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EXPLAIN THE NATURE AND SCOPE OF
CANNEL 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?
CHANNEL MARKET TASKS
• Group 1 – Manufacturer
• Marketing
• Packaging
• Financing
• Group 2 - Wholesaler
• Storage
• Delivery
• Group 3 – Retailer
• Merchandising
• Personal Selling
The tasks are handled by different groups
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 Needs2. Set Channel Objectives3. 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.