Marketing channel design means designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives.
It refers to those decisions related to the development of new channels for marketing where none has existed before, or to the modification of available or existing channels. Marketing channel design decisions include identifying customer needs and wants, specifying constraints and objectives, and recognizing & evaluating alternatives.
The process of marketing channel design involves the following steps:
- Recognizing or identifying the requirement for marketing channel design decisions.
- Setting and coordinating distribution objectives.
- Specifying distribution activities.
- Developing alternatives.
- Evaluating relevant alternatives.
- Selecting the best or ideal channel structure.
- Selecting channel members.
Generally, three parties are engaged in marketing channel design:
- Firms i.e. manufacturers, producers, franchisors, and service providers. They look down the marketing channels.
- Wholesalers- They look down as well as up the marketing channels.
- Retailers- They look up the marketing channels for securing suppliers.
This channel design and selection is influenced by the following factors:
- The products’ nature
- The behavior of buyers
- The business environment