Channel Decision For Industrial Products

Channel Management includes the analysis , planning, organizing and controlling of an enterpriser’s channel of distribution. The objectives to be served by a distribution strategy will typically cover how, when and where the enterprises market offering should be made available. It also involves the choice of a level of service by which an enterprise might seek to secure competitive advantage. There are six major decision areas in channel management

Major Decision Areas In Channel Management

Decision Area 1- Formulating channel strategyDecision Area 2- Designing the channel structureDecision Area 3- Selecting the channel membersDecision Area 4- Motivating the channel members.Decision Area 5- Coordinating channel strategy the marketing mix.

Channel Alternatives in Industrial Marketing

• Manufacturer’s Representatives or agents• Value Added Resellers• Distributors and Dealers • Brokers • Commission Merchants• Direct Marketing (Telemarketing, Direct Mail,

Online Marketing )

Choosing the channel of distribution

There are different causes or factors that influence the channel of distribution• Geographic Characteristics• Product Characteristics• Distributor Characteristics• Competitive Characteristics• Company Characteristics

Geographic Characteristics

Distributors are generally required when the customers are widely dispersed, there are a large number of them and they buy frequently in small amounts. A small manufacturer with resources too united to hire a sizeable sales force and with an equally limited market acceptance, will have to consider an already existing network to stock their products.

Product Characteristics

Direct distribution is required when bulky products such as industrial chemicals , are involved. Bulky products need channel arrangements that minimize the shipping distance and number of handlings. Products requiring installation and maintenance are generally sold through a limited network such as sole agents i.e. HMT selling machine tools.

Distributor Characteristics

Distributors are more useful when their skills of low cost contact service and storage are more important than their lack of commitment to one product or brand. For example some manufacturers of hardware find this is true where their brands have little effect on their customer loyalty.

Competitive Characteristics

Every manufacturer have to deal with the market competition. Market competition type is directly related to choice of channel. Manufacturer chooses their channel according to market competition. If market competition is high ; the company will choose maximum kinds of channel for reaching to the customers while if it is low , the company will more focus on improvement of quality and choose only convenient channel for reaching to the customers.

Company Characteristics

The size of the company often correlates with its market share. The bigger its market share , the easier it is to find distributors willing to handle the product and vice-versa. If manufacturer has ample financial resources , he may decide to cover all marketing functions himself and to delegate only a small proportion of the functions of distributors.