51 SELECTING YOUR MARKET CHANNELS
INTRODUCTION
In the not so distant past, companies designed their marketing channels (or go-tomarket networks and mechanisms) in a very simple and straightforward way. They
sold their products directly to all customers in the one way. Such a ‘one size fits all’
channel strategy is no longer tenable in today’s fragmented markets and customer
multi-segments.
MARKETING CHANNELS
Marketing channels perform a number of key tasks for a company. These can be
generically categorized as:
1. Demand Generation
The mechanisms by which a company or possibly a collaborator / partner generates a
lead , qualifies that lead ( suspect to prospect) and undertakes pre-sale , persuasion of
prospective customers. Mechanisms may be advertising, sales force or a retail partner.
2. Demand Fulfilment
How an order for the product is taken. How the product is delivered. How the
product is installed or used. There may be a third party delivery partner, for example.
3. After-Sale Service
The ongoing service.
4. Account Management
Future or additional product sales to the customer.
CHANNEL SELECTION
For each of the four ‘channel’ tasks, there are a number of options to be considered by
a company, having regard to (1) customer needs and requirements (2) the way the
industry operates in a market and (3) the company’s own objectives for
competitiveness and effectiveness.
In the start up and emerging stages, the entrepreneur has limited (time, personnel and
financial) resources and it is often best to select a limited number of channels that
offer:
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Greatest ease of market segment entry, against the competition
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Distribution methods and dynamics that are understood/previously experienced by
your management
Lowest cost of entry, compared to the competition
Best fit with brand and product positioning, for example “complex” products will
need dedicated sellers or re-sellers
Least financial risk
Strategic commitment to distribution of your product
Likely to be permanent
Sufficient volume potential to reach immediate and short-term revenue and profit
goals
Alternative routes to market, should one lapse or cease producing business
Significant level of control in at least one channel to ensure you can communicate
fully your product positioning (USP) and can keep the end customer
knowledgeable at all times to evolve and develop that positioning.
Channel Model Illustration
LARGE
Account
Opportunity
MEDIUM
FIELD
SALES
FORCE
Call
centre
WEB
DISTRIBUTORS
Re-sellers
SMALL
COMPLEX
SIMPLE
Transaction Type