Marketing Channels Strategy and Effectiveness Study

After reading this article you will learn about the Marketing Channels Strategy and Effectiveness Study.

(1) A manufacturing firm should develop its strategy of the channels of distribution having regard to:

(a) Marketing strategy,

(b) Competition,

(c) Nature of products,

(d) Nature of customer/market,

(e) Competitors’ strategy,

(f) Character of business environment,

(g) Characteristics of middlemen, and

(h) Control over outlets.

In the area of channel strategy developments, the evaluator needs to assess and quantify which of the strategic factors (such as discount or commission, inventory, window-display, demonstration, advertisement, etc.) are responsible for channel conflicts and recommend a package of solution by holding dealer’s conference or training of salesmen or otherwise as the circumstances warrant.

(2) In order to decide about the best marketing channel, the following steps are important:

(a) Identifying the various alternative means of distribution;

(b) Comparing the merits and demerits of each of the alternatives; and

(c) Recognising the one that will be best keeping in view the resource constraints.

With regard to the decisional problems, the management should study and analyse both the physical criteria and economic criteria as detailed below:

(a) Under physical criteria:

Adoption of one or more of the following distribution methods depending on the problems and circumstances:

(i) Intensive distribution i.e. the use of various outlets to obtain maximum coverage of the market segments as in the case of cigarettes, cosmetics, toiletries, soaps and detergents, etc.

Selective distribution i.e. the selective choice of outlets—wholesale and/or retail distributors for sales improvement for the products like typewriters, duplicators, Xerox machines, calculators, and portable computers, etc., which require after- sales service.

Exclusive distribution i.e. a distributor is allocated an exclusive sales territory to deal in the products independently.

Consignment selling i.e. the distribution of products through the middlemen who get commission on the sales effected.

Franchise selling i.e. chosen individual outlets who are provided with necessary loans and facilities including the advertisement and promotional campaigns for the business.

(b) Under economic criteria: The management should address and quantify the pertinent questions like:

(i) Expected sales volume under each channel alternative?

(ii) Is the channel alternative capable to handle and improve upon the sales?

(iii) Selling and distribution costs of each alternative?

(iv) Are the costs of a particular alternative reasonable? Can such costs be met in consideration of sales volume and financial resources?

(v) What is the outcome of comparison as to sales and cost-benefit factors among the different marketing channel alternatives? What is the impact of each, alternative on the firm’s profit?

(vi) Whether the firm should use its own sales force or go in for a sales agency.