Managing Business

Marketing channels
 CHANNEL
The link between manufactures and
customers .
Accomplishes all the tasks necessary to
effect a sale and deliver products to the
customer.
The tasks include making contact with
potential buyer, negotiating, contracting,
transferring the title, storage

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 Channel Component Dimensions

First, the channel structure must be designed to

accomplish desired marketing objectives.
Difficulty to selecting channel
the alternatives are numerous
marketing goals differ
the variety of business market segments often
requires that separate channels must be employed
concurrently.
Second, once the channel structure has been specified,
the business marketer must manage the channel to
achieve prescribed goals.

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 The link between manufacturers and customers is the channel of distribution.
Channel management centers on these questions: which channel tasks will
be performed by the firm and which tasks, if any, will be performed by
channel members?

Channel
Alternatives
in the
Business
Market

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Direct Sales Approach is Viable When:

1. The customers are large and well defined.

2. The customers insist on direct sales.

3. Sales involve extensive negotiations.

4. Control of the selling job is necessary to ensure

proper implementation of the total product
package and to guarantee a quick response to
market conditions.
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Indirect Distribution
is Generally Found Where
Markets are fragmented and widely
dispersed.
Low transaction amounts prevail.
Buyers typically purchase a number of
items.

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 E-Channel Use

Level 1:
Information Platform.
Level 2:
Transactional Platform.
Level 3:
Platform for Managing Customer Relations.

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 Three Primary
Distributor Classifications
General-line distributors
They stock and extensive variety of products.
Specialists
Focus on one line or on a few related lines.
Combination House
Operates in two markets: industrial and consumer.

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 The Channel Design Process

Channel design is the dynamic process of developing new

channels where none existed and modifying existing channels.
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Channel design is an active rather than a passive task.
 Frequently, the manager has little flexibility in the selection of
channel structures because of trade, competitive, company, and
environmental factors.
The decision on channel design may be imposed on the
manager.
Factors Limiting Choice of Industrial Channel

1. Availability of Good Intermediaries

2 Traditional Channel Patterns
3. Product Characteristics
4.Company Financial Resources
5.Competitive Strategies
6.Geographic Dispersion of Customers 10
 Channel Alternatives Issues

1. The number of levels to be included in the channel.

2. The types of intermediaries to employ.
3. The number of channel intermediaries.
4. The number of channels to employ.

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 Manufacturer Representatives
Manufacturer-Rep are independent intermediaries who
carry complimentary but not competing goods. They do
not take title to goods and work on a commission basis

Manufacturer-Rep Channel Used When:

The product is not standard but is closer to made-to-order.
The product tends toward technical complexity.
The gross margin is not large.
A relatively few number of customers, concentrated
geographically and concentrated in a few industries.
Customers order relatively infrequently and allow fairly
long lead times.
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Evaluating Alternative Channels
Takes into account all the elements of the channel design process as well
as important customer requirements.
Approach is to create an ideal channel system that fully addresses
customer needs.

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 Channel Administration
Channel participants must be selected, and
arrangements must be made to ensure that all
obligations are assigned.
Members must be motivated to perform the
tasks necessary to achieve channel
objectives.
Conflict within the channel must be properly
controlled.
Performance must be controlled and
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evaluated.
Motivating Channel Members
A Partnership

Dealer Advisory

Councils

Margins and
Commission
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