GAP ANALYSIS
Chp 6 with Duane Weaver
OUTLINE
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Sources of Gaps
Types of Gaps
Combined Channel Gaps
Closing Demand-Side Gaps
Closing Supply-Side Gaps
Gap Analysis Template
Sources of Gaps
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Key questions:
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2.
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4.
What non-valued functions can be eliminated without
damaging customer or channel satisfaction?
Are there to be any redundant activates? Which of them could
be eliminated to result in the lowest cost for the entire system?
Is there a way to eliminate, redefine, or combine certain tasks
in order to minimize steps in a sale or reduce its cycle time?
Is it possible to automate certain activities in a way that
reduces the unit cost of getting products to market, even
though it will lead to increased fixed costs?
Are there opportunities to modify information systems to
reduce the costs of prospecting, order entry, or quote
generation activities?
Sources of Gaps
• Most common Gaps due to:
poor thought about target end-users’ demands for service outputs
and the most cost effective manner of delivering them.
• Environmental Bounds
– Local legal constraints
– Sophistication of local physical and retailing infrastructure
– E.g.?
• Managerial Bounds
– Lack of knowledge about channel
– Corporate wide channel savings may create gaps in specific
channels (E.g.: inventory for Europe)
Types of Gaps
• DEMAND SIDE: Service–Value Gap
– SOS<SOD too low service output
• (Tupperware) - demand
• (National semi-conductor…price still to high for low service
output) - supply
– SOS>SOD too much service output
• Surfeit of service not valued by customer (Byerly’s)
and thus profits too low or price too high
• Check Service Output by Service Output
• Check Segment by Segment
Types of Gaps
• SUPPLY SIDE: when total cost of all
channel flows jointly is too high.
– Signs:
• Inventory found everywhere in channel
• Too little investment results in inefficient outdated
approaches
• Not enough of one channel flow (bottlenecks)
– NOTE:
It is possible to have one channel flow priced too high
if it enables the other channels to perform more cost
effectively such that the entire flow is lower-priced.
Combined Channel Gaps
• See Table 6.2 p. 147
• If gap is cost-side with right amount of service outputs
then: do not reduce or increase service output whilst
reducing costs.
• If there is a demand-side gap with too low a service
output level combined with high cost supply-side gap, do
not cut service provision to reduce costs.
• Imperative to have proper identification of the source of
the gap…do not just use the first obvious problem.
Understand the segment well.
• See Figure 6.3, p. 149
Closing Demand-Side Gaps
1. Offer multiple, tiered service output levels
to appeal to different segments
2. Expand or retract amount of service level
output to the target market
3. Altering the list of segments targeted (resegmentation by channel flow efficiencies)
Closing Supply-Side Gaps
1. Changing roles of current channel
members
2. Investing in new distribution technologies
to reduce total channel flow costs
3. Introducing new distribution function
specialists to improve the function of the
channel
Gap Analysis Template
• See Table 6.3, P. 154
– Demand Gaps (first line)
– Supply Gaps (second line)
– Target-Segment Specific
– Like a SWOT…but rather:
environmental and managerial constraints, Desired
Outcomes, Tactics to close, and predicted channel
behavior changes
THANK YOU!