Designing channels of distribution case

1
Designing Channels of Distribution
For many businesses, the successful launch of new products is
critical to maintaining market leadership. Unfortunately, empirical data
indicate that one-third to one-half of all new products fail to meet a
firm's financial and marketing goals. A w 1000 firms indicated that
nearly half of them had new product failures exceeding 40%. This result
is indeed surprising because these failed products had been screened for
technical soundness and commercial feasibility. In this article, we focus
on one aspect of the launch decision: the choice of distribution
channels. We offer a method to systematically evaluate, plan, and
execute the channel choice decision for new industrial products.
The primary question is about channel structure; that is, which
intermediary, or intermediary combination, is best suited to take the
new product to market?
There is an equally important corollary question: How should the
intermediary network be managed once it is up and running? This and
related management issues are dealt with in greater detail in a later
article, "Reorienting Channels of Distribution."
Fundamentally, the approach that we offer is similar to that
suggested by Stern and Sturdivant and Rangan, Menezes, and Maier.
The starting point is the customer and the building block is the channel
function. In our experience the method has worked best when
implemented by a cross-functional task force headed by a senior
executive reporting directly to the CEO. The new product development
team in many cases could double up as the channels task force. It is
important for the task force, however, to commission appropriate teams
to participate in the various steps, rather than assume all the expertise
themselves. We first present a schematic overview of the design
method, highlighting its six important steps, followed by an
illustrative application.
1Booz Allen & Hamilton, Inc. (1982), New ProductManagementfor the
1980s(New York: Booz Allen & Hamilton).
2G. Dean Kortge (1989), "Simultaneous New Product Development:

Reducing the New Product Failure Rate,"
IndustrialMarketingManagement, 18(4), 301-306.
3Louis W. Stern and Frederick D. Sturdivant (1987), "Customer-Driven
Distribution Systems," Harvard BusinessReview (July-August).
4V. Kasturi Rangan, A.J. Menezes, and Ernie Maier (1992), "Channel
Selection for New Industrial Products: A
Framework, Method, and Application," Journalof Marketing, Vol. 56, July,
69-82.
Professor V. Kasturi Rangan prepared thisnote asthe basisfor class discussion.
Copyright © 1994 by the President and Fellows of Harvard College. To
order copies, call (800) 545-7685 or write to Harvard Business School
Publishing, Boston, MA 02163. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or
transmitted in any form or by any means—electronic, mechanical,
photocopying, recording, or otherwise—without the permission of
Harvard Business School.

3
The ChannelDesign Framework
Step 1 consists of identifying homogeneous customer segments.
Obviously, customers with similar requirements will need similar
channel sources. It is important to keep in mind, however, that a
customer is usually an end-user and rarely a channel intermediary. For
example, producers of agricultural chemicals should target the farmer
and not the dealer. But producers of plastic pellets for making milk
bottles should probably focus on the "dairy," not the "consumer,"
because that is where the product has value in the eyes of the end-user.
A dairy, especially a large one, will certainly need to worry about the
cost and quality of the milk bottles. In some cases (e.g., a small dairy) the
molder who manufactures the bottle might be the more appropriate
end-user. In any case, there should be a thoughtful end-user, rather
than an intermediary, focus.
While advocating an emphasis on the end-user may appear
rather obvious, in our experience this has been a hotly debated issue in
several business applications of this approach. Many industrial
marketers have long looked upon their distribution channels as
"customers" and rarely bothered to look beyond. Yet the primary
purpose of the distribution channel is to satisfy customer / end-user
needs, and intermediaries are conduits to effect this goal. The
recommended method here is not intended to undermine the role of the
intermediary, only to view them as a means to an end and not an end
in itself.
Step 2 consists of identifying and prioritizing the customer's
channel function requirements. A generic list appears in Table 1, but it
should be treated only as a starting point. Each product- market context
is unique, and channel function requirements that best represent
customers' reality are most likely to lead to effective channel solutions.
This information should be elicited from customers in as fine-grained a
detail as possible. For instance, it would be useful to know how keen
customers are for a three-year instead of a one-year warranty, and how
much they would be willing to pay for it; how sensitive they are for a
two-hour instead of a six-hour service response time. Table 2 provides
an example.

594-116 DesigningChannels of Distribution
In our experience, the data for this step are most effectively
gathered simultaneously with Step 1 (segmentation data). This way,
segmentation and channeling strategies are consistent with each other
and reflective of customers' needs.
Data gathering in Step 2 has to be based on customer input. For
new products, this equates to potential customers, but, depending on
the nature of the innovation, these potential users may or may not be
able to provide reliable feedback. In these cases, we suggest using a
team of experts who have special knowledge of the products and how
customers are likely to buy and use them. There are two such groups of
experts. First are customer lead users. Eric von Hippel5 identifies them
as "users whose present strong needs will become general in a
marketplace months or years in the future. Since lead users are familiar
with conditions that lie in the future for most others, they can serve as a
need-forecasting laboratory for marketing research." A second group of
experts is often found in-house.6 In the new-product channel context,
judgmental projections of experienced salespeople, product managers,
sales managers, and product development engineers can compensate for
the absence of extensive customer data on purchases and usage
behaviors.
5E. Von Hippel, (1986), "Lead Users: A Source of Novel Product
Concepts," ManagementScience, Vol. 32, No. 7, 791-805.
6Jean-Claude Larreche and RezaMoinpour (1983), "Managerial Judgement
in Marketing: The Concept of
Expertise," Journalof Marketing Research, 20 (May), 110-21.

5
Table 1 Eight Generic Channel Functions
1. Product Information. Customers seek more information on
certain kinds of products, particularly products that are new and / or
technically complex, and those that have a rapidly changing
technological component.
2. Product Customization. Some products inherently need
technical modification; they require customization to fit the customer's
production requirements (e.g., special steel for a maker of surgical
instruments). Many times, however, even a standard product may need
to fulfill specific customer requirements or factors such as size or grade.
3. Product Quality Assurance. A customer emphasizes product
integrity and reliability because of product consequences for the
customer's own operations; e.g., a standard chemical may be of utmost
importance to pharmaceutical manufacturers given the liability
associated with a defective final product. This is a measure of the
application's importance to the customer.
4. Lot Size. This function reflects the customer's dollar outlay for
the product. If it has a high unit value or is used extensively, it is likely
to represent a significant financial decision for the customer and is
likely to lead to a concentrated purchasing effort.
5. Assortment. A customer may need a broad range of products
and may require one-stop shopping. For example, an electrical
contractor may need products that satisfy different electrical codes,
depending on the nature of the project. At other times, assortment needs
may simply be related to the breadth of the product line (e.g., size) and
availability of complementary products (e.g., wires with electrical
switches).
6. Availability. Some customer environments require the channel
to support a high degree of product availability. These are usually
customers whose product-usage rate is difficult to predict (e.g., spare
parts, because they are required only when a machine breaks down), or

customers who will switch to competition rather than wait when the
product is unavailable. Notions of demand uncertainty and
requirements of buffer inventory are related to this function.
7. After Sales Service. Customers need services such as
installation, repair, maintenance, and warranty. Often the quality and
availability of such post-sales services will influence the initial sale.
The nature of this service will obviously differ by industry. For
example, in the computer industry the compatibility and availability of
hardware and software upgrades may serve as a key purchasing
influence.
8. Logistics. Transporting, storing, and supplying products to the
end user involve levels of complexity. For example, transshipping and
transporting hazardous chemicals may require special investments
likely to increase handling costs. Moreover, once such investments are in
place, governing their effective use will involve additional transaction
costs.

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Table 2 Example: Channel Function Priorities and Operational Detail
MostImportant:
1. Product Information. Customers would like complete technical
knowledge of product construction. They would prefer the availability
of an expert to supervise installation as well as initial use. After the
initialization, customers would be satisfied to exchange performance
characteristics via computer, seeking assistance only when necessary.
2. Product Warranty. Customers would prefer a 3-year warranty
and are not willing to pay more than a 5% price premium to receive the
same. In case of a product breakdown, they would like it repaired
within 4 hours, and in any case not beyond 24 hours. Customers are
willing to pay for the labor charges if repaired within 4 hours.
SomewhatImportant(but not critical):
3. Application Engineering. Customers would like application
engineers to visit installations every month to assist in optimizing the
system in operation.
4. Availability of Complementary Products . Customers would
like to source complementary products simultaneously from the same
channel source, if possible.
5. Credit Terms. Customers would like a 90-day credit term, if
possible, but they can live with 30-day credit terms.
Step 3 consists of benchmarking the seller's existing channel
capabilities as well as competitors' channels with respect to customers'
channel function requirements. Data from Step 2 will serve to prioritize
and anchor customers' desired (or ideal) level of channel functions. A
supplier executing at that level can therefore be assured of the lion's
share of the business. But the supplier's channel capabilities may not
match this functional profile. The larger the deviation on the
important functions, the lesser the chances of attracting customers. It is

a good idea at this stage to also benchmark the channel capabilities of
leading competitors. This will provide a comprehensive map of the
company's relative channel strengths and weaknesses.
In the example in Table 3, the leading competitor uses a direct
sales force channel and is therefore able to provide a relatively high level
of customer intimacy with respect to product information, product
warranty, and application engineering functions; whereas the target
firm uses a distributor channel and is therefore able to provide a better
level of service with respect to availability of complementary products
and credit terms. The firm's relative channel profile for two customer
segments is shown. But because the large customers and small
customers prioritize channel functions differently, the target company is
likely to do poorly with the large customers if it were to sell the new
product through its existing channels. On the other hand, it has a
stronger profile with small customers because its distributors provide
superior "assortment" and "credit terms."

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Table 3 Channel Benchmarking
Large CustomerSegment
Customer's Desired Levelof:
1. Product Information
2. Product Warranty
3. ApplicationEngineering
4. Assortment
(of complementary
products)
5. Credit Terms
Seller's
Current
Channe
ls
Competitor's
Current
Channels
Small CustomerSegment
Customer's Desired Levelof:
1. Assortment
(of complementary products)
2. Credit Terms
3. Product Warranty
4. Product Information
5. Application
Engineering Competito
r's Current
Channels
Seller's
Current
Channels

594-116 DesigningChannels of DistributionWhen the various product options in the market are comparable in
product functions, features, and price, Step 3 serves as a direct
calibration of channel effectiveness. If there are product differences,
however, the relative deviations from the customers' channel function
requirements will not neatly map onto projected sales / market share.
This is why some companies prefer to have product development
people on the channels task force. Having the benchmarking and
calibration

11
step executed by the same team that identified, clarified, and prioritized
customers' channel function requirements ensures measurement
consistency and reliability.
Step 4 consists of creatively interpreting the output from Steps 2
and 3 to arrive at the feasible channel options that would satisfy
customers' requirements. For example, large customers' needs from
Table 3 could be potentially served by a direct sales force, and small
customers by a distributor channel. But it is also possible to serve large
customers with a combination of direct sales force and distributors,
whereby the direct sales force would handle the product information,
product warranty, and application engineering functions, and the
distributors would handle the product assortment and credit terms.
Usually, various channel alternatives will be available to take a
product to market (e.g., agents, brokers, manufacturers' reps, value-
added resellers). The role of the channels task force here is to
creatively identify channel alternatives with the potential of getting
closer to customers' ideal requirements. For the example, in Table 4,
Option 1 (seller - salesforce - distributor - customer) is the current
capability. Options 2 and 3 are hybrid combinations whereby the
salesforce / agents perform a set of channel functions, and the
distributors supplement the rest. It would be ideal for the salesforce /
agents to deliver the product information, product warranty, and
application engineering functions, and the distributors to deliver the
product assortment and credit function. This way both the large and
small customers would be happy. Finally Option 4 is a pure direct
salesforce alternative, which would please the large customers.
It is important at this stage not to be restricted by real or imagined
constraints. Issues of channel cost or conflict should be strictly deferred
to Step 5. For example, one may conclude that under Option 1 the
seller's existing distributors would not be able to adequately satisfy
customers' product information, product warranty, and application
engineering needs. But that should be no reason to rule out the option. If
feasible, one should assume that with appropriate investments and
training, distributors could rise to the desired level. Such an option
should then be considered in the choice set at this stage.

Step 5 consists of systematically evaluating the benefits and costs
associated with each option. Revenues, marketshare,
marketpenetration, transaction costs, start-up costs, and opportunity
costs must all be considered. Channel costs are not only influenced by
the depth and extent of channel functions to be performed, but also by
competitive behavior that influences the availability of channels.
Varying investment strategies for each option from Step 4 will lead to
differing customer satisfaction levels and consequently varying levels of
outputs (revenue, profits, share, etc.). Investment options that push the
profile in Table 3 closest to the customer's ideal will lead to the best
outcomes, but that may come at a huge cost. Thus the options being
considered here will have to be a multiple of those from Step 4--varying
investment levels for each option. This analysis should be as
quantitative and as specific as possible. An estimate of intensity (and
number) of distributors, for example, is useful information. Qualitative
factors such as channel motivation and level of conflict / cooperation
may be considered as well. The appropriate channel, of course, is a
sensible tradeoff between output (e.g., revenues) and input (e.g.,
transaction costs). Companies with multiple product-market segments
may draw up a short list of appropriate strategies for each segment
rather than prematurely locking in on one. The reason for this becomes
clear in Step 6.

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Option 1 Current method of going to market
Option 2 Salesforce and distributors sharing channel functions
among them Option 3 Agents and distributors sharing channel
functions among them Option 4 Salesforce performing all channel
functions
Step 6 consists of elaborating the channel overlaps for
multiproduct, multi-market businesses by aggregating the output from
Step 5. Channel synergies and dysfunctionalities across product-market
segments should be discussed, and trade-offs made within the pool of
appropriate strategies. This discussion is likely to be productive and
objective if Step 5 data are largely quantitative. Channel designers then
have an estimate of the system-wide cost for trading each best option
from Step 5. Benefit-cost analysis then becomes more meaningful, and if
necessary the company might be better off investing in conflict-
resolution mechanisms rather than skipping customer-oriented optimal
channels. Strategic long run factors become very important at this stage
of the evaluation. The key question is, "Do the channels provide a
market advantage? Does it reflect strategy?"
Table 5 shows three different optimal channels for the three
different target segments of a company. There are likely to be practical
difficulties in the co-existence of these three channels. First, Segments 1
and 2 may be somewhat hard to demarcate, especially with respect to
the medium-sized accounts. Second, "dealers" for the industrial and
consumer markets may overlap in some cases. But if the company's
strategic focus was on the industrial market, and say this accounted for
80% of the market potential, it may make a lot of sense to serve Segment
3 through industrial dealers (channel 2) as well. Again, knowing the
potential conflicts between the direct salesforce and dealers for the
medium-sized accounts, it may be wise to negotiate "dealer" agreements
carefully up front. Alternatively, as shown in Table 6, if a hybrid
approach was second best for both of the industrial segments, and if the

projected decrease in revenues and profits is less than the anticipated
conflict costs of the "ideal channel," it may simply make sense to go with
the second best solution.
The key to effectively implementing this step is totally dependent
on the care used and detail undertaken in the previous steps. In the
absence of well-calibrated channel maps and

15
Direct Salesforce
Seller
concrete financial data, this crucial final step could deteriorate into a
slugfest of personal hunches, which is exactly what this systematic
procedure tries to overcome.
Table 5 Optimal Channels for Three Segments
Table 6 The Second BestOption: Hybrid Channel for Industrial
Customers
Seller
Dealers
4
1
Medium and
Small Industrial
Customers
Industrial
Large Customers
2
Dealers
3
Do-it-Yourself
Consumers
Dealers
Distributors

Large, Medium and Small
Industrial Customers

17
Application: A Description ofthe Process7
What follows is a brief description of how the channel design
method was implemented in a division of a large industrial company.
Manufacturing process changes had enabled this company to
develop a new product, Scotchfiber (disguised name). Customers used
Scotchfiber-type products for a variety of applications such as
deburring metal parts; deflashing plastic and paper utensils; cleaning
golf balls, tiles, and rubber articles; gripping fabric in textile mills; and
containing components for assembly. Management was convinced of
Scotchfiber's superiority, especially in the $100 million industrial
cleaning and finishing market which consisted of many specialty
applications. The new product was to be directed originally only at
large industrial users in various industries. Independent market
research confirmed that these customers uniformly sought a high level
of technical benefits. The product launch team headed by the director for
Marketing Operations served as the channels task force.
Scotchfiber was a new product line for this company. Potential
customers currently used alternative solutions to address their needs,
and Scotchfiber applications had little overlap with the company's
existing product lines. About 95% of the company's current products
were sold to end users through a network of more than 500 independent
distributors with the help of the company's 100 salespeople. Because of
the new product's numerous potential applications and the strength of
its distribution channels, management was inclined to route Scotchfiber
through existing channels, which consisted of general-line finishing
distributors.
With the help of the marketing manager, product manager, and
two sales representatives, we worked out operational definitions for
each of the eight channel functions identified in Table 1 to reflect the
Scotchfiber marketing context. The function "product information," for
example, was characterized by the degree of information a customer
sought on (1) roll fiber length, fiber property, and construction density,
and (2) usage properties, such as the ability to finish irregularly shaped
pieces and interiors. The operational definitions for each function were

typed on separate cards to be used as the basic interview guide.
We chose 10 potential "customer experts" who were at the leading
edge of adopting and using the new product to be key respondents.
These lead users were considered the trendsetters in their industry and
either had already started to use Scotchfiber in production trials or were
in the process of placing the trial order. In addition, we selected 11
individuals from the company who had special knowledge about the
product and / or its customer applications. Some of these "producer
experts" were intensely involved in Scotchfiber product and application
development, and the rest were involved in marketing the product to
lead users.
Experts were interviewed individually to obtain their
evaluations of customers' anticipated channel function requirements
and priorities as they saw them. We chose three years as the time
horizon for the new product channel study because the company's top
management estimated this to be the time frame in which Scotchfiber
could establish itself in the market, if successful.
Combining the experts' evaluations is essential to making a good
channel decision because knowledge is generally dispersed in the early
stages of the product life cycle. Two broad approaches are used for
combining experts' opinions: group-oriented, where experts interact,
7A large part of this section is extracted from V. Kasturi Rangan, A.J.
Menezes, and Ernie Maier (1992), "Channel Selection for New Industrial
Products: A Framework, Method, and Application," Journalof Marketing,
Vol. 56, July 1982.

19
inform, and build consensus, such as the Delphi method,8 and analytical
(statistical), when interaction among the experts is impossible because of
physical separation or confidentiality. Because some of the lead-use
customers were considering proprietary applications of the Scotchfiber
technology, we did not use the interactive Delphi method, but instead
chose a mathematical "consensus" method developed by Robert
Winkler.9
The new product channel profiles were presented to the New
Product Launch team which was made up of six members of the
division's marketing and sales staff who were responsible for drafting an
initial Scotchfiber marketing plan. None had participated as experts in
the earlier evaluations. The launch team also benchmarked the
capabilities of its existing channels as well as Scotchfiber's indirect
competitors. This was done by a subcommittee of the task force aided by
a market research firm. Armed with these data, the launch team met
several times to reach the following conclusions:
• The anticipated customer requirements on product
information, product customization, and product quality
assurance for the new product considerably exceeded the
current capabilities of the division's general-line
finishing distributors.
• The anticipated channel function profile after the product
was established (i.e., 3 years) matched that of the
division's other products currently being routed through
general-line finishing distributors.
• A new class of distributors, fiber specialists, which the
company did not currently use, would also be able to
satisfy the functional requirement for the established
product. However, they would have difficulties
fulfilling the first three functional requirements for the
new product, but to a lesser degree than the current
distributors.

Six channel paths were initially identified as feasible options for
taking the product to market (see Table 7): two of these were pure
options, while the other four were hybrid combinations of salesforce and
distributors sharing channel tasks for the new product. Options 5 and 6,
however, were eliminated as the group thought both these options
would entail very high switching costs and channel conflicts given the
required change from one class of distributor to the other. It just didn't
make sense to start with fiber specialists and switch to general-line
distributors and vice versa. The costs of taking back inventory and any
legal fees for rewriting and defending new contracts would far surpass
the benefits. Thus the choices for the optimal channel were reduced to
four.
8H.A. Linstone and M.A. Turoff (1975), TheDelphiMethod: Techniques
and Applications (Boston: Addison- Wesley).
9RobertL. Winkler (1981), "Combining Probability Distributions from
Dependent Information Sources,"
ManagementScience, 27 (April), 479-488.

21
Table 7 Feasible Channel Options
Now (when product is new) 3 Years Later (when product is
established)
Option 1 Sales Force • General-line
Finishing Distributors
Option 2 Sales Force • Fiber Specialist
Option 3 SalesForce and General-
line Finishing Distributors
• General-line Finishing
Distributors
Option 4 Sales Force and Fiber Specialists •
Fiber Specialists
Option 5 SalesForce and General-
line Finishing Distributors
¨ Fiber Specialists
Option 6 Sales Force and Fiber Specialists •
General-line Finishing Distributors
At this company, new products were assigned sales and profit
targets: Line managers were expected to achieve or surpass both. The
division's area sales managers and their key sales representatives were
contacted for revenue and cost estimates of going to market using each
of the four channel options. Instead of estimating variations in sales
revenues through each option, area sales managers felt more confident
in estimating the intensity of channel coverage each option required for
achieving the fixed sales target. Knowing this, the cost of each channel
option can be estimated. Distribution costs were disaggregated into
seven elements: demand generation (salesforce time, marketing, and
advertising); distributor technical training; distributor administrative
training; sales support (inventory carrying and customer credit);
logistics (order processing, transportation, and warehousing);
distribution margin; and opportunity costs (of salesforce time taken
away from selling existing products).

594-116 DesigningChannels of DistributionMany cost elements, such as logistics, sales support, and distribution
margin, can be computed once the channel options and the details of its
implementation are known. But others, such as distributor training
costs and opportunity costs, are essentially judgments for new products
and channels that were obtained from area sales managers and
subsequently refined by headquarters' accounting staff. We aggregated
the costs for each channel option. Because the sales target was identical
for all four options, the optimal channel in this case was the cost-
minimizing option. The relative cost numbers are shown in Table 8.
Option 3 was the optimal choice.
Table 8Relative Costs of Feasible Channel Options
Distributor
Trainingand
Maintenance
Costs
Dem
andGeneration
Sale
sSupport Logistics Distribution
Opportunity
Tot
alCost
Costs TechnicalAdministrative
Costs Costs Margin Costs Index
Option
1
Hig
h
Low Low Hig
h
Med
ium
Low Mediu
m
102
Option
2
Hig
h
Medium High Med
ium
Med
ium
Mediu
m
High 110
Option
3
Med
ium
Medium Low Med
ium
Low High Low 100
Option
4
Med
ium
Medium High Med
ium
Med
ium
High High 111
In Option 3, the sales force and the general-line finishing
distributors together called on end users to establish the product and
effect sales. In three years these same distributors would be expected to
take on full responsibility for the product line; by then, it was assumed
that the

23
distributors would be sufficiently trained to service and maintain the
several applications for the product.
Conclusion
To evaluate the usefulness of the proposed method, we went back
to the company a year after the new product launch to obtain
information on how Scotchfiber was performing. We interviewed
several members of the original launch team and a cross-section of the
field sales management and sales reps directly involved in the
Scotchfiber marketing effort. A full year after launch, Scotchfiber sales
were running 25% ahead of sales targets and profits were running 34%
above expected levels.
Although these results pertain to evaluations at the end of the first
year of a three-year planning horizon model, management believed the
suggested method helped them make a good decision. Without the aid
of this method, the company would have distributed the product
through its 500 distributors, which, managers thought on hindsight,
would have been a mistake. The company's decision makers initially
underestimated the channel support required for the new product's
launch. Formally incorporating customer judgments, an essential part of
the method, helped remedy management misperception.
Our interviews also identified factors such as effective
communication between headquarters and field sales as key reasons for
Scotchfiber's success. But two of the top three reasons were
"involvement of the direct sales force" and "the channel selection
process." A key contribution of this research was the process itself. Other
than bringing a conceptual framework to the new product channel
decision, the research process integrated judgments from three
important constituencies:
• lead-use customers (the potential early adapters of the product)
• in-house experts (such as the product manager and
distribution development manager)

• line managers (sales reps and sales managers)
The process combined channel concepts with experts' judgments
and managers' inputs to arrive at an appropriate channel for the new
product. The managers' active participation generated substantial
commitment to the method and facilitated its implementation. The very
process of systematically focusing on the new product channel problem
led to the discovery and improvement of several related (but not central
to the method) tasks, all of which magnified the impact. There is a
valuable lesson in this: the process of method development and
implementation is perhaps as important as the underlying conceptual
framework. While the method outlined here may be immediately more
applicable to new product markets, the same principles have been used
in several channel audits of mature product markets as well. Steps 1 to 3
are particularly useful. Knowing the capability of existing channels
with respect to customer's channel function requirements and
benchmarking them with competitors' channels provide useful
diagnostics. While a structural change may not be feasible in some cases
given long-established channel relationships, distribution managers can
at least infer specific guidelines on how to manage existing channel
networks to enhance their profile to be more in tune with customer
needs.

Designing channels of distribution case

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