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Importance of marketing Channel strategy – Many products goes through multiple
marketing channel before reaching to the customer so for manufacturer it become important
so that their product and service will reach to the end user efficiently and effectively. All this
channel perform as gateway between manufacturer and customer. All this channel help to
determine the customer perception about manufacturer.
Why do Marketing channel exist- For manufacturer it become cost saving option to go
through channels rather than direct interacting with customer. That is because this channel
break bulk, ship many product to different location.
Benefits of downstream Channel Members
1. Search Facilitation – End user need to find product they want & seller need to know
exactly this customers. Intermediaries facilitate between this two parties and let know
the end user about seller.
2. Sorting – Company manufacture in large quantities and low variety where customer
need low quantity and high variety. Intermediaries sort this by connecting multiple
seller.
Benefits of Upstream channel Members
1. Routinization of Transaction – To avoid bargaining over each transaction and
standardization of goods and [Link]
2. Fewer Contact – If it weren’t for channel then every producer need to meet with each
potential buyer.
The Key Function of marketing channel - Carrying cost, generating demand through
selling, distribution, after sell service. Extending credit.
Designing structure and Strategies – First determine degree of channel intensity, mix of
channel types, use of dual distribution and to close any service or close gap. For each
segment number of channel partner competing for customer should be determined.
Auditing market channel – After finding out targeted segment next step is to find out
available channel member and their capabilities to provide service efficiently.
Every channel contribute value and required cost-
Physical possession – include activities like goods storage and transportation of goods. In
case of online service this refer to as data cost.
Promotion – include personal selling by employee or sales force, media advertising and sales
promotions, publicity and public relationship activities. This activities help to spread
awareness of product or service.
Negotiation – Cost of negotiation is personal time of parties and legal counsel.
Financing – usually in B2B purchase required 30 days payment or sometimes offered
discount of early payments.
Risk – includes price guarantees, returns allowances, warranties, insurance, repair, after-sales
services.
Ordering and Payment – cost incurred during actual purchase and order processing. This is
getting automated day by day reducing ordering cost and improving in-stock rate.
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Information sharing – this happens between every channel member in routine and specialized
way.
Auditing channel using efficiency template –
Efficiency template explains- 1) the types and amounts of work done by each channel
member to perform the marketing functions. 2) The importance of each channel function to
the end user service outputs. 3) The share of total channel profits that each channel member
should have
Auditing channels using gap analysis:
Channels would consist of gaps which is required to meet the target segments needs
where by closing these channels gaps which improves channel efficiency and with a
minimum cost target can be achieved.
Sources of channel gaps: Gaps can arise from limitations placed on even the best-intentioned
channel managers as the channel would develop constraints which prevents establishments of
an optimal channel design. Environmental bounds like local regulation and legal
sophistications lead to these kinds of gaps. Managerial bounds arise from rules imposed by a
company that manufactures a product.
Service gaps: These gaps arise when the amount of service supplied is less then service
demanded or the vice-versa. In contrast service gap reflect a low service output offering
accompanied by a low price even though the services provided would be of low prices the
customers would not perceive it as sufficient value provided by the service. It is also possible
to find service gaps in more than one service outputs in which one type of service would be
of high level and another would be of low level. One manager would think that good one will
subsidize the bad one but customers rarely compensate for one another.
Cost gaps: Cost gaps exist when total cost of performing all channel function is too high,
generally because one or more relevant channel functions becoming too expensive. If a low-
cost way of service exists then a cost gap also does exist. So, as long as the demanded service
outputs are achieved there is no overly cost of the channel exist.
Combining channel gaps: It is critical to find the gap and if the gap arises only at cost side,
then channel must not reduce service levels in order to reduce costs. Alternatively, if a
service gap occurs involving high levels of service, then needed, this is where channel can
reduce cost gap and service gap both at a time.
Auditing Omni channels-
In Omni channel design, many channels grant customer numerous interfaces giving rise to
difference in customer experience depending upon downstream channel member. It also
creates a danger of fragmentation and siloes, which can lead to broken, confusing, frustrating
experiences. An effective Omni channel produces customers with cohesive, seamless, unified
experience.
Distribution breadth and depth which corresponds to brand coverage and
availability of brand within channel or outlet. These metrics mainly relate to access numbers,
importance, and ease of shopping in various channel outlets.
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