Logistics PPS9b Topic 6
Assessing channel member performance
Scope and frequency – factors: control Degree of control by M – strong if have contract with others or have strong acceptance for its products Importance of the channel members Importance of the channel members for M (rely totally on or partly?) unit value and volume The more complex the product, the broader the scope of evaluation (unit value and volume) number of channel members Intensive vs selective (number of channel members) Member performance Comprehesive performance evaluation = Channel member performance audit
Develop performance measurement criteria Evaluate channel member against those criteria Take corrective action if needed
Performance measures in marketing channels
Evaluating total channel effectiveness Determine customer needs for channel service: Locational services Lot size Delivery time Product variety Determine which channel institutions are responsible for providing which channel services Determine how well customer needs are being met Take corrective action, if needed Reinforce effective performance
Taking the five steps into consideration, evaluate the effectiveness of the marketing channel systems for the following: FMCG’s Cellphones Medical services
Channel system equity
Channel system productivity Measure how efficiently an intermediary uses resources i.e. -Land -Labour -Capital to generate output = sales volume, gross margin & value-added variables
CHANNEL SYSTEM PROFITABILITY Distribution Productivity Distribution channel environment: Consumer-demand Technology Consumerism and trade actions Legal regulations Economic conditions Competitive conditions Labour unions Capital and international markets Distribution channel structure: Number of channel levels Types of institutions participating at each level Number of establishments of each institutional type Functions performed at each channel level Extent of routinisation of transactions Incidence of postponement/ speculation in the channel Distribution channel member policies: Product assortment to be carried Market segments and territories to be served Ordering time and minimum order requirements Safety margin, never-out-list and other inventory policies Prices, discounts and buy-lease policies Advertising and sales promotion obligations Credit and payment policies
Corrective action 1.Clarify tasks by marketing managers in channel 2.Use of power perhaps necessary to reinforce expectations/ requirements 3.Elimination i.e. YOU’RE FIRED!
Read through Page 264 – 265 When modification of the existing channel may become necessary.
case study Page 266 – 268 and answer questions on page 268