Term
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Definition
| Refers to those decisions involving the development of new marketing channels where none had existed before, or to the modification of existing channels. |
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Term
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Definition
1. Channel design is presented as a decision faced by the marketer
2. Channel design is used in the broader sense to include either setting up channels from scratch or modifying existing channels.
3. Design as a verb implies that the marketer is consciously and actively allocating the distribution tasks in an attempt to develop an efficient channel structure.
4. The term selection refers to only one phase of channel design – the selection of the actual channel members.
5. The term channel design also has a strategic connotation because channel design should be used as an integral part of the firm’s attempt to gain a differential advantage in the market. |
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Term
| Seven Steps (or phases) of the Channel Design Decision |
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Definition
1. Recognizing the need for a channel design decision
2. Setting and coordinating distribution objectives
3. Specifying the distribution tasks
4. Developing possible alternative channel structures
5. Evaluating the variables affecting channel structure
6. Choosing the “best” channel structure
7. Choosing channel members |
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Term
| Situations that can indicate the need for a channel design decision: |
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Definition
- developing a new product or product line
- aiming an existing product a new target market
- making a major change in some other component of the marketing mix
- establishing a new firm, from scratch or as a result of mergers/acquisitions
- adapting to changes that existing intermediaries might make to their policies so as to inhibit the attainment of the firm’s distribution objectives
- dealing with changes in availability of particular kinds of intermediaries
- opening up new geographic marketing areas (territories)
- meeting the challenge of conflict or other behavioral problems
- reviewing and evaluating |
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Term
| Channel managers need to perform three tasks when setting and coordinating distribution objectives |
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Definition
- familiarize themselves with the objectives and strategies in the other marketing mix areas and other relevant objectives and strategies of the firm
- set distribution objectives and state them explicitly
- check to see if the distribution objectives they have set are congruent with marketing and other general objectives and strategies of the firm |
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Term
4. Developing possible alternative channel structures
Allocation alternatives should be in terms of these three dimensions |
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Definition
- number of levels in the channel
- intensity at various levels
- types of intermediaries at each level |
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Term
| The six variables affecting channel structure |
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Definition
- market variables
- product variables
- company variables
- intermediary variables
- environmental variables
- behavioral variables |
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Term
| Major approaches to choosing the “best” structure: |
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Definition
- “Characteristics of Goods and Parallel Systems” approach by Aspinwall
- Financial approach
- Transaction Cost Approach (TCA)
- Management Science Approaches- Judgmental-Heuristic Approaches |
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Term
| - “Characteristics of Goods and Parallel Systems” approach to choosing the best structure by Aspinwall states that all products may be described in terms of the following 5 characteristics: |
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Definition
- Replacement rate
- Gross margin
- Adjustment
- Time of consumption
- Searching time |
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