Channel Information Systems-h

8/4/2019 Channel Information Systems-h

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Channel Information Systems


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Learning ObjectivesUnderstand importance of informationsystems for management of channels

Elements of channel information systemsHow information systems are used to impactchannel service objectives

Performance measures for channelsUnderstand principles of channelimplementation


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CIS PurposeCIS is C hannel Information S ystemsCIS is the orderly flow of pertinent operationaldata both internally and between channel

members, for use as a basis of decisionmaking in specified responsibility areas of channel managementCIS is of primary use of sales managers.


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Information - Advantages

Useful in marketing planning helpsimprove quality of marketing decisionsC an help tap market opportunitiesProvides an alert against competitionHelps spot trends favourable or

otherwiseHelps develop action plans for growthGives feedback on consumer needs


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Classification of

Information

Based on the use made of it by marketing planning, operations, decision making or

controlBased on subjects consumers, products,competition, channels, promotions, pricing,sales volume, value etc

Operations data facts and figuresAlso based on assumptions , anticipatedoccurrences forecasts relating to thechannel system


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Information Process

COLLECTION

USE

PROCESSING

STORAGE


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Information ProcessC ollection : acquiring and placing raw data monthly sales by each territoryProcessing : analyzing data to get meaningout of it arranging, modifying and

interpreting the data by the user comparison of sales between periodsS torage : keeping the information intact till it isneeded

Use: application of information for management decision making sales data of the last 6 months to forecast the sales of thenext month.

Development.


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Developing a

Channel M

IS

D ecide what information is required

D ecide who will use the informationwhen and for what purpose

Organize information in a manner suitablefor interpretation and action


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Use of Information

Planning : sales forecasts or distributor indents

Control : expenses against budgetThere is always a cost of collectinginformation.If data collected is not used properly, the data

provider will hesitate to give the information.The channel M IS works at the salesoperational level . It has very little strategicintent.


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S ources of D ataReports (oral and written) and records of channel members, sales peopleLetters, statements and market researchAny other info collected by the sales peopleand the channel members from the marketExternal sources like business publications,magazines, newspapers, trade journals.In a dedicated channel system the collectionof info is well streamlined in the J C meetingWith use of IT enabled systems collection andprocessing has become simpler.


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A Good C hannel M IS

Integrated system to handle all regular dataUseful decision support systemReflects the style of the marketing

organizationUser friendly and user oriented

C onvincing to the providers of the info as toits purpose

Be cost effectiveNot need for verification from other sourcesBe fast and totally reliable


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ElementImportance

In a good channel M IS , it is necessaryto define upfront for each element of theMIS , the following: Purpose of the info Source of the info

Action possible Impact on customer service


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Competition Tracking

Purpose Plan day to day corrective action to protect marketshares and shelf space

Source Trade, channel partners and sales people

Actionpossible

S pot action while in the market and taken bychannel partners or sales people

Impact on

service

Timely action to provide better support to the trade

and retain their goodwill

Example


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C hannel PerformanceEvaluation


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EvaluationC

riteriaC hannel system can be evaluated on howwell it provides time, place and possession

utilitiesFormal channel evaluation only withcontracted channel membersIndependent wholesalers and retailers may

not accept any evaluation by a companyPeriodicity of evaluation and parameters likeachieving targets market coverage etc agreedwith channel partners.


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Distributor Evaluation

Once a month by the sales people onthe performance of the previous monthon all agreed criteriaC riteria varies with the category of channel member, nature of the product

and the nature of customers.


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Evaluation

Each of the primary criteria can begiven a weightage and performancescores worked

Criteria Weightage% - X

Criteriascore (1 to

10) - Y

Weightedscore X*Y

S ales target achievement 50 7 3.50Inventory management 15 8 1.20S elling resources 15 7 1.05Market coverage 10 8 0.80Back office support 10 6 0.60

Overall performance score 7.15


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EvaluationEach of the primary criterion can be broken downinto it components and also rated.

Criterion Weightage% - X

Score 1to 10 - Y

Weightedscore X*Y

Primary sales 15 8 1.20Secondary sales 50 7 3.50

Achievement of secondarysales target

20 7 1.40

Sales growth by period 10 8 0.80

Market share achievement 5 6 0.30

Sales target achievement Performance score

7.20


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Evaluation Overall RankingsChannelmember

Overall performancescore

Ranking

A 7.39 1B 7.20 2

C 7.15 3

D 6.89 4E 6.56 5

F 5.60 6


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Overall Rankings - ActionBottom 20% to be warned to improveperformanceTop scorers have potential to give morebusiness to the company to beencouragedC onsistent poor performance will entaildismissal


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Implementation Principles

More relevant where member is bound by acontract . Wholesalers and retailers are

involved in the implementation to the extentthat the company wants to cover them with itsproduct presence.The most critical issue in implementation isthe intensity of distribution desired. This ismore relevant to FMC G, pharma kind of products and not so much for consumer durables or industrial products


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Influencing Factors

Intense distribution allows consumer to shopwhere he likes for the product

Intensive distribution increases sales goodcompanies insist on retail distribution intensityS elective or exclusive distribution may resultin loss of sales opportunities

C hannel members feel widely distributedproduct must be a fast seller. Equitable effortsare required in selling all brands and packs of the same company


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Influencing Factors

Intensive distribution is more expensiveand requires more supervision

For consumer electronics or durablesintensive distribution may result in free-riding situationsC

hannel members prefer selectivedistribution the company should givethe products only to them


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Influencing Factors

If a brand has a strong consumer franchise,no outlet can ignore it HLL brands

distribution becomes intensiveC hannel partner or reseller also has a choiceon what he wants to stock and sellIf the product category is important andcompetition is severe, selectivity is a costlyoption


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Implementing Rules

Low value goods : cigarettes, soaps,shampoos intensive distribution fmcg kind

of low investment but mass based.High value goods : electronic goods or consumer durables buyer makescomparisons across outlets selectiveSpecialty goods : Mont Blanc pen or TagHeuer watches exclusive distribution.


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Intensive - Factors

Influence of channel principal decreases withintensityC hannel members competitors also havesame productsHigher quality positioning does not matchhigher intensityD epends on the target marketTakes into account the importance of themarket and prevailing competition moreintense the competition, more the intensity of distribution


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Selective - Factors

C an cut costs but may prove inadequate lower selling expenses, higher promotional

allocations, larger transactions, moreaccurate forecasting of demandC hannel members margins may be better Better influence over channel membersManufacturer attracts more aspirants

S uitable for new product or testing the market


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Key Learnings

C hannel information systems is to collect andanalyse data about operations of channels

CIS uses methods and sources to collect,process, store and use pertinent informationfor decision makingS teps for development of a CIS are: decide

info required, organize info in a suitablemanner and decide users with purposeACIS can include all elements of interest tosales managers to operate better


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Key Learnings

The channel evaluation system checks as tohow well the system reaches the products or

services to customersC hannel implementation is guided by theintensity of the distribution requiredFor products with a large consumer base ,

intensive distribution is preferredUnder specific circumstances, selective or exclusive distribution has advantages.

Documents

Channel Information Systems-h