Chapter 16

Designing Customer-Oriented
Marketing Channels

Copyright 2011 Oxford University Press

Chapter 16: Designing Customer Oriented Marketing Channels

Channel Design

The channel design is normally meant to give a clear idea

about:
The number of channel entities in the channel network,
The way in which they are linked,
The roles and responsibilities of the entities in the network
The rewards for participating in the activities and also
Clear cut guidelines for the major activities to be performed
during the normal functioning of the channel.

Copyright 2011 Oxford University Press

Chapter 16: Designing Customer Oriented Marketing Channels

What are the service outputs

Waiting time
Breaking the bulk
Spatial convenience
Assortment

Copyright 2011 Oxford University Press

Chapter 16: Designing Customer Oriented Marketing Channels

Distribution channel design

To consume
a product

Channels

Service outputs
have to be delivered

Participates in
channel flows

Activities have
to be performed

Copyright 2011 Oxford University Press

Thus performs activities

Chapter 16: Designing Customer Oriented Marketing Channels

Channel flows and contribution to service outputs

Flow

Direct contribution

Indirect contribution

Physical
Possession

Spatial convenience,
bulk breaking, waiting
time

Assortment

Ownership

Spatial convenience

Promotion

Spatial convenience

Negotiation

Spatial convenience,
bulk breaking

Risk taking

Other contribution

Is a service output in
itself

Assortment
Waiting time, bulk
breaking, spatial
convenience

Financing

Spatial convenience,
waiting time, bulk
breaking

Ordering

Bulk breaking, spatial

convenience, waiting
time

Payment

Bulk breaking, spatial

convenience, waiting
time

Copyright 2011 Oxford University Press

Assortment

Chapter 16: Designing Customer Oriented Marketing Channels

Channel design effort decisions

The service output levels

The flows or activities that are associated with the
achievement of the service output levels
The type of entity who would be entrusted with the
performance of each of these flows

Copyright 2011 Oxford University Press

Chapter 16: Designing Customer Oriented Marketing Channels

Parameters for comparing channel designs

Efficiency
Effectiveness
Equity
Scalability
Flexibility

Copyright 2011 Oxford University Press

Chapter 16: Designing Customer Oriented Marketing Channels

The channel establishment plan (contd.)

The main purpose of the channel to be set-up

The profile of the customers who are the target market for
the channel

The needs and requirements of the target market with

regard to the identified service outputs provided by the
proposed/ existing channel:

Analysis of the operations of the existing channels that deal

in similar product/service lines

Detailed activity chart for achieving the service output

objectives

Copyright 2011 Oxford University Press

Chapter 16: Designing Customer Oriented Marketing Channels

Plan..Contd.

Details about the various channel constituents who will be

performing these tasks

The cost of performing the activities

The designated roles and responsibilities of the channel

constituents

The proposed remuneration for performing these roles and

responsibilities

Standards for measuring the performance

Procedures for reporting and information sharing

Monitoring mechanisms

Criteria for appointing the channel members

Copyright 2011 Oxford University Press

Chapter 16: Designing Customer Oriented Marketing Channels