CHANNEL

MANAGE ME NT
CHAPTER 4
 GERALD UNDERSCORE / TONI GG /
"KUYA" KRIZZY Q
(GALLINERO) (LEAGUE)

JOHN LLOYD CROSS / RUFFA MAY PINTO ZEINAB KARATE DCONYO UMALIS MAINE IN CHINA
TITO BUI (BATAYON) (PELAEZ) (OATES) (DIOLA)
(SARMIENTO)
GERALD UNDERSCORE
(Gallinero, Josh)
 CHANNEL MANAGEMENT
Channel management involves the marketing
and sales strategies your company uses to
reach and satisfy consumers, the techniques
you use to support your partners who help
with the distribution process, and how you
manage vendors. (Guide, n.d.)
 CHANNEL MANAGEMENT
Channel management is a marketing
management activity that involves
handling the different streams employed
by a company to sell its products or
services (What Is Channel Management?
- D efinition |Meaning |Example, n.d.)
EXAMPLE:
Label Shoes Co. is a company that makes fashionable
women's shoes. They've been in business for 5 years and
have solely sold shoes on their website label.com since
the beginning. Recently, a large firm called Studio 29,
which sells shoes through more than 500 locations across
the country, offered Label an exclusive distribution
partnership in which Studio 29 would be the brand's only
physical retailer.
 CHANNEL PLANNING
A channel strategy refers to a vendor's
plan to move a product or service
through a chain of commerce to the
end customer. Channels serve two
primary functions. The first is to sell a
product or service to a customer, and
the second is to deliver a customer
experience. (Channel Strategy:
Definition, Benefits and Tips, 2021)
Get the proper data: Learn about distributor brand positions, market
orientation, and more. For example, chain affiliation. Also, look at the main
players' profiles.

Develop organizational discipline: To acquire the proper information on

branches and roll it up for strategic planning reasons, develop a data
gathering, planning, system, and implementation discipline.

Create scenario plans: Visualize your future distribution mix based on a variety
of significant assumptions and industry developments. Select distribution to
link your brand(s) with the appropriate channels for reaching target market
segments

Make a wager: write down, review, and communicate your plans.

JOHN LLOYD CROSS
(S a r mi e n t o , J o h n Ll o yd )
CHANNEL COORDINATING
Channel coordination or also known
as supply chain coordination aims at
improving supply chain performance
by aligning the plans and the
objectives of individual enterprises. It
usually focuses on inventory
management and ordering decisions
in distributed inter-company settings.
 CHANNEL ORGANIZING
A ccording to Burnett, J. (2020),
Channel Organizing is basically the
organizing of the channels, it is either
through a planned process or through
a natural evolution, channels of
distribution reflect an observable
organization structure.
Three types are most common:
Conventional Channels
Vertical Marketing Systems
Horizontal Channel Systems
 CONVENTIONAL CHANNEL

According to MBA Skool Team (2021), the conventional channel of

distribution could be described as a group of independent businesses,
each motivated by profit, and having little concern about any other
member of the distribution sequence.
RU FFA M A Y P INTO
(Ba t a yo n, P a ul i ne )
 VETICAL MARKETING SYSTEM (VMS)

A vertical marketing system (VMS) comes about when a member of

the distribution channel (usually the manufacturer) assumes a
leadership role and attempts to coordinate the efforts of the channel
so that mutually beneficial goals can be attained.
 VETICAL MARKETING SYSTEM (VMS)

A vertical marketing system is the type of cooperation between the

members of a distribution channel. It includes a producer, a wholesaler,
and a retailer collaborating to deliver necessary products to their
customers and aims at achieving better efficiency and economies of scale.
- SendPulse 2022
THREE FORM S OF
VERTI CAL
INTEGRATION:
 THREE FORM S OF
VERTI C AL
1.A D MINIS TERED VMS INTEGRATION:
The administered V M S is very close to the conventional
network, but differs in that it is informally guided by goals
and programs developed by one or a limited number of firms
in the existing channel. This framework is the source of the
concept of a channel captain, in that administrative skills and
the power of one individual may be the driving force of the
channel. Often the dominant brands are able to manifest this
cooperation.
 THREE FORM S OF
VERTI CAL
INTEGRATION:
2. CONTRA CTUA L VMS
There are instances when channel members wish to formalize their
relationship by employing a contractual agreement, known as a
contractual VMS. This is the most popular form of vertical marketing
arrangement.
 THREE FORM S OF
VERTI CAL
INTEGRATION:
3. CORPORATE VMS
When channel members on different levels are
owned and operated by one organization, a
corporate vertical marketing system is said to exist.
Such integration can be forward or backward.
 THREE FORM S OF
VERTI CAL
INTEGRATION:
A manufacturer who owns the various intermediaries in its channel
network has engaged in forward integration. A retailer who takes over the
wholesaling and manufacturing tasks is backward integrating. This process
can entail either the organization’s purchasing the institutions, or
establishing its own facilities. Although partial forward or backward
integration is most common, total integration is becoming more popular. It
is the integration of both backward and forward.
 HORIZONTAL CHANNEL SYSTEMS

There are instances where two or more companies are unable to acquire
the capital, or do not have the technical or production know-how, to
effectively market their products alone. In such cases, these companies
may establish a temporary or quasi-permanent relationship in order to
work with each other, and create the channel mechanism required to reach
their target markets. This arrangement has been labeled a horizontal
channel system.
K RIZ Z Y Q
( L e a g u e , Kl a r i e n z L a y c e )
 CHANNEL MANAGEMENT PROCESS
A channel should always be handled in the same way that the
product, promotion, and pricing functions are.

According to Bird (2019), Channel

Management process is a relationship
and the methodology behind making
sure that those companies are engaged
 CHANNEL MANAGEMENT PROCESS
5 STEPS OF CHANNEL MANAGEMENT

ANALYZE THE CONSUMER

•We need to identify the traits of our end

users since it might help us to determine
the other institutions, we would use to
meet these needs.
 CHANNEL MANAGEMENT PROCESS
BUYING CHARACTERISTICS OF THE PURCHASER OF A HIGH-
QUALITY VCR MIGHT BE AS FOLLOWS

1.Purchased only from a well-established

dealer with good reputation
2.Purchased only after considerable
shopping.
3. Purchaser that is willing to some
inconvenience
 CHANNEL MANAGEMENT PROCESS
4.Purchased only after extended
conversations such as the important people
5. Purchase may be postponed
6.Purchased only from a dealer equipped to
render prompt and reasonable product
service

Here are just some of the buying specifications given the example
of buying a high quality VCR, which the manufacturer must take
note
 CHANNEL MANAGEMENT PROCESS

By careful and imaginative research,

most of the critical factors that bear
on consumer buying specifications
can be determined.

“From whom do my retail outlets prefer to buy?”

 CHANNEL MANAGEMENT PROCESS
ESTABLISHED THE CHANNEL OBJECTIVES

Did you know that a channel plan is derived from

channel objective?

They are based on the requirements of the purchasers

and users, and the overall marketing strategy
 CHANNEL MANAGEMENT PROCESS
Major Categories of Channel Objectives :
Growth Sales
Maintaining or increasing market share
Achieve a distribution-structure
Improve Channel performance

Acording to Aliman (2013), channel objectives should be stated

in terms of targeted service output levels.
 CHANNEL MANAGEMENT PROCESS
SPECIFY DISTRIBUTION TA S K S

-R ight after the distribution objectives, it is necessary to

identify the specific distribution tasks or functions

-The channel manag er must analyze all stages of the

distribution system.
 CHANNEL MANAGEMENT PROCESS
Tasks must be identified fully, and costs must be assigned
to these tasks to reach the target market:

guarantee delivery
provide sufficient storage space
lend money
facilitate the establishment
provide easily accessible inventory
allow for size and grade absorption
 CHANNEL MANAGEMENT PROCESS
EVALUATE A N D SELECT FORM CHANNEL ALTERNATIVES
The specific channel tasks must be determined before the evaluation and
selection process can begin.
Four factors of channel alternatives:

- number of levels
- the intensity at each level
- types of intermediaries at each level
-application of a selection criterion
to channel alternatives.
ZEINAB KARATE
(P e l a e z , S he rra
NUMBER OF LEVELS

• Channels can range from two to

several levels.
• The number of levels in a
particular industry might be the
same for all the companies.
• A basis to identify the possible
channel alternatives structures.
INTENSITY AT EACH LEVEL:

• The channel manager must determine

and evaluate the actual number of
channel components involved.
• Level of leadership is provided for
better channel performances.
• Leadership style may range from very
negative to very positive.
• The intensity decision is extremely
critical.
 CHANNEL CONTROLLING
CHANNEL CONTROL
- The actual impact that a channel member achieves on an
associated channel member’s beliefs, attitudes, and
behavior.
- Occurs when one member of a distribution channel can
dominate the decisions made in that channel by the power
it possesses.
 CHANNEL CONTROLLING
Leadership controls the channel performances.
The company or producer must regularly monitor the channels
performances against agreed targets.
The company should recognize and rewards intermediaries that
are performing well.
Manufacturers need to be sensitive to their dealers.
 CHANNEL CONTROLLING
Reasons for Channel Controlling:
1. Vertical Integration
2. Reduce Cost
3. Cooperation
4. Protection
 CHANNEL ENVIRONMENT
1. ECONOMIC ENVIRONMENT
Most obvious and pervasive category of variables affecting all
members and participants in the channel.
Major economic phenomena:
·Recession
·Inflation
·Deflation
 CHANNEL ENVIRONMENT
2. COM PETITIVE ENVIRONM ENT

a. Horizontal b. Intertype c. Vertical d. Channel system

Competition Competition Competition competition
 CHANNEL ENVIRONMENT
3. S OCIOCULTURA L
ENVIRONMENT
Age pattern of population
Changing ethnic mix
Changing role of women
Educational trends 4. TECHNOLOGICA L ENVIRONMENT
Scanners, Computerized
inventory management and
Portable computers.
Electronic Data Interchange
 CHANNEL ENVIRONMENT
5. LEGA L ENVIRONMENT
Legal issues in Channel Management:
Price Discrimination
Price Maintenance
Refusal to deal
Resale restrictions
Tying agreements
DCONYO UMALIS
( O a t e s, Da n e )
 CHANNEL CONFLICT
CHANNEL CONFLICT IN BRIEF
A. Multichannel systems are a way of life for manufacturers today
B . A limited amount of channel conflict is healthy
C. Conflict can show up in the market in a variety of ways

- Conflicts won't occur if there are no causes. According to Business

Jargons (2016) following are some of the causes that give birth to
the channel conflict:
 CHANNEL CONFLICT
-Conflicts won't occur if there are no causes. According to Business
Jargons (2016) following are some of the causes that give birth to
the channel conflict:
1.Goal incompatibility
2.Ambiguous Roles
3.Different Perceptions
4.Manufacturer dominating the Intermediaries
5.Lack of Communication

D. Channel conflict is managed by a combination of economics and

controls.
 CHANNEL CONFLICT
What is Channel Conflict?
Channel conflict can be defined as any scenario
where two different channels compete for the same
sale with the same brand.
A few facts about achieving an appropriate balance between
coverage and conflict:

Lack of any channel conflict in a marketing strategy usually

indicates gaps in market coverage
 CHANNEL CONFLICT
Conflict cannot be eliminated. The goal of
marketing management must be to
optimize market coverage and manage a
healthy level of channel conflict so that it
does not become destructive

Market share erosion and declining street

prices are evidence that channel conflict is
becoming destructive. Channels are
responding to excessive competition by
de-emphasizing the brand or by giving
away too much in order to keep an account
 CHANNEL CONFLICT
CONSEQUENCES OF CHANNEL CONFLICT
Now that we know about the causes of such conflicts, we must also
understand how dangerous these may prove to be for an organization
(J, A ., 2020).
Given below are some of these outcomes:
Price Wars
Customer Dissatisfaction
Sales Deterioration
Distributors Exit
Poor Public Relations
M A I N E IN C H I N A
( D i o l a , M a r y Ja n e )
 MANAGING CONFLICT
CHANNEL CONFLICT SOLUTIONS

Channel conflict is an integral part of your channel strategy,

so you must examine your market position and channel strategy
before attempting to manage it.
 MANAGING CONFLICT
A channel strategy is a vendor's
plan for moving a product or a service
through the chain of commerce to the
end customer.

TYPES OF CHANNEL STRATEGIES

1. Direct sales
2. Indirect sales
3. Customer sales
 MANAGING CONFLICT
A Market Positioning refers to the
ability to influence consumer perception
regarding a brand or product relative to
competitors.

For example:
A fast-food restaurant chain may position
itself as the provider of cheap meals
 MANAGING CONFLICT
CHANNEL CONFLICT SOLUTIONS

So prior to executing solutions to address channel conflict, the

manufacturer is encouraged to examine all elements of its overall channel
strategy, including pricing, end user segmentation, channel support
programs, company policies, etc.
 MANAGING CONFLICT
Destructive channel conflict is managed through
economics and structural controls.

.
 MANAGING CONFLICT

Economics motivate the channels

to avoid conflict. The right
economic solution is dictated by
the type of conflict being faced,
the manufacturer's market and
channel position, and the
company's strategic goals.
 MANAGING CONFLICT
Economic Approaches includes:

1.DUAL COMPENSATION
— applied when conflict exists between
direct and indirect channels.

2. ACTIVITY BASED COMPENSATION OR

DISCOUNT
—used to manage cross-channel
conflict or conflict between
channels of differing cost structures
and capabilities
 MANAGING CONFLICT
Economic Approaches includes:

3. S HA RED COS TS
—the key difference between this concept
and functional discounts is that functional
discounts compensate the channel for
incremental tasks via a discount on product
sold, while shared costs pay directly for the
task.
 MANAGING CONFLICT
Economic Approaches includes:

4. Compensation for market share

—usually applied to direct versus
indirect conflict, the direct sales
rep is compensated based on total
market share in a territory
MANAGING CONFLICT

Structural controls lay the

ground rules within which
conflict is managed. With each
tactic, communication before
conflict arises is critical.
 MANAGING CONFLICT
The structural controls are typically
applied to:

Accounts
Product
Geog raphy
The successful marketer combines the
elements of economic and control-
related solutions that best address
conflict challenges
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