Channel design

APPAINSTITUTE OF ENGINEERING & TECHNOLOGY

DEPARTMENT OF MBA

PRESENTATION ONCHANNEL DESIGN

SUBMITTED TO: Prof.Basavaraj S M

SUBMITTED BY: Mahesh PATIL

Channel design

Meaning of channel designChannel design decisions are critical

because they determine a product’s market presence and buyer’s accessibility to the product. Channel decisions have additional strategic significance because they entail long-term commitments. It is usually easier to change prices or promotion than to change marketing channels.

Dimensions of channel design

Dimensions of channel design

Market dimensionsCompany

dimensionsEnvironmental

Dimensions

Product dimensions

Intermediary Dimensions

Behavioural dimensions

1. Market dimensions: It focuses on customer( market) orientation.

In developing and adapting the marketing mix, then, marketing managers should take their basic cues from the needs and wants to the target markets at which they are aiming. Four basic sub categories of market variables are particularly important in influencing channel structure. They are:

Market geography Market size Market density Market Behaviour

2. Product Dimension:Product variables are another important category to

consider in evaluating alternative channel structures. Some of the most important product variables are as follows:

Bulk and weight Perishability Unit value Technical versus non- technical Newness

3. Company dimensions: The most important company variables

affecting channel design are: size Financial capacity Managerial Expertise Objectives and Strategies

4. Intermediary Dimensions: The key intermediary variables related to channel structure are:

Availability. Cost Services

5. Environment dimension: Environmental variables may affect

all aspects of channel development and management. Economic, sociocultural, competitive, technological, and legal environmental forces can have a significant impact of environmental forces is one of the more common reasons for marketing channel design decisions.

Process of channel designDefining the customer

needs

Defining the channel objective

Channel alternatives

Evaluation of major alternatives

Ideal channel structure

1. Defining the customer needs:In designing the market channel, the

marketer must understand the service output levels its target customer want. It is essential to capture customer requirements while designing marketing channel. It includes the following:

Product information Product customizationProduct quality assuranceLot sizeProduct varietySpatial convenience / availabilityWaiting and delivery timeAfter sales serviceLogistics

2. Defining channel objective:The channel objective vary with product

characteristics:Perishable products requires more direct marketing.Bulky products, such as building materials, require

channels that minimize the shipping distance and amount of handling.

non- standard products, such as custom-built machinary and specialised business forms, are sold directly by company sales representatives.

High- unit- value products such as generators and turbines are often sold through a company sales force rather than intermediaries.

3. Channel alternative:A company looks at alternatives for its distribution channel after

it has decided on the targeted customers and the customer service deliverables it desires from its channel partners to reach these customers. At the time of deciding the company will scan for:

Type of intermediaries- Distributors or re-distribution stockist- Carrying and forwarding agents- Logistics service providers.- manufacturer’s agents, stockist, guarantors- Financing agencies- Wholesalers and semi wholsalers- Retailers and service centres.

Number of intermediaries. cost of the channel system.Terms and responsibility of channel

members.

4. Evaluation of major alternative:The major problem before the producer is to

decide which of the alternatives would be best satisfy the long term objectives of the firm taking in view the factors which would affect the channel decision. For this purpose, each alternative must be rated against economic; control and adequate criteria:

Economic Criteria Control Criteria Adaptive Criteria

5. Ideal channel structure:With the completion of forgoing steps, the number of alternatives would have narrowed down considerably. The firm must evaluate design and choose the best among them.

Criteria for effective channel designThe following criteria should be considered:

Effectiveness Efficiency EquityScalabilityFlexibility

Channel design decision Selecting the channel member.

Identity of the channel partner at each channel level.

Type of channel member.

THANK YOU...!!!