1. CHAPTER 6 DESIGNING THE MARKETING CHANNEL

2. Classification of Channel Systems
Conventional
(Classical)
Vertical Marketing
Systems (VMS)
Administered
Contractual
Corporate
(Vertical
Integration)
Franchises
Retail
Cooperative
WSVC *
Wholesale Sponsored Voluntary Chain

3. What is Channel Design?
Decisions about the development of new marketing channels or the modification of existing channels
Part of the marketer’s marketing strategy decisions
New or existing channels
Allocation of tasks
Selection of channel members

4. Rationale for the Design Process
New products or product lines
New target market
Change in other parts of the marketing mix
Incorporation of new firm into the organization
Changing policies of intermediaries
Changing availability of intermediaries
New geographic markets
Environmental changes
Conflict in the channel
Response to evaluation process

5. Setting and Coordinating Distribution Objectives
What are the overall objectives of the company?
What is the strategy in the other marketing mix elements?
Set and State the distribution objectives
Reaffirm that all marketing mix objectives are compatible.

6. What distribution tasks are needed to accomplish the objectives?
Examples of tasks in the consumer market:
Research shopping behaviors
Promote the product
Maintain inventory
Provide product samples
Transport the product
Provide credit, warranty work, etc.
Examples of tasks in the business market:
Maintain inventory
Provide storage space
Provide technical assistance
Monitor quality
Process orders
Manage packaging and special handling

7. Develop Alternative Channel Structures
Determine levels and intensity
Intensive, selective, exclusive
Decide on types of intermediaries
Decide on possible alternatives of channel structure

8. Attempt to evaluate all variables affecting the channel structure
Market variables
Product variables
Company variables
Intermediary variables
Environmental variables
Behavioral variables

9. Market Variables Market Geography Market Size Market Density
Market Behavior

10. Product Variables Bulk and weight Perishability Unit value
Degree of standardization
Technical versus non-technical
Degree of newness

11. Company Variables Size Financial capacity Managerial expertise
Objectives and desired strategies

12. Intermediary Variables
Availability
Cost
Services

13. Environmental Variables
Review chapter 3
Economic, sociocultural, competitive, technological, legal

14. Behavioral Variables Communications flow Power relationship
Control issues
Conflict potential

15. Choose the “Best” Channel Structure
Aspinwall’s Characteristics of Goods and Parallel Systems approach
Financial approach
Transaction Cost analysis approach
Management Science approach
Judgmental-Heuristic approaches

16. Zero Based Channel Design
A zero-based channel design is one that
meets the target market segment’s demands for service outputs
at minimum cost of performing the necessary channel flows that produce those service outputs.

17. To move toward that goal, consider…
What flows/tasks are being offered that could be eliminated?
Are there tasks/flows being performed that are duplications of effort?
Could any flows/tasks be reorganized to improve efficiency?
Could we reduce costs by modifying any tasks/flows?

18. Channel Gaps
Anything within the channel structure that is preventing the channel from being a zero-based design.