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Supply Side Channel Analysis: Channel Flows

Chapter#3Ref: Anne T. Coughlan, Erin Anderson, Louis W. Stern, &

Adel I. El-Ansary, Marketing Channels, 7th Edition, Prentice-Hall, Inc. (ATC)

End-User Channel Preferences

• Warehouse/ Wholesale market• Departmental Store• Kiosk• Neighborhood Retail Outlet• Street Vendor/Hawker• Online Shop• Home Delivery• Salesman

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As a buyer what we expect from Outlets / Seller

As a buyer what we expect from Outlets / Seller

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Marketing Channel Outputs(1) Warehouse Functions (storage and maintenance); (2) Bulk-Breaking (quantity-breaking or size-breaking); (3) Spatial Convenience (transportation or physical movement

of the product); (4) Product Information (regarding features, ingredients, etc.

of the product; information services also include communication services to link channel members);

(5) Tagging (price, expiry date, and date of manufacturing, etc.Now-a-days warehouses, retailers, and/or distributors perform this function);

(6) Sorting and Grading (sorting according to quality, weight, size, price, design, etc.);

(7) Product Returns (reverse logistics); (8) Promotions (formal and informal audience contact tools

including advertisement and various viral buzzes);

Marketing Channel Outputs(9) Risking (the risk in case of product failure, unsold inventory

left with the retailers due to unexpected events, etc.); (10) Financing (credit facilities to any participant including the

end-users, such as funding for inventory, account receivables, factoring as well as basic assets, and customer credit financing);

(11) Arranging (creating special situations and incentive to facilitate product movement or sale in other than primary business operation methods, such as trade fair);

(12) Assembly & Customization (modifying product to customer’s specifications, or putting finished parts together for the end-users);

(13) Merchandising (working at point of sale to increase appeal of product assortment);

(14) Fulfillment (taking customers’ orders and provide specialized product shipment as a value-added service); &

(15) Packaging & re-packaging

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Service Output Demandedi) Low Service Output

ii) High Service Output

• Voluntary Customer made channel Dilution• Involuntary Customer made channel Dilution

Segmenting the Market based on Service Output Demanded

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Channel Flows

The activities or functions that produce the service outputs demanded by end users are called Channel Flows

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Channel Flows• What Channel Flows are performed?• Who Performs?• At What Levels?

i) Helps to diagnose and remedy shortcomings in the service outputs

ii) Help to design new channel or revising existing channeliii) Which Channel member have incurred the cost of

performing what flows helps in allocating the profits equitably among the members

Eight Generic Channel Flows

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