Formulation of channel objectives is the first step in designing a channel system. The objectives clarify what is sought to be achieved by having the channels. All firms seek to realize certain common objectives by having the channel. In addition, they may also have some specific objectives depending on their unique circumstances.
Channel Objectives will decide Channel Design
Channel objectives will determine the channel design the firm should adopt.
Objectives, Firms Commonly Seek from Channels
- Effective coverage of the target market
- Efficient and cost-effective distribution
- Ensuring that consumers incur minimum exertion in procuring the product
- Helping the firm to carry on manufacturing uninterrupted, confident that the channels will take care of sales
- Partnering the firm in financing and sub-distribution tasks
Channel Objectives Differ from Firm to Firm; Consequently, their Channel Designs Differ
We see that often channel designs of firms differ from one another. Even within a given industry; different firms have different channel designs. This is so because their channel objectives differ. Even in respect of those objectives, which are by and large common for all firms, we can see variations in emphasis from firm to firm. For example, intensity of market coverage sought from the channels and extent of convenience to be provided to the customer will vary from firm to firm. The weight ages will flow from the marketing objectives of the respective firms.
Distinctive Characteristics of Industrial Products
| • Buyers are few. • Size of at a time purchase is large. • Have high unit value. | • Purchased only once in a while, as their replacement rate is low. • They are complex, technical, and often as per buyers’ specifications. |
Identifying Channel Functions
Identification of the functions to be performed by the channel is the next step in designing channel system Channel design depends on the functions expected of the channel and that channel functions must be identified in the specific context of the firm in order to get practical direction in designing the channel system.
