Chapter 7

Question 1

What do channels move?

Answer 1

goods, services, information

• good businesses know that information helps attract and keep customers

Question 2

Example: Zara

Answer 2

information channels are very clear for consumers. Have 3 lines Classic, Fashion and Trend. These lines have different production methods that reflect what the customer wants from each.

Question 3

Example: Dell

Answer 3

using channels to build a competitive advantage over your competitors

• bypassed dealer network and sold directly to consumer
• used the internet and telephone
• practise JIT and negative cash conversion cycle
• less storage costs, can pay suppliers, all advantages

Question 4

Virtual Integration

Answer 4

providing accurate up-to-date info to channel partners so they can work in a synchronized way to serve the customer

Question 5

Why are channel strategies important in a business?

Answer 5

• use information to attract and maintain customers
• create competitive advantage
• compensate for weakness in marketing mix
• differentiate a brand
• build brand loyalty

Question 6

Example: Papa John’s

Answer 6

using channels to compensate for weaknesses in marketing mix

• trailing behind Pizza Hut and Dominos
• used new online ordering and text messages as a new channel (5 years before competitors)

Question 7

Example: Nokia

Answer 7

differentiate brand

- makes mobile phone network operators its channel partners to compete with Apple

Question 8

Example: Saturn

Answer 8

Build Customer Loyalty

• “build a better car, not based on engineers, but on the customer’s perspective”
• secured brand loyalty by changing the maintenance process and the buying process
• developed supply chain strategy based on the customer needs
• each dealer is given a region so that they don’t compete with each other but focus on the brand/customer

Question 9

Consequences of Bad Channel Strategy

Answer 9

• high channel costs
• lost market share
• lost profits
• wasted effort (not effective channels will yield no results)

Question 10

How to Pick the Right Channels

Answer 10

1. Define Realistic Channel Range (use table grid)
2. Calculate channel economics
3. Guide to customer channels
4. Touch customers at each point
5. Mitigate channel conflict
6. evolve channel strategy

Question 11

Multi-Channel

Answer 11

• increasing the number of channels increases customer expectations, so it is difficult to remove them later
• more difficult to manage and market across
• may reduce profits by increasing the cost to serve customer

Question 12

Defining Realistic Channels

Answer 12

1. Will customer use this channel?
2. Is this channel a good fit with our product?
3. Will channel impact our brand positively?
4. Is channel a good fit with our overall strategy?

Question 13

Channel economics

Answer 13

• look at the cost per transaction as well as the revenues gained to make informed decision
• channel profitability = (expense/revenue)
• channel capacity

Question 14

Guide customers to channels

Answer 14

• get right customer to the right channel

- will under-serve or over-serve resulting in wasted efforts and profit loss

Question 15

Customer Purchase Process

Answer 15

1. Brand Awareness
2. Product Knowledge
3. Purchase
4. Post-Sale Service

Question 16

Example: Charles Schwab

Answer 16

How to Maintain a Multi-Channel Model While Reducing the Cost of Providing It
- uses branches to acquire customers but uses other (less expensive) channels to keep them

Question 17

Touch Customers at Each Point

Answer 17

• provide incentives/disincentives to direct to appropriate channel
• make it easy to switch channels (assistance - i.e. Air Canada)
• provide a safety net

Question 18

Mitigate Channel Conflict

Example: WW Grainger

Answer 18

• conflicts arise vertically and horizontally in the channel
• had to navigate backlash from sales force when online sales took away potential commissions
• repurposed sales force to focus on building customer loyalty with more lucrative clients

Question 19

Evolve Channel Strategy

Example: LEGO

Answer 19

despite high sales and innovation, LEGO continued to make losses due to an outdated channel strategy

• refined suppliers and waste to reduce overall costs and increase efficiency
• worked closely with larger retailers to forecast inventory and make decisions

Question 20

Arbol Channel Strategy

Answer 20

Evolve its Supply Chain

• focused on value chain rather than supply chain!!
• salespeople were not educated about the differences and benefits of diff plywood
• created an education program that made supply chain stronger and customer more satisfied, increasing value of brand

Question 21

Example: Sony

Answer 21

Tweaks product features to ensure the different channels are not competing for the “same” product, reducing channel conflict across retailers