Channel objectives differ from firm to firm


We see that often channel designs of firms differ from one another. Even within a given industry, different firms have different channel designs. This is so because their channel objectives differ. Even in respect of those objectives, which are by and large common for firms, we can see variations in emphasis from firm to firm. For example, intensity of market coverage sought from the channels and extent of convenience to be provided to the customer will vary from firm to firm. The priorities will flow from the marketing objectives of the respective firms.

The textile industry example: National Textile Corporation (NTC), Reliance Industries, Bombay Dyeing, DCM and Mafatlal are all textile firms and all of them operate in the same market. yet, their channel designs vary from one another. This is so because their channel/marketing objectives differ from one another. NTC’s objective is to the lower middle class, with textiles of reasonable quality at reasonable quality at reasonable prices. It goes in for a channel design that is appropriate for this objective.

At the other end of the spectrum, selling ‘fashion’ to well-to-urban segments is the objective of Reliance. Premium product and premium price are the implications here. Evidently, the channel design of Reliance doffers from that of NTC. Reliance has gone in for a chain of exclusive Vimal showrooms. Though NTC has also set up some showrooms, it relies mainly on conventional trade. Reliance has set up 2,000 odd showrooms, covering all metros and Class I towns of India; it has located them in the best showrooms; the showroom is main strategic strength of the company. Firms like Bombay Dyeing and DCM, fall somewhere on the line between the position taken by the NTC and Reliance, at the two ends. All these firms have obviously selected their channel design, based on their respective channel objectives.

Let us take another illustration of two companies in the same business. Chambour range cosmetics are sold through just 35 outlets in the country, whereas the Lakme range is sold through 125,000 outlets. The two channel systems differ not merely in the intensity of retail outlets, but in other aspects of channels design as well. It is because their channel objectives differ that their channel designs differ.

Industrial and Consumer Products Need Different channels

Industrial and consumer products usually need different channels as they differ from each other in several vital respects.

Channels for industrial products

Industrial products need extensive pre-sale service (installation and commissioning service) and post-sale service (maintenance service).

Consumer products on the contrary, are mass products, non-technical and least complex; most of them are of a low unit value; they are regularly consumed and replaced; and they require nil or limited after sale service. It is in view of these differences that the two categories need different channel systems.

Only some Industrial Products are amenable for selling through Channels

First of all, among industrial products, only some are amenable for selling through channels / distributors. And if the answer is ‘yes’ it must find out which type of distribution will appropriate for the items under consideration.