1. Product Issues in Channel
Design & Management

2. 6-Step Channel Design Process
Step 1
Step 2
• Identify End-User customer segment
• Identify and Prioritize customer’s channel function requirements
• Benchmark existing channel and competitor’s capabilities to channel function
requirements
Step 3
• Develop feasible channel options
Step 4

3. Channel Design Tool Based on What
Customers Value
low
1
Product information
Product Customization
Product Quality Assurance
Lot Size
Assortment
Availability
After Sales Service
Logistics
2
3
4
high
5

4. 6-Step Channel Design Process
Step 5
• Evaluate the benefits and costs for each option
• Elaborate the channel overlaps for multiproduct, multimarket businesses using data from Step 5
Step 6

5. The Channel Helps To Differentiate a Product
and Company in Consumer’s Mind

6. The Channel Helps To Position a Product in
Consumer’s Mind

7. The Channel Helps To Set The Frame Of
Reference for Consumer

8. Channel Design Can Augment or Detract A
Product’s Differentiation Strategy
http://www.youtube.com/watch?v=xLOpuXNrBmI

9. Support from Channel Members is Critical to
the Success of New & Existing Products
Encourage Input
Foster Acceptance
Channel Success
Provide Education
Trouble-Free Products

10. Channel Design And Mgmt. Must Be Aligned With
Product Lines, Not Just Individual Products
Potential Problems With Product Lines
How Manufacturer’s Can Influence
Channel Partners
• Delicate balance between product
proliferation and product losses
• Incorporate channel member’s opinions
before expanding/contracting Product Lines
• Differences of opinion between
manufacturer and channel members on
which customers to target
• Explain rationale and adequate advance
notice
• Cannibalization of the product line
• Differentiate products within the product
line enough to motivate channel members
to sell them all; not focus only on the
highest earning products

11. Channel Needs To Adapt OR Change As
Products Mature
Sales
($)
Maturity
Decline
Growth
Introduction
Adequate market
coverage
Adequate market coverage
and inventory levels
Make sure the product
remains attractive to channel
Phase out marginal channel
members
Adequate supply
Gauge effects of
competition on channel
support
Possible changes in channel
structure to extend maturity
phase
Determine impact of product
deletion on channel

12. Entering New Markets Will Typically Require
Changes To Existing Channels and/or Creation of
New Channels
Confidence
of channel in
manufacturer
Adequate
channel
coverage
Brand
strategy may
cause rifts
New
Market

13. Market Maturity Impacts Channel Design And
Management
Source: Deloitte, “Channel Strategy – Getting straight to the point

14. Coca-Cola India : Rural vs. Urban
Urban Market
Rural Market
Bottling Plant
Large
Distributors
(Hubs)
Bottling
Plants
Smaller
Distributors
(Spokes)
Retailers
Retailers
Retailers
Retailers
Consumers

15. Let’s Build a Channel For a New Product
Product 1 - A Humanoid Robot that walks, talks, and helps from Honda
Product 2 – A Household vacuum cleaner from Black&Decker
Product 3 – Personalized Sweaters and Other Clothing ITems

16. Channel Management wrap-up graphic
Channel Design
Product Issues
• Customer
• Differentiation
• Positioning
• Frame of reference
• Company resources
Channel
Management
Product Issues
• Building Support
• Product Line Channel Issues
• Product Life Cycle Impact
• Market Maturity Affect