

• Identify gaps and close them

• Monitor and control your relationships

• Conduct periodic gap analaysis

You are welcome to contact Nigel Bairstow at B2B

Whiteboard your source of B2B Asia / Pacific

marketing advice

http://www.linkedin.com/pub/nigel-bairstow/6/41b/726

http://twitter.com/#!/b2bwhiteboard