chap 16 designing channels

Copyright © 2011 Oxford University Press Chapter 16: Designing Customer Oriented Marketing Channels

Chapter 16

Designing Customer-Oriented Marketing Channels


• The channel design is normally meant to give a clear idea about:

• The number of channel entities in the channel network, • The way in which they are linked,• The roles and responsibilities of the entities in the network• The rewards for participating in the activities and also • Clear cut guidelines for the major activities to be performed

during the normal functioning of the channel.

Channel Design


What are the service outputs

• Waiting time

• Breaking the bulk

• Spatial convenience

• Assortment


Distribution channel design

To consume a product

Service outputs have to be delivered

Channels

Participates in channel flows

Activities have to be performed

Thus performs activities


Flow Direct contribution Indirect contribution Other contribution

Physical Possession

Spatial convenience, bulk breaking, waiting time

Assortment

Ownership Spatial convenience

Promotion Spatial convenience Is a service output in itself

Negotiation Spatial convenience, bulk breaking

Assortment

Risk taking Waiting time, bulk breaking, spatial convenience

Financing Spatial convenience, waiting time, bulk breaking

Assortment

Ordering Bulk breaking, spatial convenience, waiting time

Payment Bulk breaking, spatial convenience, waiting time

Channel flows and contribution to service outputs


Channel design effort decisions

• The service output levels• The flows or activities that are associated with the

achievement of the service output levels• The type of entity who would be entrusted with the

performance of each of these flows


Parameters for comparing channel designs

• Efficiency• Effectiveness• Equity• Scalability• Flexibility


The channel establishment plan (contd.)

• The main purpose of the channel to be set-up

• The profile of the customers who are the target market for the channel

• The needs and requirements of the target market with

regard to the identified service outputs provided by the

proposed/ existing channel:

• Analysis of the operations of the existing channels that deal

in similar product/service lines

• Detailed activity chart for achieving the service output

objectives


Plan…..Contd.

• Details about the various channel constituents who will be performing these tasks

• The cost of performing the activities

• The designated roles and responsibilities of the channel constituents

• The proposed remuneration for performing these roles and responsibilities

• Standards for measuring the performance

• Procedures for reporting and information sharing

• Monitoring mechanisms

• Criteria for appointing the channel members

chap 16 designing channels

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