Channel Strategy and Positioning

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ACADEMIC NOTE PRESENTATION- CHANNEL

STRATEGY AND POSITIONING

Palka Kejriwal (150103107) ft15palkakejriwal@imt.ac.in PGDM Marketing -


2nd Year
Prakhar Khandelwal ft15prakharkhandelwal@imt
(150103115) .ac.in
Sahil Ahuja (150103140 ft15sahilahuja@imt.ac.in

Sahil kapoor (150103141) ft15sahilkapoor@imt.ac.in


ra ga ti Motors
P Introduction

• Upstream Activities – sourcing, production, logistics, innovation- are getting


commoditized
• Downstream Activities – aimed at reducing costs and reducing risks for
customers are gaining importance
• These changes has led to consumers becoming the core of the business
• Hence pace of evolution of markets are driven by changing customer
preference and purchase criteria
ra ga ti Motors
P MARKETING CHANNEL STRATEGY

• “The broad principles by which the firm expects to achieve its distribution
objectives for its target market(s)”
• Except for ‘Place(Distribution)’ , rest 3P’s of marketing mix are easily
imitable these days
• Therefore , marketing managers are focusing to build their sustainable
competitive advantage through Distribution
• Objectives of channel partners in distribution network should be aligned
with company’s marketing strategy and also with each other
EMPHASIS
ra ga ti MotoON
rs CHANNEL STRATEGY IN DEVELOPING
P
MARKETING MIX

• Marketing mix should meet the firm’s objective and give it a competitive
edge

• Three P’s of marketing mix – Product, Price & Promotions are easily
imitable these days

• Fourth P – Place(Distribution) – requires superior strategy, organization


and human capabilities which cannot be easily copied

• Therefore , many firms are focusing more on Place(Distribution) element to


differentiate themselves and create a Sustainable Competitive Advantage
CONCEPTUAL FRAMEWORK FOR DETERMINING
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DISTRIBUTION
P ra g OBJECTIVE
1. The decision process of the target group and the channel’s influence on
it:
Decision Process Stages in decision process The role the channel can play
Consideration set Information Evaluation
formation Search
Picking/ Impulse No No No There is no evaluation process. The availability and
visibility of the brand govern the buying process.
Thus, the channel can play an important role by
displaying the brand such that it is visible to the
buyers.
Variety Seeking Yes No No In this process the buyer forms a consideration set
and chooses a different brand each time a purchase is
made. The role the channel play is to ensure that the
brand enters the consideration set through the process
of ‘recognition’.
Habit No No Yes The buyer is looking for reinforcements to continue
with the same brand. The channel can supplement the
buyers’ evaluation through ‘testimonial’ based point
of purchase advertising.
Sub contract No No No The process involves sub-contracting the decision
process to a knowledgeable person. The channel can
play an important role by increasing credibility. This
can be achieved by acquiring technical skills.
Extended Problem Yes Yes Yes The channel can play a role in ensuring that the brand
Solving enters the consideration set through the process of
‘recognition’ and also help the information search and
evaluation by enhancing its credibility by acquiring
technical knowledge.
CONCEPTUAL FRAMEWORK FOR DETERMINING
a ti Motors
DISTRIBUTION
P ra g OBJECTIVE (CONT…)

2. The point of sales the company wishes to reach given its brand
positioning/image
Selecting a point of sale which is not in coherence with the product and
target group could contribute negatively to the brand positioning.

3. The role the channel has to play to contribute to the company norms
There are certain core values that the company consistently offers to the
consumers. These norms of services and standards must also be taken into
consideration while determining the distribution objectives

4. Market orientation of the company taking into account the influence of


the competition
The market orientation has a positive and significant effect on the level of
trust in the relationship, and, thereby, indirectly influences cooperation and
commitment.
BASIC DISTRIBUTION
s
DECISIONS
ra ga ti Motor
P

To achieve the distribution objective by a firm, channel manager needs to


answer some basic areas to achieve these objectives. These areas are :

1. Relationship Of Distribution to the other variables of marketing mix

2.Role OF Channel Strategy

3.Creating differential advantage through channel design

4.Selection and expectations from channel members

5.Creating Synergy in multi channel structure

6.Channel Conflicts

7.Evaluation of Channel Members


CHANNEL
ra ga ti MotorsMANAGEMENT STRATEGIC FRAMEWORK
P
FOR CHANNEL STRATEGY

Below is the framework developed by Capgemini Consulting(2011) from


which a channel strategy can be formulated to drive results from the
organization’s customers or product or service:

• Defining the Distribution Objective


• Channel Introduction( Which Channels should be present?)
• Channel Optimization (How are these channels performing?)
• Channel Migration (Which customer should be using which channel for
what?)
• Channel Rationalization( Which channels do we not need to meet our
business goals?)
• Channel Integration(How should the channels be integrated ?)
FRAMEWORK
ragati Mo
tors FOR CHANNEL DESIGN
P

Steps Involved in Channel Design are :


• Segmenting the market
• Identifying optimal positioning response to segment’s demand
• Targeting the segments on which to focus channel’s efforts
• Establishing and refining the channels in the marketplace

Steps involved in Channel Implementation are :


• Understanding of each channel member’s sources of power &
dependence
• Understanding the resources for channel conflict
• Plan for the environment where optimal channel design can be
implemented
M s
otor PROCESS OF CHANNEL MEMBERS
SELECTION
P ra ga ti

Channel members selection process consists of following three steps:

• Finding prospective channel members


• Applying selection criteria to determine the suitability of
prospective channel members
• Securing the prospective channel members as actual channel
members
EVALUATION
ragati Mo
tors OF CHANNEL MEMBERS
P
Success of a firm is directly dependent on the success of its channel
partners. So its important to evaluate them because of the following
reasons:
• Control & Communicate
• Improvement
• Motivation

FACTORS THAT AFFECT THE SCOPE & FREQUENCY OF EVA

• Degree of Control
• Importance of channel members
• Nature of products
• Number of channel members
FRAMEWORK
ra ga ti Motors FOR PERFORMANCE EVALUATION OF
P
CHANNEL PARTNERS
As per the journal “A framework for performance evaluation of channel
partners in distribution relationships” , there are three key dimensions of
channel partner’s performance:

Performance Measures

Output Activity Capability Figure: The three


Performance Performance Performance dimensional
Measures Measures Measures framework for
 Return on  Flexibility  Skills performance
Investment
 Adaptability  Knowledge of
evaluation
 Profit market
 Degree of Cooperation
Contribution
 Human resources
 Degree of Compliance like sales force
 Revenue
 Behavioral Control  Physical resources
 Return on Assets
like store size,
 Process Control
 Sales Generated location , inventory
ra ga ti Motors
P

THANK YOU 

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