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EXPLAIN THE NATURE AND SCOPE OF CHANNEL MANAGEMENT NCSCOS 4. 08 A
WHAT IS CHANNEL MANAGEMENT? WHO ARE ITS MEMBERS? • The process of balancing allocation of product inventory and pricing across distribution channels. • Channel members are anyone involved in the channel management process
HOW DO 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
WHAT ARE CHANNEL FUNCTIONS?
• Group 1 – Manufacturer CHANNEL MARKET TASKS The tasks are handled by different groups • Marketing • Packaging • Financing • Group 2 - Wholesaler • Storage • Delivery • Group 3 – Retailer • Merchandising • Personal Selling
WHEN WILL A CHANNEL BE MOST 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 Conflict • Occurs among firms at the same level of the channel (ex. Retailer to retailer) • Vertical Conflict • Occurs between different levels of the same channel (ex. Wholesaler to retailer)
CHANNEL MANAGEMENT DECISIONS • Selecting Channel Members • Identify characteristics that distinguish the best channel members • Managing and Motivating Channel Members • Partner relationship management (PRM) is key • Evaluating Channel Members • Performance should be checked against standards
CHANNEL MANAGEMENT DECISIONS 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 • The customer is the puzzle. You need to work with people to put the puzzle together to give the customer what they want.