How to Design a Distribution Channel

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来自 IE Business School 的课程

Channel Management and Retailing

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IE Business School

Channel Management and Retailing

322 个评分

课程 3（共 5 门，Specialization 营销组合实践）

Nowadays a distribution strategy is part of the DNA of many companies and a correct channel management is key for the success of your product. Distribution plans need to be prepared for the long run, combining the following main areas: company profile, portfolio structure and price positioning, go-to-market policy, trade and retail marketing, e-commerce and global retail management. In the last decade, there have been two main revolutions that have affected industries, increasing the importance of Distribution Channel Management: • The IT revolution: considering developments in CRM, supply chain, planning tools, merchandise and reallocation systems, amongst others. • The retail focus: a clear retail strategy can be a differentiator for companies and a strong weapon of competitiveness. Stay up-to-date on how companies are adding these aspects to their main strategic guidelines and making them key points in their managerial decision-making process.

从本节课中

Distribution Channel Planning and Management: Why are They so Important?

At the end of this module you will know the steps to designing and managing a distribution channel. You will also be able to identify the most important players in distribution channels and their roles.

How to Design a Distribution Channel5:37

Key Factors in Channel Management3:56

Expert Interview: Sixto Collazo, International Director of Loewe Perfumes S.A. (LVMH) 113:20

The Role of Distribution Channels in the Value Chain5:58

Who are the Main Participants in Distribution Channels?4:30

与讲师见面

Maria Teresa Aranzabal
Professor
Marketing

[MUSIC]

Welcome back, today we're going to learn to design a distribution channel,

where we'll find out what important aspects we need to take into account.

In designing marketing channels manufacturers

struggle between what is ideal on one side and what is practical.

A marketing channel design calls for four aspects,

analyzing customer needs, setting channel objectives,

identifying major channel alternatives, and finally evaluating those alternatives.

We need to start by analyzing customer needs and wants.

We need to find out what the target customer wants from the channel,

providing the fastest delivery, the greatest assortment, and

the more services may not be possible and practical.

Second aspect is to establish the channel objectives and constraints.

A company states objectives in terms of the target level of customer service.

And also it has to decide which segments to serve and

the best channels to use in each case.

The channel objectives are also influenced by several factors like the nature

of the company, its product, the market and intermediaries, and competitors.

We have the example of Mary Kay use direct channel, and Estee Lauder, for

example, the department stores.

Apple sells through stores and Dell through Internet.

But we have to also consider that the environmental factors such

as the economic condition and

legal constraints may also affect the channel objectives and its designed.

During the crisis,

the main objective has been to distribute the most economical way.

The third aspect in designing channels is to identify major channel alternatives.

When the company has defined its channel objectives,

it should next identify what are these alternatives in terms of the type,

the number of intermediaries, and its responsibilities.

Type of intermediaries,

these are the type of channel members available to carry out the channel work.

Using many types of resellers in a channel provides both benefits,

because you can reach more different buyers, but

also drawbacks because it's difficult to manage and control.

And they may compete, and conflict may arise.

This would be a long channel.

We have the case of Dell that it decided to use a short channel,

meaning selling through Internet.

Talking about channel alternatives, we have to consider not only the type of

intermediaries, also the number of intermediaries,

what number of channel members to use in each level.

There are three strategies available.

We have intensive distribution, that the stock is available in many outlets.

That would be typical for convenience products, and the company could be 7/11.

We have also exclusive distribution.

Usually you lmiit the number of intermediaries handling your product.

Also typically in the luxury products like Hermes, Rolex, or Rolls-Royce.

And we have a third type that would be in the middle,

that is the selective distribution, where you have more than one intermediary,

but fewer than all that would be willing to carry your product.

And in here we can highlight, for example, the distribution of TVs,

furniture, or home appliances.

And a third factor within the channels is that we have

to consider not only the number and the types but

also the responsibilities of each of the channel members.

Producers and intermediaries need to agree on the terms and

responsibilities of each channel member.

And we need to agree in aspects like, for example,

the price policing, the condition of sales, the territory rights, and

also in the specific service that is going to be performed.

And the four aspect that we have to in the designing of the channel,

just to finalize is that we need to evaluate these major alternatives.

Each alternative should be evaluated against economic,

control, and adaptability criterias.

In economic criterias, we compare ratios,

such as what's going to be expected sales, the costs, the profitability.

In the control criteria, it helps

us to decide if we are going to give more or less control to the intermediaries.

We also have the adaptability ones, and

channels often involve a long-term commitment.

However, the company wants to keep

the channel flexibility to adapt to the environmental changes.

So if we choose a long-term commitment channel, it might show that it

is going to have a clear superiority in the economic and control terms.

So now that we know which steps to follow to design a distribution channel,

in the next class we will learn how to manage them

[MUSIC]

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