Continued from page 1
Next, determining what type of product you have is
single most important part of defining your channel strategy. Product type, pre & post service requirements, and revenue generated per customer transaction are key. Understanding these points are important and will focus
manufacturers sales & marketing resources.
For example, if
transaction per customer is low (under $500), then
channel will expect
manufacturer to create demand in
market through effective advertising to targeted end-user accounts. The ideal channel will fill orders to a broad customer base in order to cover individual sales costs. If
product carries a higher value,
channel will be more motivated to pioneer
product because they will be able to sell additional value (local stock, service, integration, etc.) that not only covers their sales costs, but provides cross-selling opportunity yielding higher, overall profit per customer transaction. This dictates that
sales & marketing resources are applied strongly to
partner channels.
Understanding your value proposition per customer transaction is key to defining major components of your channel strategy.
E-traffic -
new channel dynamic
If you are not utilizing
power of
web as an integral part of your marketing program and sales channel strategy, you are simply asleep! And your competition loves you for it.
The web has had a dramatic affect on channel partners. Most buying individuals have access to online information. Product pricing and specifications can be quickly downloaded for easy comparison-shopping. This real-time dynamic of
web has forced channel partners to be true and tight.
However,
web has also yielded many channel enhancements to
forward-acting manufacture.
Many companies use their web site as a clearing and linking depot for their channel partners. Listing
channel partners' web site gives customers quick access and information on local channel presence. Channel partner enhancements include
creation of an Intranet. This channel-access only Intranet is virtually cost-free and provides timely (24/7) order entry, literature and information downloads as well as on-line service support. Surely you can think of other services that
Intranet can provide. Done right, this can be a customer plus and a competitive advantage.
Blending all channels to market - dealing with channel conflict
Global Marketing's contention is that companies must utilize all channels to market. Typically small and mid-size companies favor one channel. Usually it is
channel that assisted their early growth. Early on, there may not have been much choice, but to grow to
next level, mutli-channel marketing must be deployed. And this brings up
biggest barrier to an effective channel strategy - cross channel conflict.
Cross channel conflict is when two or more channels compete for
same sale with
same brand. Realize that any company will face channel conflict. As markets and products mature, you must add new channels to cover all major market segments. Conflict cannot be eliminated. The goal of marketing must be to optimize market coverage and manage conflict so that it does not become destructive. Balancing this conflict is demanding, yet essential to sustained growth.
Too much conflict is destructive causing price issues and loss of market share and excessive sales management time. Too little conflict yields less market share with major coverage gaps. Optimum market coverage drives high market share, low coverage gaps and manageable conflict.
Recognize that
driving influences of channel conflict are both economic and structural in nature. Economics motivate
channel and structural controls help to define and guide how conflict is managed. Pricing strategy, market penetration, channel support issues, and even company politics are challenges that generate channel conflict. Understanding, reviewing and managing these problems enhance your firm's ability to maximize market coverage and manage channel conflict.
One final point. Figuring out your channel strategy is only part of
issue. Communicating your strategy and any required updates to all active channels on a regular basis is an imperative. Each channel must understand how they will part-take in generating businesses and make money.

Frank Williams is a marketer. With many post graduate courses in management, leadership, marketing and technology to his credit, Williams is a widely respected speaker, author and technologist. He has significant knowledge in marketing strategies and is the founder and CEO of Global Marketing, Inc. - a leader in business, marketing and sales consulting