Designing Channel Systems

Designing a suitable channel system will require defining the customer needs, clarifying the channel objectives, looking at alternative systems which can meet these objectives, cost of the channel and finally evaluating the various alternatives to tone in on the ideal channel system.

Stages in Channel Planning

Segmentation:- It is the cluster of customers on the

basis of what each segment expects out of the channel.

Positioning:- It defines the channel element which is

required to service each of the segments.

Segmentation

Positioning

FocusDevelopmen

t

Stages in Channel PlanningFocus:-The sales manager decides only the

segments that need to be addressed.Developing the right channel alternative:

Selecting the best from the set of alternatives available

Defining the Customer Needs Customer needs are defined by the customer

service levels expected out of channel system

Service levels are: Lot sizeWaiting timeChoice to the consumerPlace utilityService support

Defining Channel Objectives: Channel objectives are simply what the channel system is expected to do to support customer service.

Cost of the channel system: 1. No. of intermediaries2. Current intermediariesHybrid Channels: Companies where some

parts are managed by the company itself and some others are handled by intermediaries.