1. Designing a suitable channel system will require
defining the customer needs, clarifying the channel
objectives, looking at alternative systems which can
meet these objectives, cost of the channel and finally
evaluating the various alternatives to tone in on the
ideal channel system.

2. Stages in Channel Planning
Segmentation:- It is the cluster of customers on the
basis of what each segment expects out of the channel.
Positioning:- It defines the channel element which is
required to service each of the segments.
Segmentation Positioning Focus Development

3. Stages in Channel Planning
 Focus:-The sales manager decides only the segments
that need to be addressed.
 Developing the right channel alternative:
Selecting the best from the set of alternatives available

4. Defining the Customer Needs
Customer needs are defined by the customer service
levels expected out of channel system
Service levels are:
 Lot size
 Waiting time
 Choice to the consumer
 Place utility
 Service support

5.  Defining Channel Objectives: Channel objectives
are simply what the channel system is expected to do
to support customer service.
 Cost of the channel system:
1. No. of intermediaries
2. Current intermediaries
 Hybrid Channels: Companies where some parts are
managed by the company itself and some others are
handled by intermediaries.