BERMAN11.PPT 32KB Jun 05 2011 09:30:17 PM

MARKETING CHANNELS
Channel Design
Berman Chapter 11
Version 3.0
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Channel Design
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1. Channel Design and Selection
2. Determining Channel Objectives
3. Assessing Channel Length, Width
4. Factors that Offset Channel Length
5. Allocating Channel Tasks
6. Selection of Resellers

7. Revising Channel Arrangements
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1. Design and Selection
Goal: optimal channel arrangement
• marketing strategy
change
• geographic expansion
• loss of major client
• mergers, acquisitions
in industry

• existence or increase
of gray market activity
• new channel
introductions (net)
• changes in buyer
behavior

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2. Channel Objectives
• integrate effects
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mergers and acquisitions
wider distribution
gray market
new markets

• specific objectives
– service output requirements
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lot size
market decentralization
waiting time
product variety
service backups

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• 3. Intermediary Requirements
– Channel length
• short - direct
• long - indirect

– channel width
• determinants - investments, buyer behavior, volume
• degrees - exclusive, intensive, selective

– types
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horizontal
forward vertical
backward vertical
intertype - multiple, dual
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4. Channel Length
• Aspinwall Theory
– characteristics of goods and parallel systems
– replacement rate, gross margin, adjustment,
consumption time, searching time
– goods - reed, orange, yellow

• Product factors
– customer base, geographic dispersion, customer
density, sales gestation period, level of

customer, average order size
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Channel Length (cont)
• Product factors
– bulk, perishability, unit value, product standardization,
technical nature, gross margin

• Manufacturer Factors
– size, financial capability, desire for control, managerial
expertise, customer knowledge

• Intermediary Factors
– availability, cost, service quality

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Length Factors Summary
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lack of independence of variables
need to consider multiple factors
relationship simplification
most closely related factors
– product information, customization, quality
assurance, lot size, assortment, availability,
after sales service, logistics
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5. Channel Participant Tasks
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Selling
Channel Support
Physical Distribution
Product Modification
After Sale Service
Risk Assumption
– Criteria - reducing costs, maximizing share,
sales revenue, profits, optimizing ROI risks,
meeting needs for info, availability,
etc.,information sources
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– Contact Bases
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selling intermediaries
stocking intermediaries

stocking / servicing intermediaries
hybrid arrangements

• 6. Selection of resellers
– availability, preliminary evaluation,
comprehensive analysis
– evaluations
• screenings, interviews, checklists, analyses, final
process
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7. Revising Channel Arrangements
• ideal vs actual system - gap analysis
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creditworthiness
territorial coverage
image and reputation
service performance
pricing strategy
wholesaler requirements
effects on current channel
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7. Revising Channel Arrangements
(cont)
• Efficiency
• Effectiveness
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coverage

control
effectiveness
efficiency

• Adaptability
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