frame work for channel analysis

8/3/2019 Frame Work for Channel Analysis

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Guides the channel managers

--initial design of the channels--ongoing management over time

Creating new channels in already existingmarkets



INSIGHTS FOR SPECIFIC CHANNEL INSTITUTIONS:Retailing, Wholesaling and Logistics, Franchising

Channel Design Process:

SEGMENTATION: Recognize and respond to target customers·service output demands

DecisionsAbout

Eff icient Channel Response:

CHANNEL STRUCTURE:What kinds of intermediaries are in my

channel?Who are they?How many of them?

SPLITTING THE WORKLOAD:With what responsibilities?

DEGREE OF COMMITMENT:

Distribution alliance?

Vertical integration/ownership?GAP ANALYSIS:

What do I have to change?

Channel Implementation Process:

CHANNEL CONFLICT:Identify actual andpotential sources

MANA

GE

/DE

FUSE

CONFLICT:Use power sources strategically,subject to legal constraints

GOAL: Channel Coordination

CHANNEL POWER:

Identify sources for allchannel members

FRAMEWORK FOR CHANNEL DESIGN AND IMPLEMENTATION



Producing the channel service outputs to theend users in an efficient way and at a minimumpossible cost.

-to understand what the work of channel is

-what type of intermediaries must beincluded in the channels



Segmentation

Channel structure decisions

S

plitting the workload Degree of commitment

Gap analysis



Splitting the market into groups of end-usersdepending upon what type of channel outputsthey need.

The value added services created by thechannel members along with the product arecalled as service outputs.

bulk breaking, product/usage information,customer service, delivery and waiting time etc..,



Based on the segment the channel structure isdesigned.

STEPS:

1. Types of channel members

2. Identities of specific channel members

3. Channel intensity

(intensive, selective, exclusive)



Assign channel flows to channel members

Meet target segment·s service output demands

Reliable

Minimize total cost, while meeting service level

minimum cost can be achieved by ActivityBased Costing (ABC)



Transactional relationships

Pursue individual goals

No guarantee of continued business

Alliances

Enduring connections throughout companies

Pursue common goals



This is a stage of deciding what to target &what not to target

This keeps the channel focused on key

segments for profitable sales

Reason for not all segments being targeted

Internal: Managerial bounds(unwilling to allocatefunds)

External: Environmental bounds & Competitivebounds



If no channel, knowledge of optimal channel toreach the segment & the bounds will help

If channel exists then Channel manager should

perform gap analysis

Gap analysis: The difference b/w optimal &actual channel

Gaps exist both on supply as well as demandside.



Demand side: Service o/p demand not appropriately met

U

nder supplied or over supplied Undersupply will lead to dissatisfaction

Oversupply leads to higher prices for end users

More than one service o/p means several gaps needattention

Supply side: Here gaps means high cost of channels

Leading to low profit margin, high price for end users,reduced sales & market share

It is due to lack of up-to- date expertise in channel flow orwaste in the channel



There are strategies to close gaps in channel

Closing the gaps is costly & very difficult

So initial channel design has strategicimportance



Identifying power sources

Identifying channel conflicts

The goal of channel coordination



Implementing optimal channel design is veryimportant

Channel·s multiple entities may or may not

have same incentives to implement channeldesign.

Failure by one may cause a fatal damage. Eg:

poor transportation system Including all entities is very critical



Implementing channel design withinterdependent channel partners requirespossession and use of channel power.

Channel member power: Ability to control thedecision variables in marketing strategy ofanother member

I

t will help to deliver the demanded serviceoutput at a lower cost.



Is common and dangerous for achieving thegoals

Affects overall success of channel efforts &

harm total channel performance

Goal conflict: difference between channelmembers goals & objectives

Domain conflict

:difference over domain ofaction & responsibility in channel

Perceptual conflict: differences in perceptionsin marketplace



Management should do the following

First: Channel manager should identify theconflict

Second:He should take actions to manage &reduce those channel conflicts

Conflicts are reduced by using channel power.

Eg: Manufacturer and distributor having goalconflict



It is not a one time achievement

But an ongoing process of analysis & responseto the

market,

competition,

the abilities of the members of the channel



Retailers

Wholesalers

Logistics firms

Supply chain issues

Franchises



THANK YOUTHANK YOU

frame work for channel analysis

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