The Nature and Scope of Channel Management

Channel Management
The process of balancing allocation of product inventory and pricing across distribution channels
Channel Members
anyone involved in the channel management process
How Channel members add value
~Business use intermediaries to move their merchandise through the country and the world
~ The use of intermediaries results from their greater efficiency in making goods available to target markets
~ Offers the firm more than it can achieve on its own through the intermediaries
Channel Functions
Information, promotion, contact, matching, negotiation, physical distribution, financing, risk taking
**These functions should be assigned to the channel member who can add the most value for cost**
Channel market task groups (and tasks)
Manufacturer (marketing, packaging and financing), Wholesaler (storage and delivery), and Retailer (merchandising and personal selling)
When will a channel be effective?
~ When each member is assigned tasks it can do the best
~ All members cooperate to attain overall channel goals
What is the difference between Horizontal and Vertical conflict?
~ Horizontal: Occurs among firms at the same level of the channel (ex. retailer to retailer)
~ Vertical: Occurs between different levels of the channels (ex. wholesaler to retailer)
Channel management decision
1. Selecting Channel Members: identifying characteristics that distinguish the best channel members
2. Managing and motivating channel members: partner relationship management (PRM) is key
3. Evaluating Channel Members: performance should be checked against standards
Channel management decisions process
1. Analyze Consumer needs
2. Set Channel Objectives
3. Identify Major Alternatives
~ types of intermediaries
~ number of intermediaries
~ responsibility of intermediaries
Channel management in a nut shell
A customer is the puzzle. You need to work with other people to put the puzzle together to give the customer what they want.