Channel Management
Define the following terms: channel, channel intensity, channel length, distribution patterns, exclusive distribution, selective distribution, and intensive distribution.
Channel: different options for moving their products to the consumers and businesses who want to buy them.
Channel intensity: to acheive ideal market exposure.
Channel length: the total number of channel members.
Distribution patterns: are determined by considering consumer needs as well as the nature of the product itself.
Exclusive distribution: means selling a product through just one middleman in a geographic area. Marketers use this method when they need to maintain tight control over a product.
Selective distribution: means selling a product through a limited number of wholesalers and retailers in a geographic area. Marketers use this method when they want to deal with the middlemen they feel will do the best job of promoting and selling their products.
Intensive distribution: means selling a product through every available wholesaler and retailer in a geographic area where consumers might look for it. Marketers use this method when they are attempting to reach the greatest number of consumers possible.
Explain how channel members add value.
Each channel member adds value to a product when they strive together to acheive a common goal.
Discuss channel functions (e.g., information, promotion, contact, matching, negotiation, financing, and risk taking).
Channel functions include, providing marketing information, promoting products, negotiating with customers, reducing discrepancies, and financing and risk-taking. When providing marketing information, companies rely on market research to determine their target markets’ needs and wants. Promoting products can be expensive, shared promotion activities within the channel can lower channel members’ individual costs while producing the same results. Producers often don’t have the time or the ability to negotiate with final consumers on issues such as price, delivery, installation, etc. These “discrepancies” of quantity and assortment are issues that middlemen can solve. When channel members work together to finance activities (manufacture products, to transport and store them, to promote them, to gather information about target market needs, to extend credit to consumers, etc.) and to assume the inherent financial risks, channels will be more effective.
Explain key channel tasks (e.g., marketing, packaging, financing, storage, delivery, merchandising, and personal selling).
Channel tasks include, providing marketing information, promoting products, negotiating with customers, reducing discrepancies, and financing and risk-taking. When providing marketing information, companies rely on market research to determine their target markets’ needs and wants. Promoting products can be expensive, shared promotion activities within the channel can lower channel members’ individual costs while producing the same results. Producers often don’t have the time or the ability to negotiate with final consumers on issues such as price, delivery, installation, etc. These “discrepancies” of quantity and assortment are issues that middlemen can solve. When channel members work together to finance activities (manufacture products, to transport and store them, to promote them, to gather information about target market needs, to extend credit to consumers, etc.) and to assume the inherent financial risks, channels will be more effective.
Describe when a channel will be most effective.
Channels of distribution are effective only when they are properly managed, when members share common goals, and when responsibilities are assigned appropriately.
Distinguish between horizontal and vertical conflict.
Horizontal conflict refers to a conflict between two or more channel members at the same level, whereas vertical conflicts involve a disagreement between two channel members on consecutive levels.
Describe channel management decisions (i.e., selecting channel members, managing and motivating channel members, and evaluating channel members).
Channel-management decisions include setting channel objectives, determining distribution patterns, selecting channel members, determining channel responsibilities, and managing, motivating, and monitoring channel members. Channel's have to set objectives. Marketers can’t begin designing channels and selecting channel members before they’ve determined what they’re trying to achieve. In general, marketers want channels to meet the needs and wants of their target markets efficiently and to give their product a competitive edge in the marketplace. When determining distribution patterns, marketers want to achieve something called ideal market exposure—that is, they want to make their product available to each and every customer who might buy it, but they don’t want to over-distribute the product and waste money. To achieve ideal market exposure, marketers must determine distribution intensity. Before selecting specific channel members, marketers must determine the types of members that belong in the channel (whole- salers, retailers, etc.) and also determine channel length. Determining channel responsibilities is an important part of channel management. Chan- nels are effective only when members work together appropriately and perform the tasks they are best suited for. When managing, motivating, and monitoring marketers should constantly evaluate the channel to see what’s working, what isn’t, and what can be improved.
Explain channel design decisions (i.e., analyzing customer needs, setting channel objectives, identifying major alternatives—types of intermediaries, number of intermediaries, responsibilities of intermediaries).
Marketers designing channels and overseeing channel strategies must first recognize the importance of their task and then make informed decisions regarding distribution patterns as well as the selection of channel members and assignment of their responsibilities. Marketers can’t begin designing channels and selecting channel members before they’ve determined what they’re trying to achieve. In general, marketers want channels to meet the needs and wants of their target markets efficiently and to give their product a competitive edge in the marketplace.