Channel Management
The broad principles by which the firm
expects to achieve its distribution
objectives for its target market/s
1
Case: Cadbury’s
The total weight of Dairy Milk produced
worldwide in one year is equivalent to 7230
elephants.
2002-03: The worms in the chocolate bars
controversy has hit Cadbury India where it hurts
most and that is in sales. The company today
faces tough times ahead as the business
environment for its chocolates becomes
increasingly negative with rising raw material
prices and low consumer sentiments, post the
worms controversy in October this year.
2
Cadbury’s…
If it weren't bad enough that the controversy
blew up at the festival season when the
chocolates sales are at their peak, the company
may also just have to shelve plans of becoming
a major sourcing hub for British chocolates and
beverages giant Cadbury Schweppes. As part of
a global realignment of its supply chain
management, the company was giving finishing
touches to a plan that might have seen Cadbury
India emerge as a major supplier of chocolates
to the Asia-Pacific region and the Middle East.
3
Market Variables
Market geography
Market size
Market density
Market behaviour
– How, in what quantities
– When
– Where
– Who
4
Product Variables
Bulk and weight
Perishability
Unit value
Degree of Standardisation
Technical/Non technical
Newness
5
Company variables
Size
Financial capacity
Managerial expertise
Objectives and strategy
6
Intermediary Variables
Availability (Dell)
Cost
Services
Other variables –
Environmental Variables
Behavioural Variables
7
Channel Issues
Coverage
Credit extension
Inventory holding
Alignment with company goals
Spoilage
Salesmen
Cross selling
Expired or damaged goods
Advertising
8
Conflicts
Appointment of new distributor
Appointment of new channel
Spoilage issues not addressed
Credit issues
Volumes and targets
Returns policy
9
Causes
Role incongruities
Resource scarcities
Perceptual differences
Expectational differences
Decision domain disagreements
Goal Incompatibilities
Communication difficulties
10
Managing Conflict
Conflict is inherent
It is a pervasive element; numerous
causes
Affects channel efficiency
Levels of conflict and effect on efficiency
Detecting channel conflict
11
Uses and misuses of power
Reward power
Coercive Power
Legitimate Power
Referent Power
Expert Power
Identify and use power bases
12