MARKETING CHANNELS Evaluation of Channels Berman Chapter 15

MARKETING CHANNELS Evaluation of Channels Berman Chapter 15 Version 3. 0 1

Channel Assessment and Control • • • 1. Introduction 2. Overall Measures of Performance 3. Financial Performance Measures 4. Distribution Cost Analysis 5. The Channel Audit 6. Improving Channel Productivity 2

1. Introduction to Channel Assessment and Control • three different levels – product category for a given channel reseller • relative profitability of a private label brand vs a national brand • contribution to overall profits of specific products – profitability of a channel unit – profitability of specific channels • relativity of direct vs indirect channels 3

2. Overall Measures of Channel Performance • A. Measures used by Dealers – outcomes based measures • volume, profit, margins, turnover, market share – behavior based measures • service, warranty/claims, buildings, facilities, office systems, incentive plans – five measures • outcome sales, outcome profit, behavior sales, customer service, market share 4

2. Overall Measures of Channel Performance • B. Measures used by Suppliers • 7 components – sales contribution , profit contribution, reseller competence, reseller compliance, reseller adaptation, growth contribution, customer satisfaction • 2 measures – financial - sales, profits, margins, turnover – behavioral - service, warranty/claims, competence, adaptation 5

3. Financial Performance Measures A. data envelopment analysis • efficiency and profit • expectations and performance – high/low – stars - high E, High P – effectives - high P, low E – underperforming - high E, low P – underperformers - low E, low P 6

3. Financial Performance Measures B. financial ratios • solvency • quick ratio, current ratio, liabilities to net worth • efficiency ratios • collection periods, inventory turnover, assets to sales • profitability ratios • net profit margin, return on assets, return on net worth 7

4. Distribution Cost Analysis • Configuration cost and profitability – direct vs indirect, private vs national brands, customer types - discounters, upscales, etc • Full and Direct cost analysis – natural expenses vs function expenses – non traceable common costs • Activity based costing – vs non-activity - product, channel , customers 8

5. The Channel Audit Process vertical and horizontal audits • • • channel structure relationship marketing customer service physical distribution marketing research management information systems • • • product pricing promotion technology service channels international channels 9

6. Improving Channel Productivity partnerships and customer response • Channel Partnership Benefits – reduced channel inventory – electronic data interface among partners – reassigned tasks - i. e. . preticketing – eliminate redundancies – supplier managed replenishments – cross docking and direct store delivery 10

6. Improving Channel Productivity partnerships and customer response • Efficient Customer Response – electronic data interchange – point-of-sale registers – bar codes – cross docking – scanning equipment – store replenishment software – invoicing and packaging standards 11