270 CHAPTER 10 CHANNELCONCEPTS:DISTRIBUTINGTHEPRODUCT
Inmuchthesamewaythatbuyingspecificationsofultimateusersaredetermined,
themanufacturersmustalsodiscoverbuyingspecificationsofresellers.Ofparticularimpor-
tanceis thequestion,"fromwhomdomyretailoutletsprefertobuy?" The answertothis
question determinesthetypesofwholesalers(ifany)thatthemanufacturershoulduse.
Althoughmanyretailersprefertobuydirectlyfromth e manufacturers,thisisnotalway~
thecase. Often,theexchangerequirementsofmanufacturers (e.g., infrequentvisit~,large
orderrequirements,andstringentcredittemls)are theoppositeofthosedesired byretail-
ers.Suchre tailerswouldratherbuyfromlocddistributorswhohavelenientcreditterms
andoffera wideassortmentofmerchandise.EstablishtheChannelObjectives
T hechannelplanisderivedfromchannelobjectives.They arebasedontherequirements
ofthepurchasersandusers,theoverall marketingstrategy, andthelong-rungoal~ofthe
corporation.However,incaseswhena companyisjustgettingstarted, oranoldercom-
panyistryingtocarveouta newmarketniche,thechannelobjectivesmay be thedomi-
nantobjectives.Forexample, a smallmanufacturerwantstoex pandoutside thelocalmarket.
Animmediateobstacleis thelimitedshelfspaceavailable tothis manufacturer. Theaddi-
tionofa newproducttothe shelvesgenerallymeansthatspacepreviouslyassignedto com-
petitiveproducts must beobtained. Withoutthis exposure, theproductisdoomed.
Asonewouldexpect,thereis widediversityofformthatchannelobjectivescantake.
Thefollowingareasencompass themajorcategories:- Growlhinsales- byre achi ngnewmarkets,and/orincrea~ingsalesinexisting
markets. - Maintenanceorimprovementofmarketshare--educateorassistchannelcom-
ponentsintheireffortstoincreasethecmountofproducttheyhandle. - Achievea patternofdistribution-struCturethechannelinordertoachievecer-
taintime,place,andformutilities.
4.Createanefficientchannel-improvechannelperformancebymodifyingvarious
flowmechanisms.
SpecifyDistributionTasks
Afterthedi stributionobjectivesare set,it is appropriatetodeterminethespecificdistribu-
tiontasks(functions)tobe performedinthatchannelsystem.The channelmanager must
befarmorespecificindescribingthetasks, andmust definehowthesetaskswillchange
dependinguponthesituation.An abilitytodothisrequires thechannel managertoL:valu-
ateallphasesofthedistributionnetwork.Tasksmustbeidentifiedfully, andcosts mustbe
assign~dtothesetasks.Forexample,a manufacturermightdeline8.tethefollowingtas:cs
asbeingnecessaryinordertoprofitablyreachthetargetmarket:- Providedeliverywithin48 hoursafterorderplacement
- Offeradequatestoragesp ace
- Providecreditto otherintermediaries
- Facilitatea productreturnnetwork
- Providereadilyavailableinventory(quantityandtype)
- ProvideforabsorptionofsizeandgradeobsolescencG