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MARKETING CHANNELS
Evaluation of Channels
Berman Chapter 15
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Channel Assessment and Control
• 1. Introduction
• 2. Overall Measures of Performance
• 3. Financial Performance Measures
• 4. Distribution Cost Analysis
• 5. The Channel Audit
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1. Introduction to
Channel Assessment and Control
• three different levels
– product category for a given channel reseller
• relative profitability of a private label brand vs a national brand
• contribution to overall profits of specific products
– profitability of a channel unit
– profitability of specific channels
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2. Overall Measures of
Channel Performance
• A. Measures used by Dealers
– outcomes based measures
• volume, profit, margins, turnover, market share
– behavior based measures
• service, warranty/claims, buildings, facilities, office systems, incentive plans
– five measures
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2. Overall Measures of
Channel Performance
• B. Measures used by Suppliers
• 7 components
– sales contribution , profit contribution, reseller competence, reseller compliance, reseller
adaptation, growth contribution, customer satisfaction
• 2 measures
– financial - sales, profits, margins, turnover – behavioral - service, warranty/claims,
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3. Financial Performance Measures
A. data envelopment analysis
• efficiency and profit
• expectations and performance
– high/low
-– stars - high E, High P
– effectives - high P, low E
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3. Financial Performance Measures
B. financial ratios
• solvency
• quick ratio, current ratio, liabilities to net worth
• efficiency ratios
• collection periods, inventory turnover, assets to sales
• profitability ratios
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4. Distribution Cost Analysis
• Configuration cost and profitability
– direct vs indirect, private vs national brands, customer types - discounters,upscales, etc
• Full and Direct cost analysis
– natural expenses vs function expenses – non traceable common costs
• Activity based costing
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5. The Channel Audit Process
vertical and horizontal audits
• channel structure
• relationship marketing • customer service
• physical distribution • marketing research • management
information systems
• product • pricing
• promotion • technology
• service channels
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6. Improving Channel Productivity
partnerships and customer response
• Channel Partnership Benefits
– reduced channel inventory
– electronic data interface among partners – reassigned tasks - i.e.. preticketing
– eliminate redundancies
– supplier managed replenishments
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6. Improving Channel Productivity
partnerships and customer response
• Efficient Customer Response
– electronic data interchange – point-of-sale registers
– bar codes
– cross docking
– scanning equipment
– store replenishment software
