1. Target Markets and Channel Design Strategy
Part 2: Developing the Marketing Channel
Target Markets and Channel Design Strategy

2. Market Variables 1 The target market’s needs and
wants should drive the manner in
which the channel manager shapes
the design of the firm’s marketing
channels.

3. Framework for Market Analysis2
Market geography – efficiently and effectively reach customers. Can use census data and zip code data to identify.
Market behavior – four dimensions: when, where, how, and who.
Market size – must consider relative costs of adding additional channel members based on size.
Market density – number of buyers in an area. Want efficient congestion.
Target
Markets

4. Market Density & Channel Strategy
Efficient congestion
Congested (high-density) markets can promote efficiency in the performance of several basic distribution tasks, particularly those of transportation, storage, communication, and negotiation.
Strategic
Implication
The opportunity to achieve a
high level of customer access at
low cost is higher in dense markets
than in more dispersed ones.

5. When the Market Buys Variations occur: Daily Weekly Seasonally
Implications for the channel manager:
Variations create peaks & valleys in the manufacturer’s production schedule.
He or she should attempt to select channel members who are in tune with these changing patterns.

6. Where the Market Buys Implications for the channel manager:
Determined by the types of outlets from which final
buyers choose to make their purchases
2. Determined by the location of those outlets
Implications for the channel manager:
1. He or she should know where customers generally
buy particular types of products
He or she should know whether these patterns
may be changing.

7. How the Market Buys Versus Large quantities Self-service
One-stop shopping
Impulse buying
Cash
Shopping at home
Expending substantial effort
8. Demanding extensive service
Small quantities
Assistance by salespeople
Buying from several stores
Extensive decision making prior to purchase
Credit
Shopping at stores
Expending little effort
8. Demanding little service
Versus

8. Who Buys Who makes the physical purchase?
Affects the type of retailers chosen in the consumer market.
May influence the kinds of channel members used to serve industrial markets.
Buying centers are commonly Used in industrial markets.

9. Buying Centers
Collection of people who participate in industrial
buying decisions and who are responsible for
the consequences resulting from the decision
Users – actually use the purchase Influencers – provide input Deciders – have the power to buy Approvers – authorize decision Buyers – negotiate terms Gatekeepers – information flows

10. Changes in Market Behavior7
Channel
Manager’s
Role
Must be tuned in
to changes that
are likely to occur
Needs to determine
whether changes
are temporary or
long term

11. Recent Changes… 6 Improved service at the retail level.
Demand for low prices leading to minimum service/warehouse environment.
Catalog and online buying for convenience.
Less complex buying procedures.
Retail level innovations in layout and display.