Designing Channels of Distribution

By: V. Kasturi Rangan

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Synopsis: Presents a framework and a method for addressing the new product channel choice decision. Offers a six-step method that involves: 1) disaggregating and prioritizing a distribution channel by customers' channel function requirements; 2) obtaining and combining customers' (and key informants) evaluations of the channel functions; 3) benchmarking existing channels (own as well as competitors'); 4) identifying and constructing effective channel alternatives; 5) quantifying the short-term and long-term benefits and costs of each alternative; and 6) selecting the appropriate channel by trading off the opportunities versus constraints posed by existing channel networks (if applicable). The method requires extensive management participation to facilitate its implementation. Provides an illustrative application to demonstrate its managerial usefulness.