Channel Design Decisions

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We now look at several channel decisions facing manufacturers, in designing marketing channels, manufacturers struggle between what is ideal and what is practical. A new firm usually starts by selling in a limited market area - a few manufacturers' sales agents, a few wholesalers, some existing retailers, a few trucking companies and a few warehouses. Deciding on the best channels might not be a problem: the problem might simply be how to convince one or a few good intermediaries to handle the line.

Ii' the new firm is successful, it might branch out to new markets. Again, the manufacturer will tend to work through the existing intermediaries, although this strategy might mean using hybrid marketing channels. In smaller markets, the firm might sell directly to retailers; in larger markets, it might sell through distributors. In one part of the country, it might grant exclusive franchises because that is the way merchants normally work; in another, it might sell through all outlets willing to handle the merchandise. In one country it might use international sales agents; in another, it might partner a local firm.

Thus channel systems often evolve to meet market opportunities and conditions. However, for maximum effectiveness, channel analysis and decision making should be more purposeful. Designing a channel system calls for:

• Analyzing customer service needs.

• Defining the channel objectives and constraints.

• Identifying the major channel alternatives.

• Evaluating those alternatives.

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