Channel Design & Implementation

Decisions Involved
 

New channel Design Modification of the existing channel

Channel Design Includes

   

The number of channel to employ The number of levels to be included The type of intermediaries The number of channel intermediaries at each level

Channel Design decision

    

Is based upon target segment Positioning of the company Product category Alternatives available Goals of the channel member

Other factors influencing choice of channel design

   

uyers needs Retailers requirements Legal requirements Distribution requirements

Framework for meeting Buyers needs to Channel Design

Grocers & General Merchant Target Segment Middle income group upwards Monthly shopping

Supermarkets

Chemists

Middle income group upwards Trial and variety seeking behavior

Middle income & floating population Impulse buying

Buyers behavior satisfied

Way of Evaluation
Channel Strategy Company showroom Franchisee Cost Middlemen Profitability NA Control Adaptability

High

High

Low

Medium

Moderate

High

High

Framework for designing the channel

Target Group

Buyers Needs

Product Features

Retailers Needs

Legal issues

Reach

Distribution Needs Feasible alternative

Functions to be performed by the Channel

Case


Dell Computers in recent times has started selling computers through Retail distribution channel in addition to online channel.


Lets assess the relevance of the new channel

Channel Design Parameters Target Group Buyers needs

Online Channel Tech Savy consumers Recent up to date features and a chance to customize Supply chain partners

Retail channel General Consumers Novice people looking for brand comparison and retailers advice Technical specifications Margins Brand Pull Selling support Tier 1 & Tier II towns (medium to high) Availability Explaining the product factors Push the product Provide brand comparison yes

Retailers Needs

Reach Functions to be performed by the channel

Accessibility to net/phone etc Information, timely supply etc.

Feasible & Distinct

Yes

Channel Modification (issues involved)



    

Assess the suitability of the existing channel (channel evaluation) Determine does it need complete makeover or make over of certain components Identify the components to be modified Establish the objective for modification Identify the change agent & Change target Undertake/undergo the change process Carry out evaluation/feedback

Implementing Channel Design

Channel Member selection process

    

Identify the criteria for selecting channel members Develop guidelines for collecting information Find prospective channel members Collect information Applying selection criteria to determine the suitability of prospective channel members Appointing these partners as channel members

Framework for Selecting the channel Members

Category 1: Shortlisting criteria

Brands

Category 2: Essential Criteria capacity Span of Control Attitude Reliability Financial Strength
Investment

Category 3: Situational Criteria

Storage

Kept Product Kept (past experience)

space Location Infrastructure Capability Salesforce

Track Record

Business capabilities Investment Reach Cultural feasibility Willingness to venture Systems

Physical attributes Location Infrastructur e Scalability Sales force

Principal companies associated with Line of industry and operational compatibility

Exercise


List down the selection criteria for choosing the following for an Agri Inputs Company (Fertilisers & Pesticides).
  

Distributors Dealers Direct Selling Agents

List down the selection criteria for choosing the following for a dairy products company (cheese, margarine, butter etc.)
 

Distributors Dealers

Information Sources


Initial Criteria
    

Sales force Existing dealers Advertisements Directories Past dealings Bank Reports Subjective assessment of individual sales manager External sources

Essential Criteria
  

Exercise


ABCL Mobile Ltd. wants to spread its wings into rural India and wants your help in identifying the right subdistributor for smaller towns who will be able to take care of rural areas as well as other nearby smaller towns. They will be working under existing distributors based out of Large District headquarters/Cities. They will work on a fixed percentage determined on the basis of turnover.  Establish the selection criteria

For evaluation
    

Establish the distribution objective Establish the objective criteria Establish the subjective measures Rate various parties Select after deliberations