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

Buyers needs Retailers requirements Legal requirements Distribution requirements

Framework for meeting Buyers needs to Channel Design

Grocers & General Merchant

Supermarkets Chemists

Target Segment

Middle income group upwards

Middle income group upwards

Middle income & floating population

Buyers behavior satisfied

Monthly shopping

Trial and variety seeking behavior

Impulse buying

Way of Evaluation

Channel Strategy

Cost Middlemen Profitability

Control Adaptability

Company showroom

High NA High Low

Franchisee Medium Moderate High High

Framework for designing the channel

Product Features

Target Group

Buyers Needs

Retailers Needs

ReachFunctions to be

performed by the Channel

Legal issues

Distribution Needs

Feasible alternative

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

Online Channel Retail channel

Target Group Tech Savy consumers General Consumers

Buyers needs Recent up to date features and a chance to customize

Novice people looking for brand comparison and retailers advice

Retailers Needs Supply chain partners Technical specificationsMarginsBrand PullSelling support

Reach Accessibility to net/phone etc

Tier 1 & Tier II towns (medium to high)

Functions to be performed by the channel

Information, timely supply etc.

AvailabilityExplaining the product factorsPush the productProvide brand comparison

Feasible & Distinct Yes 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

Category 2:

Essential Criteria

Category 3:

Situational Criteria

Brands KeptProduct Kept (past experience)

Investment capacitySpan of ControlAttitudeReliabilityFinancial Strength

Storage spaceLocationInfrastructureCapabilitySalesforce

Track Record Business capabilities

Physical attributes

Principal companies associated withLine of industry and operational compatibility

Investment ReachCultural feasibilityWillingness to ventureSystems

LocationInfrastructureScalabilitySales force

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

Essential Criteria Bank Reports Subjective assessment of individual sales manager External sources

Exercise

ABCL Mobile Ltd. wants to spread its wings into rural India and wants your help in identifying the right sub-distributor 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