Chapter 12, designing channel systems. After studying this chapter you will be able: Understanding customer needs to define channel objectives; channel design factors, components, issues, steps and process; method of evaluating various channel alternatives; how channel partners are: selected, trained and kept motivated; principles of vertical integration and electronic channels. | Chapter 12 Designing Channel Systems SDM- Ch 12 Tata McGraw Hill Publishing Learning Objectives Understanding customer needs to define channel objectives Channel design factors, components, issues, steps and process Method of evaluating various channel alternatives How channel partners are: selected, trained and kept motivated Principles of vertical integration and electronic channels Channel design factors . SDM- Ch 12 Tata McGraw Hill Publishing Channel Design Factors Product mix and nature of the product Width and depth of market / outlet coverage planned Long term commitments to channel partners Level of customer service planned Cost affordable on the channel system Channel control requirements of the company Steps . SDM- Ch 12 Tata McGraw Hill Publishing Channel Design Steps Define customer needs Clarify channel objectives Look at alternative systems which can meet these objectives Estimate cost of operating the channel system Evaluate available alternatives Finalise | Chapter 12 Designing Channel Systems SDM- Ch 12 Tata McGraw Hill Publishing Learning Objectives Understanding customer needs to define channel objectives Channel design factors, components, issues, steps and process Method of evaluating various channel alternatives How channel partners are: selected, trained and kept motivated Principles of vertical integration and electronic channels Channel design factors . SDM- Ch 12 Tata McGraw Hill Publishing Channel Design Factors Product mix and nature of the product Width and depth of market / outlet coverage planned Long term commitments to channel partners Level of customer service planned Cost affordable on the channel system Channel control requirements of the company Steps . SDM- Ch 12 Tata McGraw Hill Publishing Channel Design Steps Define customer needs Clarify channel objectives Look at alternative systems which can meet these objectives Estimate cost of operating the channel system Evaluate available alternatives Finalise the ‘ideal’ system Customer needs . SDM- Ch 12 Tata McGraw Hill Publishing Customer Needs Lot size – most convenient pack size which the consumer can buy at a time Waiting time – time elapsed between the desire to buy the product and the time when he can actually buy it – should be almost zero Variety – choice of products, brands, packs Place utility – choice of buying where he wants. For a consumer product it has to be at a location closest to his residence Components SDM- Ch 12 Tata McGraw Hill Publishing Channel Design Components Revenue generation or the commercial part Physical delivery of the goods or services – the logistics part The ‘service’ part to take care of after-sales support Each part of the system is likely to be handled by a different entity. Design issues . SDM- Ch 12 Tata McGraw Hill Publishing Channel Design Issues Activities required and who will perform Activities relationship to service levels Number of channel members required and the relationship
