Numerous companies in different kinds of industries are presently using channel management solutions to manage their distribution networks. A channel distribution network is a set of interdependent intermediaries that are involved in making particular goods and services available for consumption. Intermediaries or partners are utilized because there is greater efficiency in making these products available to end consumers. In addition to that they provide a parent company with more than it can ever hope to achieve or accomplish on its own such as getting quality contacts, experience, specialization and scale of operation. The web of partners allows the even matching of supply and demand.
The use of channel management solutions and strategies is one of the biggest trends in business right now because of the various benefits they bring to companies or organizations. It is important to understand that such strategies are more complicated than they seem especially since they deal with a lot of essential processes that are vital to the success of a channel. They are dependent on channel decisions, which are among the most important decisions that managers have to make and deal with because they influence every other marketing decision in a channel.
The Six Fundamental Strategic Distribution Decisions are the following:
1. Determining the role of distribution in the company’s overall goals and strategies.
2. Discerning the role of distribution in the marketing mix.
3. Knowing how marketing channels should be designed to effectively achieve distribution objectives.
4. Identifying the type of channel members to be selected to meet distribution objectives.
5. Establishing how to manage the channel to effectively and efficiently implement the channel design.
6. Finalizing how every partner’s performance will be evaluated.
Making Channel Design Decisions is probably most comprehensive of the six fundamental strategies. This involves the development of new marketing channels where none had existed in the past. In addition to that, it also tackles the critical modification of existing channels. The chosen design should contribute to the main quest of achieving differential advantage. The paradigm of making channel design decisions includes the following: recognizing the need for making the said decisions; setting and coordinating distribution objectives; specifying distribution tasks; developing possible channel structure alternatives; evaluating variables that affect channel structure; choosing the best channel structure; and selecting channel members.
Making channel decisions is the foundation of an effective channel management strategy. It encompasses the most important processes such as channel design, partner profile and recruitment, partner relationship management, methods of implementation and member performance evaluation. Of all the mentioned processes, partner relationship management carries a heavier burden because it involves the proper way of taking care of existing partners so that a committed and healthy partnership is maintained. It is a given fact that without intermediaries or partners, a channel is as good as dead.
Parent companies and managers are therefore given the responsibility of making sound decisions for the entire company and its network. It is critical that thorough assessment and analysis is always done, so that the resulting decisions would contribute to the improvement of the company which would lead to increased productivity and enhanced profitability.