ISSN 1392-2785 ENGINEERING ECONOMICS. 2008.
No 1 (56)
ECONOMICS OF ENGINEERING DECISIONS
The Specific Features of Marketing Channel Design
Rasa Gudonaviþienơ6RQDWD$OLMRãLHQơ
Kauno technologijos universitetas
K. Donelaiþio g. 73, LT-44029, Kaunas
Marketing channels in nowadays market might be the
decision determining the failure for enterprise if it is made
without evaluation of every aspect connected with the
design of marketing channel. Thus enterprise in planning
its marketing complex must pay considerable attention to
the decisions of product distribution.
Distribution as one of four elements of marketing
complex is inseparable part of marketing decisions, which
involves all the decisions about distribution of products to
the end user. The issues of distribution were analysed by a
number of Lithuanian (ýaplikas, 1997; Balkeviþius, 2000;
Pajuodis, Pranulis, 2000; Gudonaviþienơ, Buþinjnienơ,
2003; Gerikaitơ, Sadauskaitơ, 2005) and foreign marketing
specialists (Berman, 1999; Kim, 1996; Delton, 1997;
Frazier, 1999; Kotler, 2003; Rosenbloom, 1999; Stern,
2006; etc.), paying a big attention to the elaboration of the
procedures of marketing channel design.
Every enterprise that acts at the conditions of market
economy pays a big attention to organization and
optimisation of the process of product distribution to the
end user. The production performance, success of sales
programme and position of the enterprise in the target
market depends on product realization. Often the
competitive advantage of the enterprise, which is obtained
at the level of product distribution, determines the future
success in the market.
This article reveals various models of marketing
channel formation, analyses their advantages and
proposes the new conceptual model for marketing channel
design, created by the authors with reference to Stern,
Coughlan, El-Ansary (2002) and Rosenbloom (1999). The
proposed model is tested empirically by designing the
marketing channel for product of the group of enterprises
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The suggested model recommends performing the
design of marketing channel in the following manner:
1. to describe the existing marketing channel, by
assessing the influence of environmental and
enterprise factors;
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determining the needs of consumers and the goals
of marketing channel;
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perform the formation of alternative marketing
channels, an evaluation of alternatives and to select
the intermediaries of marketing channel.
The model for marketing channel design proposed in
this article suggests to begin with the analysis of
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influencing factors; adjust channel goals to general
strategy and politics of enterprise; considering the gaps
and the goals of marketing channel to foresee the
alternative structures of marketing channel, making
decisions about channel type and distribution strategy; to
end the formation of marketing channel by selecting the
most appropriate intermediaries.
Keywords: marketing channels, distribution.
Introduction
Relevance. Recently marketing analytics
acknowledged that marketing channel selection and
improvement is one of the most complicated and relevant
problems for enterprise. Purchasers seek for maximum
benefit in their decisions and because of that the
distribution of goods and services becomes one of the most
important part of business management, and the
development of distribution theories and practice forces to
think about the role of marketing channels in the system of
marketing.
Decisions about the selection of marketing channels
require high investments and efforts, but an effective
distribution system always provides additional advantages
in the competitive market.
Marketing channel is the chain of interrelated
enterprises that take part in the process of the movement of
goods from the producer to the consumer (Guibert, 2006).
Marketing channels by timely providing the proper amount
of goods and services in the proper place, of right quality
and optimal price, not only meet the needs of consumers,
but also stimulate the demand, by using different methods
of promotion among all organizations in the marketing
channel. That is why we need to qualify marketing
channels as the managed chain, which increases the value
of goods and services (Stern; Coughlan; El-Ansary: 2002).
The problem. While the commercial performance of
different forms intensifies and the diversity of retail objects
increases, marketing channels become more sophisticated
and their management becomes more complicated. This
situation determines the need for bigger attention to
channel administration and the assessment of their
effectiveness when analysing possible alternatives of
distribution of the production to the end user. Because of
that, industrial enterprises encounter the problem of
formation of effective structure of marketing channel and
that leads to the necessity of continuous searching for new
possibilities how to modify the structure of existing
channel.
 Research object. The formation of the structure of
(1) Analysis of consumer needs
marketing channel.
The aim of the paper. After theoretical analysis of
marketing channel formation, to provide the conceptual (2) The aims of marketing channel
approach to the formation and modification of marketing
channel and to test it empirically with the group of (3) Identification of the main
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Research methods. 0HWKRGV RI V\VWHPLF DQG
(4) Selection of intermediaries
comparative analysis of theoretical literature on marketing
channel formation and improvement were used; and
methods of the assessment of marketing channel (5) Assessment of marketing channel
alternatives were employed in the empirical research.
Figure 1. The model for marketing channel design (Kotler, 2002)
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of marketing channel are analysed and every alternative is
marketing channels is increasing continuously.
characterized according to the type of intermediary,
Rosenbloom (1999) suggest 5 reasons for this tendency:
number of intermediaries required, responsibility of
1. continual competitive advantage, that makes it
marketing channel participants and conditions of
difficult to copy marketing channel easily and
performance. At the fourth stage the selection of
fast;
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2. increasing power of wholesalers and retailers in
of marketing channel depending on the economic criteria,
marketing channel;
control level during the period of adaptation has to be
3. need to reduce the distribution costs;
performed.
4. new stress in the development of enterprises;
5. the growing role of technologies.
The model for marketing channel design suggested
by Rosenbloom. Rosenbloom (1999) suggests the model
Neves, Zuurbier, Campomar (2001), Kotler (2000) and
that encompasses 7 stages (Figure 2).
others note that marketing channel is one of the most stable
elements in the marketing complex and has the character of
sustained, lasting perspective. The changing of marketing (1) Preconditions of marketing channel formation
channel, not as price or promotion, requires a lot of efforts,
investments and time. (2) Identification of the goals of distribution
The selection of marketing channel is a very
responsible and complicated process: decisions of
(3) Specification of the tasks of distribution
distribution are directly connected with the general politics
of enterprise performance, which is being formulated at the
top-level management. (4) Prevision of alternative structures of marketing channel

The comparative analysis of the models for marketing

(5) Analysis of factors influencing the performance of channel
channel design

The formation of marketing channel is attributed to the
decisions that encompass the creation of new (not existing
before) marketing channels or the modification of existing
marketing channels (Rosenbloom, 1999).
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channel formation proposed by Rosenbloom (1999);
Berman (1999); Kotler (2002); Stern, Coughlan, El-Ansary
(2002; 2006) and Neves, Zuurbier, Campomar (2001).
The analysis of the models of marketing channel
formation is presented below.
The model for marketing channel design proposed
by Kotler. Kotler (2000) suggests the method of five
stages that is presented in Figure 1.
Kotler (2000) suggests the beginning the formation of
marketing channel with the analysis of the needs of target
consumers. At the second stage the target markets are
identified and the main aims of marketing channel are
determined, according to product characteristics and
qualification of intermediaries. Next, different alternatives
(6) Setting the optimal structure of marketing channel
(7) Selection of marketing channel intermediaries
Figure 2. The model for marketing channel design
(Rosenbloom, 1999)
Rosenbloom (1999) suggests to begin with the
identification of preconditions for marketing channel
creation or change. At the second stage the goals of
marketing channel should be determined and coordinated.
Next, the distribution tasks should be specified and the
alternative structures of marketing channel should be
foreseen (the length and width of marketing channel). At
the fifth and sixth stages the factors influencing marketing
channel are analysed and the optimal structure of
marketing channel is defined using various existing
methods for doing so. At the last stage the proper
intermediaries should be selected.

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Campomar (2001) suggest to begin the marketing channel
planning with the description of everyone in the marketing
channel, where not only a producer, intermediaries and
consumer, but also the suppliers participate. Hereby we
need to describe the functions of all of them and to make
one systematic approach to channel structure.
The model for marketing channel design suggested
by Stern, Coughlan, El-Ansary (2006). The main feature
of this model is the orientation to the needs of consumers.
The model suggests to identify the needs of consumers and
to group them into the separate segments at the very
beginning of the process of channel design.
1. Segmentation
2. Positioning
3. Targeting
4A. Establish new 4B. Refine existing
channels channels
5. Channel implementation
Figure 6. Channel Management Schematic
(Stern; Coughlan; El-Ansary: 2006)
Comparing the models for marketing channel design
There is no strict regulation about how to determine
the structure of marketing channel. Different authors
provide models with different number of process stages.
Thus, for the enterprise to begin the process of marketing
channel formation, we recommend to get acquainted with
the peculiarities of existing models and to decide which of
them would be more suitable for the specific needs of the
enterprise. Comparable analysis of the existing models of
marketing channel planning allows highlighting the
following:
x Rosenbloom (1999) emphasizes the distribution in
the general strategy of enterprise. The model shows
the steps that combine distribution goals, strategies,
strategic planning of the enterprise and marketing
channels. This model is easy to implement.
x Neves, Zuurbier, Campomar (2001) model was
created with reference to existing theoretical
models, and involves the most important stages of
marketing channel formation, with some new ones
added.
x The model suggested by Stern, Coughlan, El-
Ansary (2006) emphasizes the needs of consumers.
Identification of the consumers needs allows
grouping them into separate segments. According to
different needs of different targets, specific features
of the product, goals and potential of the enterprise,
the most acceptable marketing channel is being
designed.
With reference to the models discussed above, the
authors of this article propose the new conceptual model of
marketing channel formation. The model is tested
empirically by designing the marketing channel for the
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sufficiently effective and the thorough analysis of
marketing channel structure was necessary as well as the
formation of new alternative marketing channel.
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formation we suggest to use the new conceptual model for
marketing channel formation (Figure 7), which was created
by the authors of this paper with reference to Stern,
Coughlan, El-Ansary (2002) and Rosenbloom (1999).
B. Ideal marketing channel A. Existing marketing channel
3. Analysis of 1. Influence of limiting
consumer needs factors
4. Goals of 2. Existing MCh,
marketing channel restricted by factors
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stages, still is very clear and detailed, defining the
various factors that have to be analysed at each
level. C. New marketing 6. Alternative
channel marketing channel
x The model of Kotler (2002) suggests to begin the formation
formation of marketing channel from the end user.
This model in comparison with others is simpler. It
7. Evaluation of 8. Selection of
defines the principles of marketing channel alternatives intermediaries
formation rather than claims to give the exhaustive
projection within this process.
x The model proposed by Stern, Coughlan, El-Ansary Figure 7. The model for marketing channel design
(2002) comprises the biggest number of marketing (proposed by the authors of this paper)
channel design stages that are provided in detail.
The model of distribution system is created With this model we recommend to perform the
according to the needs of the end user. formation of marketing channel in three stages:
I. To describe the existing marketing channel, by

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according to marketing strategy and the elements of
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wholesale intermediary, which would cooperate
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experience in the market of chewing gum. The potential
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 International Journal of Physical Distribution & Logistic
Management, 2002, Vol. 32, No 5, p. 326-380.
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J.Saunders, V.Wong. Kaunas, 2003.
16. /LHWXYRVVWDWLVWLNRVGHSDUWDPHQWDV>åLnjrơta 2007-09-02]. Prieiga per
internetą: <http://www.stat.gov.lt/lt/pages/view/?id=1115>.
17. Narus, J.A. Rethinking distribution: adaptive channels / J.A. Narus,
J.C. Anderson // Harvard Business Review, Vol. 74, p. 112-119.
18. Neves, M.F. A Model for the Distribution Channels Planning
Process / M.F.Neves, P.Zuurbier, M.C. Campomar // Journal of
Business & Industrial Marketing, Vol. 16, No 6 and 7, 2001, p. 518-
539.
19. Rosenbloom B. Marketing Channels: A Management View. 4th ed.
Orlando, FL: The Dryden Press, 1999.
20. Sahadev, S. Managing the distribution channels for high-technology
products/ S. Sahadev, S. Jayachandran// European Journal of
Marketing, 2004, Vol. 38, No. ½, p. 121-149.
21. Svensson, G. Vulnerability scenarios in marketing channels //
Supply Chain Management: an International Journal, 2002, Vol. 7,
No 5, p. 322-333.
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39.
23. Ⱦɨɣɥɶ ɉ. Ɇɚɪɤɟɬɢɧɝ-ɦɟɧɟɞɠɦɟɧɬ ɢ ɫɬɪɚɬɟɝɢɢ, 3-ɟ
ɦɟɠɞɭɧɚɪɨɞɧɨɟ ɢɡɞɚɧɢɟ. Ɇɨɫɤɜɚ, 2003.
24. Ʉɨɬɥɟɪ Ɏ. Ɉɫɧɨɜɵ ɦɚɪɤɟɬɢɧɝa. Ɇɨɫɤɜɚ, 2002
25. ɒɬɟɪɧ Ʌ.ȼ. ɗɥɶ-Ⱥɧɫɚɪɢ Ⱥ.ɂ. Ʉɨɮɥɚɧ ɗ.T. Ɇɚɪɤɟɬɢɧɝɨɜɵɟ
ɤɚɧɚɥɵ. Ɇɨɫɤɜɚ, 2002.
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Marketingo kanalǐ formavimo ypatumai
Santrauka
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kanalǐ parinkimas ir tobulinimas yra viena sudơtingiausiǐ ir aktualiausiǐ
problemǐ, su kuria tenka susidurti Ƴmonei. PirkơMDL VLHNLD GLGåLDXVLRV
QDXGRVLãVDYRVSUHQGLPǐ, todơl prekiǐ arba paslaugǐ paskirstymas darosi
vienu svarbiausiǐ verslo valdymo sriþiǐ, o prekiǐ paskirstymo teorijos ir
praktikos plơtra verþia susimąstyti apie marketingo kanalǐ vaidmenƳ
marketingo sistemoje.
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daugiau dơmesio skirti kanalǐ administravimui ir jǐ efektyvumo
vertinimui, tiriant galimas produkcijos paskirstymo galutiniam vartotojui
alternatyvas. TodơOYLVGDåQLDXJDP\ELQơs Ƴmonơs susiduria su efektyvios
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modeliai.
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vykdyti trimis etapais:
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