Channel strategy and design

Question 1

1. Marketing channels play a critical organizational role in supporting the overall firm strategy (Anderson et al., 1997). In order to do so, four particular requirements must be met. Mention them and describe two of them.

Answer 1

Effectiveness: How closely does the channel design address customers’ stated and unstated requirements?
Coverage: Can the customer find and appreciate the value in a firm’s offering?
Cost-efficiency: Can the company justify a trade-off in cost-efficiency to gain greater strategic effectiveness and coverage because of the multiplier effect that distribution has on increasing the impact of the other marketing variables?
Long-run adaptability: Can the channel design handle possible new products and services and incorporate emergent channel forms?

Question 2

2. Today’s distribution channel systems are increasingly complex. Thus, this may affect how value is created toward consumers (Sa Vinhas et al., 2010). Describe how this new scenario could affect the value creation process.

Answer 2

Channel system: design of the channels, which has to be a good balance of value for all actors.
Relationships between actors.
Individual actors: adjust design to the main goals of the actors.

For the new complex scenario, this means that multiple channels have to be chosen for the producer and for the partners, which also has consequences for the end-user customer. The value creation on the 3 levels of the channel system will thus also change, because of the different channel choices which have to be made. In general, the number of individual actors will grow and the relationships between actors will become more complex. This thus results in a more complex channel system to manage this whole complex design of the channels.