Channel design decisions consists of:
- Analyzing customer needs
- Lot size – buying fleet of cars vs car for home.
- Waiting and delivery time – prefers less waiting time
- Spatial convenience – easiness of purchasing – more dealers
- Product variety – prefer variety of products to choose from
- Service backup – credit, delivery, installation, repairs etc.
- Establishing channel objectives
- Result from firm’s marketing objectives – stating targeted service output levels.
- Profit consideration and asset utilization must be considered.
- Try to lower the total channel cost
- Eg: Perishable goods – direct marketing is preferred
- Eg: Customized goods – sold directly by company sales representatives (middlemen lack knowledge)
- Identifying major channel alternatives
- Companies can choose from a wide variety of channels for reaching customers – salesforce, agents, distributors, dealers, direct mail, telemarketing, internet etc.
- Elements of channel alternatives:
- Type of intermediaries
- Number of intermediaries
- Terms and responsibilities of each channel participant – price, policies, territorial rights etc
- Evaluating major channel alternatives
- Economic criteria – different levels of sales and cost – salesforce vs agents
- Control criteria –
- Adaptive criteria – Some duration of commitment – can not switch to other channels.
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