Distribution Channel Management

Week 3

Break down in groups and discuss these 3 topics…

1. Describe your experience of buying clothes in 1990’s2. Describe your experience of buying clothes in 2000’s3. Describe your experience of buying clothes in 2010’s

What changes do you recognize?Why do these changes happened?

Change = Opportunity

Everywhere there is innovation and creative idea about how opportunity can be created for customers to buy and buy more

To warrant serious pursuit, an idea must be both practical and useful. Out of those idea that are practical, a smaller number may be useful. To be useful, an invention must not only fill a need, it must be an economical and efficient solution to that need. – David Packard, joint founder of Hewlett Packard -

Distribution and Channel Management is not about products or services, It’s about how to make more customer buy your

products or services, and buy more of them

Let’s get some group fun

• Now pick a products or services that you have the passion for…

• And until the end of the semester, your group will act as the manufacturer or provider of these products or services…

• You will prepare a Distribution and Channel Plan for this products/services

• Every week your group will submit part of the project report. For next week, define the 6 factors of successful channel for your products/services

(1) Making the selection… Let’s talk about these factors

• Customers/Shoppers characteristics• Product characteristics• Distributor characteristics• Competitive characteristics• Company characteristics• Environmental characteristics

Customer Characteristics

• Who is your customers/shoppers ?• Where do your shoppers usually buy the

products/services?• How much do they usually buy your

products/services?• Do they buy regularly or occasionally?• How frequent your shoppers need your

products/services?• Does the purchase planned or unplanned?

Product Characteristic

• How big is your products?• Does it need special handling?• Does it need special display or demonstration

unit? • Does it need extensive customer support?• How much your products/services cost? High

unit value product can bare higher unit selling and distribution cost, and vice versa.

Distributor Characteristics• What store channels does your products/service should be

available to your shoppers?• Do you need the help of distributor to reach your customers and

shoppers?• How many stores totally you need to cover?• Does your products/services should be distributed locally,

regionally, or nationally?• Based on information above you should decide:

– Do you need distributor?– What kind of distributor will give you best service to reach your

customers and shoppers?– Can you afford this distributor service cost, regarding your

products/services?

Competitive Characteristics

• How’s your competitor doing their business? What channels do they use?

• How do they perform in the marketplace?• Is there any specific competitor that perform better than

the others?• Do you want to directly competing the leader or not?• Do you want to use the same channel as the leader or

not? Suppose you want to use the same channel, Are you sure the channels will help you to compete against the market leader? Can you afford to support these channel against the market leader?

Company Characteristics

• How is the resources + capability of the company’s can create company’s competitive advantage for your customer, shoppers, and consumers?

• Identify your company’s value creation activity inside the value chain, and determine what role your distributor and your customer playing to deliver the competitive advantage to the end consumers

Environmental Characteristics

• Is there any government regulation, market trends, legal aspects, economics, that can affect your distribution structures and performance?

• How do you prepare to face environmental changes in the future?

• How agile your organization and your channels be able to adjust with these changes? Design and restructure your organization if needed. Make sure your channel choices is the right choice considering these environmental conditions.

• Now, write down your selections.

Your group paper about (1) Making the selection should be submitted 4,5,6 March 2014. It accounts for 10 points of Nilai Tugas…

If there’s something you need to ask about this task, feel free to find me in the lecturer room, or contact me to make appointment.

Every group eligible for 1 consultation meeting with me. You decide whether you need to use this privilege or not. This is optional not an obligation.