Mostly companies do not sell their product directly to the end-user. There are some intermediaries like brokers, sales agents, wholesalers, retailers that constitute distribution channel.
According to Kotler, "Marketing channels are set of interdependent organizations involved in the process of making a product or service available for use or consumption.
"According to Stern and El-Ansary, "Intermediaries smooth the flow of goods and service. This procedure is necessary in order to bridge the discrepancy between the assortment of goods and services generated by the producer and the assortment demanded by the consumer. The discrepancy results from the fact that manufacturers typically produce a large quantity of limited variety of goods, whereas consumers usually desire only a limited quantity of wide variety of goods."
i.Establishing Distribution Channel Management
Designing a channel management involves analyzing customer requirements,establishing channel objectives, identifying and evaluating the channel alternatives.
a. Analyzing Customer Requirements Includes:
According to Kotler, "Marketing channels are set of interdependent organizations involved in the process of making a product or service available for use or consumption.
"According to Stern and El-Ansary, "Intermediaries smooth the flow of goods and service. This procedure is necessary in order to bridge the discrepancy between the assortment of goods and services generated by the producer and the assortment demanded by the consumer. The discrepancy results from the fact that manufacturers typically produce a large quantity of limited variety of goods, whereas consumers usually desire only a limited quantity of wide variety of goods."
i.Establishing Distribution Channel Management
Designing a channel management involves analyzing customer requirements,establishing channel objectives, identifying and evaluating the channel alternatives.
a. Analyzing Customer Requirements Includes:
- Number of units permissible to buy at one time by a customer
- Time taken to deliver the product
- Convenience of the customer to buy a product
- Availability of variety of goods
- Add-on services provided by the channel
There is a direct correlation between the service output quality and the channel cost. If the service output gets better the channel cost increases which increases the product price for the customer.
b. Establishing Objectives: Channel objectives are defined to get the targeted output level. Objectives vary with the product. Some product needs more direct marketing however; some product needs little marketing or no interaction with the intermediary.
c. Identifying Major Channel Alternatives: According to Kotler a channel alternative is described by three elements: the types of available business intermediaries, the number of intermediaries needed, and the term and responsibilities of each channel member.
d. Evaluating the Major Alternatives: Each channel should be evaluated against different criteria. Different criteria are economic, control and adaptive.
ii. Managing Channel Partners
Once the channel is finalized, the next step is to select, train, motivate, and evaluate them.Producers should try to recruit better intermediaries in terms of their capability and knowledge. Companies should train the intermediaries carefully because at the end of the day, they are the face of the company in front of your final customer. A company should motivate the channel partners by finding out their need and should plan and implement some programs to increase their performance.Company should evaluate their performance time to time. They should be rewarded/retrained depending on the performance.
b. Establishing Objectives: Channel objectives are defined to get the targeted output level. Objectives vary with the product. Some product needs more direct marketing however; some product needs little marketing or no interaction with the intermediary.
c. Identifying Major Channel Alternatives: According to Kotler a channel alternative is described by three elements: the types of available business intermediaries, the number of intermediaries needed, and the term and responsibilities of each channel member.
d. Evaluating the Major Alternatives: Each channel should be evaluated against different criteria. Different criteria are economic, control and adaptive.
ii. Managing Channel Partners
Once the channel is finalized, the next step is to select, train, motivate, and evaluate them.Producers should try to recruit better intermediaries in terms of their capability and knowledge. Companies should train the intermediaries carefully because at the end of the day, they are the face of the company in front of your final customer. A company should motivate the channel partners by finding out their need and should plan and implement some programs to increase their performance.Company should evaluate their performance time to time. They should be rewarded/retrained depending on the performance.
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