Download CHAPTER 13: CHANNEL MANAGEMENT, CUSTOMER CONTACT,

CHAPTER 13: CHANNEL MANAGEMENT
CHAPTER FOCUS
Some potential (and actual) adopters of this book might feel that the topic of channels or
the general issue of customer contact is outside the scope of the product manager’s job.
However, we feel that this is actually the most dynamic marketing mix “variable” in today’s
marketing environment. This is due to the explosive growth of ways to reach customers directly,
such as through direct mail and the Internet.
As a result, the first part of the chapter attempts to make the case that channel systems are
not fixed, rigid structures but are rather dynamic in nature. It then becomes a primary
responsibility of the product manager to always keep abreast of changes in customer needs about
how they want to purchase the product or service and then adapt the channel structure
accordingly. The three major areas of class discussion on which the instructor should focus
follow:
1. Channel selection. Assuming that the instructor has made the case for channel systems being
dynamic in nature, the channel selection issue then becomes an integral part of the annual
planning that product managers must go through. That is, like annual advertising and promotion
budgets, product managers must be constantly re-evaluating their channel systems. One specific
issue that we have found to be highly relevant is the choice between direct sales and indirect
channels (or both). Many companies, particularly in high-tech industries, have traditionally felt
that a direct sales force is necessary to sell their products because of their complex nature.
Perhaps predictably, more companies, especially new ones, are using either indirect channels or
other kinds of direct channels such as direct mail to reach customers. Product managers need to
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understand the tradeoffs between having control with a sales force and the efficiency, market
coverage, etc. afforded by indirect channels. A second topic is how to manage multiple channels
for reaching different segments, so-called hybrid channel structures.
2. Channel control issues are usually discussed in marketing management courses but not from
the product manager’s perspective. We try to make the case for the product manager to view the
channel members as customers and to treat them accordingly. The movement to category
management in retailers (see Chapter 1) and the need from the manufacturer’s perspective, and
therefore the product manager’s, to improve relations with them is a good example of a structural
shift in an industry that has traditionally been driven by the sellers (consumer products
companies) rather than the buyers (supermarkets).
3. The whole area of direct marketing is simply exploding. This not only includes direct mail but
also reaching customers through the Internet via the Web, telemarketing, and any medium
whereby the company can establish personal relationships with the customer. The instructor can
bring in many interesting examples from websites to make this class exciting. Guest speakers
also work well on this topic.
CASES
Since the material in this area is basically conceptual, it does not lend itself well to inclass exercises. However, the material does make for excellent case discussions. Some cases that
relate to the issues raised above in both U.S. and international contexts are the following:
Calyx & Corolla (Harvard; #9-592-035)
Computervision Japan (Harvard; #9-585-155)
Ingersoll-Rand (A) (Harvard; #9-589-121)
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Loctite Corporation: International Distribution (Harvard; #9-594-021)
Lotus Development Corporation (Harvard; #9-587-078)
Polaroid Corporation: European Distribution System (Harvard; #9-695-038)
Rolm Corporation (A) (Harvard; #9-580-699)
Wang Laboratories (Harvard; #9-585-046)
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