Your channel choice requires knowing the decisive user and their preferences in buying merchandise. Depending on client needs and wants, your marketing channel strategies should be incorporated in your chosen distribution centers to promote your product and boost as much channel sales as possible.
What is a channel decision?
Marketing channel decisions have the same importance as that of channel decisions relating to product features and pricing. As such, channel partners who promote and sell the products, also play a very important role in the channel program.
But first, you must understand what a channel decision is and what it entails for you as a channel vendor. Channel decision is an action or movement that a channel program or community needs to decide upon to establish the growth and success of a product or service.
Channel decisions include these three kinds:
1. Channel Length
This relates to the times that a product or service is passed to the next vendor among the channel partners before it ends up to the user or purchasing client. It is considered as a long one if the manufacturer has to move his/her product or service through some middlemen. On the other hand, it is short if there are only up to two channel partners involved in the sale.
2. Channel Width
The width refers to the number of middlemen the product or service passes through at each point or step during the distribution. Essentially, this pertains to how many wholesalers and resellers are involved and at each distribution or drop point before it reaches the buyer or client. It becomes wider as more wholesalers and resellers are used in each sales channel.
Do you want to be considered as a selective channel? If so, then only award the selling of your product to a limited number of intermediaries. As a result, your product or service becomes available to your target market via these qualified channel vendors.
Lastly, it becomes an exclusive channel if only one wholesaler or distributor is awarded the selling of your product or service in one area.
3. Amount of Distribution Channels
This is the third consideration for channel decisions, wherein you have to decide how many distribution channels you will be using to market or sell your product or service. Depending on your strategy and product use, you can employ a lot of channels or you can use just one long channel plus a direct channel.
Remember that a dual type of distribution can work if you have different brands that can be offered to different types of consumers. This is also possible if you open your company sales distributor branch in another country and you are bound to stay connected with the original channel for legal or strategic reasons.
Whether you are acting as a channel only vendor or are a member of the reseller channel program, you are bound to understand the products or services that you have taken on to sell. Moreover, you have to conform to the set marketing and/or product policies mandated for that product or service.
How will you decide on your channel strategy?
Channel strategy requires you to choose the kind of channel you want to establish including your target distribution intensity, channel configuration design as well as its constant channel management. These are all necessities for the successful distribution or delivery of your product or service to your clients and target market.
A. Kinds of Distribution Channel
The traditional kind of distribution channel is composed of independent groups, who are more concerned about attaining success for their own group or organization instead of the overall channel performance.
However, firm executives realized the power that a united channel has for all channel members to benefit from. As a result, more and more businesses look for a channel that they can join so that they can contribute to it and benefit from the success that the channel has.
These kinds of distribution called the VMS or Vertical Marketing Systems lead the retail industry now. What’s more, these have become important factors that impact most businesses, especially those under industrial products plus services.
To explain further about VMS, these are composed of a group of experts established as a group or community to provide optimal economic and marketing goals for every member. VMS is the channel that you would want to join so that you can take advantage of its economic and marketing power as a channel partner. In return, you also incorporate the channel goals in your business operations so that you are united in the goal to put forth the growth and success of your channel as a whole.
Briefly, once you have become a member of the channel, you conform to the channel program as well as operating guidelines and participate in channel events and functions. In exchange, your channel leader provides you with management assistance and open the doors of opportunity for business success in coordination with other channel partners. Since almost all vendors will be offering helpful products or services that boost your business operations, you would surely want to join.
b. Target Distribution Intensity
This is often impacted by your geographical location. For one, the intensive distribution approach is employed if management delivers its products in all or many retail stores in one trading area. On the other hand, it becomes an exclusive distribution strategy if there’s only one retailer in one trading area that sells the product or service. Lastly, selective distribution is the middle ground of these two distribution strategies.
The distribution intensity is affected by the preference of your channel as well as the product or service and on how it can be marketed.
To decide on the appropriate channel strategy decision to employ, here are some tips to consider:
- Identify the possible distribution intensity.
- Decide on the size and features of the product.
- Identify the size and requirements of your target market.
- Name the requirements of your channel vendors.
- Determine the best channel strategy decision based on all the data found above.
When selecting the strategy, remember these additional tips:
- Check that it gives the right strategic fit.
- Must meet the expectations of the channel.
- It should be appealing to channel vendors who will sell your product or service.
c. Channel Configuration Design
When choosing your distribution strategy, make sure to decide on the level of organization you want to have in the channel, and in the channel vendors you will award the selling of your product or service.
Here are some factors that may impact your channel configuration decision:
- End-user preferences
- Product or service features
- Manufacturing capacity and resources
- Roles and requirements to be followed
- Availability and capacity of channel vendors
d. Constant Channel Management
Having chosen the channel design, you must now identify, assess then recruit your channel vendors. You have to choose wisely as hunting for competent and dedicated channel vendors to implement your channel strategy will determine the success or failure of your sales. With so many types to choose from, leverage by getting expert guidance and assistance from your community. This way, you can take advantage of the strengths and expertise of your channel while ensuring that you follow the rules and regulations of the channel.
Why Go For Omnichannel Channel Strategy
Omnichannel involves having a multichannel approach to distribute your products or services to your target market. This includes purchasing in stores or online shopping or even via telephone. Due to the varied ways that your clients can buy your products or services, you have more chances to sell than if it were limited to a few channel vendors only. However, the kind of product or service you offer will still decide if you can employ this channel strategy as it may not be possible for some products or services.
All in all, whatever channel strategy decisions you choose to employ for your channel will dictate the other factors needed to run it and your channel vendors. What is important is that you realize the magnitude of impact that your decision will have on how successful your channel will become. So, know your options, decide which one you can do best and work towards creating an ideal channel program that promotes mutual growth and success to its channel members.