What is "Developing Business Channels"

Table of Contents

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- 1 What is a Business Channel

- 2 Characteristics of a Business Channel

- 3 The Importance of Business Channel Management

- 4 Development Trends of Business Channels

- 5 Business Channel Strategies

- 7.1.

- 6 Links of Business Channels

- 7 Design of Business Channels

o 7.1 i. Steps of Business Channel System Design

o 7.2 ii. Design of Business Channel Structures

o 7.3 iii. Comparison and Evaluation of Channel Decision Making

- 8 Composition of Channel Membership

o 8.1 i. Functions of Channel Membership Definition

o 8.2 ii. Selection and Motivation of Channel Members

- 9 Channel Conflict and Control

o 9.1 i. Advantages and Disadvantages of Channel Conflicts

o 9.2 ii. Basic Types of Channel Conflicts

o 9.3 iii. Problems of Tampering

o 9.4 iv. p>- 10 The Utility of Business Channels

- 11 Factors Affecting the Selection of Business Channels for Networks

- 12 The Basic Elements of Business Channel Management

- 13 Business Channel Case Studies

o 13.1 Case Study 1: China Mobile's Business Channels

o 13.2 Case Study 2: Hunan Unicom's Business Channels

o 13.3 Case Study 3: China Unicom's Business Channels

o 13.4 Establishing an Effective Channel Conflict Resolution Mechanism

o Analysis 2

- 14 References

What is a business channel

Philip Kotler, an authority on marketing business in the United States: "A business channel is all the firms or individuals who acquire ownership of, or help to transfer ownership of, a good or service as it moves from producer to consumer. " Simply put, business channels are the specific channels or paths through which goods and services move from producers to consumers.

Characteristics of Business Channels

Characteristics of Business Channels:

1. The starting point is the producer, and the end point is the consumer (living consumption) and the user (production and consumption)

2. The participants are various types of intermediaries in the process of commodity circulation

3. The prerequisite for this is the transfer of ownership of goods .

Importance of business channel management

1. Maintained through technological leadership and innovation. It has become increasingly difficult for companies to be competitive in the marketplace.

2. The resources created by the business channel system have a compensating effect on the manufacturer's development.

The development trend of business channels

(1) Channel operation: centering on end-market construction

(2) Channel support: shifting from mechanization to omni-directionality

(3) Channel pattern: shifting from unitary to diversification

(4) Flattening of the channel structure

Business channel strategies

(1), Direct or indirect channel business strategy

(ii), long or short channel business strategy

(iii), wide or narrow channel business strategy

(iv), single business channel and multi-business channel strategy

(v), traditional business channel and vertical business channel strategy (vertical business system)

Business channel

I. Wholesalers

II. Retailers (store-less retailing, store retailing)

III. Agents

Business channel design

I. Steps of business channel system design

Stern and other scholars summarized the "user-oriented channel system "design model. Channel strategy design process is divided into the following five stages, *** fourteen steps:

(a) current environmental analysis

Step 1. review the current state of the company's channels

Step 2. the current channel system

Step 3. to collect channel information

Step 4. to analyze the competitor's channels

(b) the development of short-term Channel countermeasures

Step 5: Evaluate near-term opportunities in the channel

Step 6: Develop a near-term plan of attack

(C) Optimize the design of the channel system

Step 7: Qualitative analysis of end-user needs

Step 8: Quantitative analysis of end-user needs

Step 9: Industry simulation analysis

Step 10: Design the "ideal" channel system

Step 11: Design the "ideal" channel system

(D) Constraints and gap analysis

Step 11: Designing management constraints

Step 12: Gap analysis

(E) Decision-making on channel strategy options

Step 13: Developing strategic options

Step 14: Decision-making on the optimal channel system

The second business channel structure design

The three main elements of the business channel structure are the number of levels in the channel, the density of each level and the types of intermediaries at each level.

Channel level refers to the number of channel lengths needed to accomplish the business channel objectives of the enterprise.

Channel density is the number of intermediaries at the same channel level.

Types of intermediaries are the types of intermediaries that should be used in each level of the channel in question.

Comparison and Evaluation of Channel Decision Making

(I) Financial Assessment Method

The Financial Approach (Financial Approach) is a method put forward by Lambert (Lambeit) in the 1960s. He pointed out that it is the financial factor that is the most important factor in deciding which channel structure to choose. This decision involves comparing the cost of capital required to use different channel structures, with the resulting capital benefit to determine the most profitable channel.

(ii) Transaction Cost Assessment Method

Transaction Cost Analysis (TCA, Transaction CostAnalysis), was first proposed by Williamson. The method focuses on the transaction costs required for a company to accomplish its business channel tasks. Essentially, transaction costs are associated with the costs of accomplishing tasks such as information gathering, negotiating, and monitoring performance. In the TCA approach, Williamson integrates traditional economic analysis with behavioral science concepts and the results generated by organizational behavior to consider the choice of channel structure.

(C) Empirical Assessment Methods

1. Weighted Factor Scoring Method

The Weighted Factor Approach, proposed by Kotler, is a more precise direct qualitative method of selecting a channel structure. Basic steps:

List the relevant factors affecting channel selection.

The importance of each decision factor is expressed as a percentage.

Each channel choice is scored on a scale of 1 to 100 depending on each decision factor.

The total weighted factor score (total score) for each channel choice is obtained by multiplying the weights (A) with the factor scores (B).

The alternative channel structure total scores are ranked, and the channel choice option that receives the highest score is the best choice.

2, direct qualitative judgment method

Channel design selection, direct qualitative judgment method is the most rough but also the most commonly used methods.

3, business channel cost comparison method

The cost and benefit of each channel mode as the most important evaluation factors, through the comparison of inputs and benefits to select low-cost and big benefit channel structure.

(D) Mathematical model of business channel evaluation

1, business channel cost comparison model

2, business channel benefit comparison model

3, ROI comparison model

Channel membership

I. Definition of channel member functions

Channel member duties mainly include the following aspects:<

Promotion;

Channel support;

Logistics;

Product correction;

After-sales service and risk taking.

II. Selection and Incentive of Channel Members

(I) Principles of Selecting Channel Members

Principle of Reaching Market Goals.

Principle of division of labor and cooperation.

Principle of image matching.

Principle of being in the same boat***.

(ii). Channel member selection

Evaluation of intermediaries

1. Operating capacity:

Capital capacity, personnel capacity, business area, warehousing facilities

2. The level of operation, reflecting the effectiveness of intermediary business.

Adaptability, innovation, attractiveness

3. Turnover capacity, refers to the intermediary's capital turnover capacity.

(C) Incentives for channel members

(1) Provide quality products

(2) Give appropriate profits

(3) **** the same for advertising

(4) Training of personnel

Channel Conflict and Control

I. Pros and Cons of Channel Conflict

Manufacturers and manufacturers, Manufacturers and intermediaries, intermediaries and intermediaries, and even manufacturers and their direct sales offices of the conflict is inevitable. But everything has its advantages and disadvantages, benefits:

1, it is possible that a new channel operating model will replace the old channel model, in the long run this innovation is beneficial to consumers.

2, completely free of channel conflict and customer collision manufacturers, its channel coverage and market development is certainly flawed.

3, the intensity of the channel conflict can also become a conflict between the strength of the two sides and whether the goods are hot or not the "test table".

Second, the basic types of channel conflict

There are three main types:

The first is a different brand of the same channel of the fight,

The second is the same brand of the channel within the fight,

The third is the channel upstream and downstream of the fight.

Three, the problem of tampering

(a) tampering with the type of

from the nature can be divided into:

malicious tampering: that is, dealers to make unnatural profits, deliberately dumping goods to non-jurisdictional;

natural tampering: generally occurs in the jurisdictional boundaries of the process of logistics, non-dealers maliciously;

benevolent tampering : the selected dealer circulation is very strong, the goods often flow to non-target markets.

(B) tampering performance analysis

1, tampering between intermediaries.

2, tampering between distributors and offices direct sales project customers

3, the more egregious tampering phenomenon is that the distributor will be counterfeit and shoddy products mixed with genuine products for sale, plundering the market share of legitimate products, or direct dumping at below-market prices, to obtain abnormal profits, and to combat the other distributors of the brand's confidence.

(C) the harm of tampering analysis

1, affecting channel control and corporate image.

2, affecting sales performance.

3, damage to the brand image, so that the first investment can not get a reasonable return.

4, the impact of decision-making analysis:

Sent to the A goods were quietly sold to the B, its "performance" is reflected in the A, in the company did not determine the tampering with goods, the headquarters will get such false data, resulting in the company's decision-making and analysis of the error.

Four, the establishment of an effective channel conflict resolution mechanism

(a) the establishment of the "pre-alarm system" system

(b) channel integration, flattening

(c) constraints on contractual

(d) packaging differentiation

(e) the price of systematic

Utility of business channels

Business channels can create the following three kinds of utility in the business process:

(1) Time utility.

That is, business channels can solve the contradiction between the production and demand of commodities in the time inconsistency, to ensure that the needs of consumers;

(2) location utility.

That is, business channels can solve the contradiction between the spatial inconsistency of commodity production and demand.

(3) Ownership utility.

The business channel can realize the transfer of ownership of goods.

The online marketplace enables the three roles of the business channel to be further strengthened. In terms of time and place, it enables the inconsistency between production and demand to be resolved more effectively, with consumers being able to obtain the goods they need at home, at the nearest location, and in a quicker time. Merchants can also in a shorter period of time, according to the consumer's individual needs for production, goods, and in the nearest location, with the minimum cost of goods to consumers.

Factors affecting the selection of online business channels

(1) Target market.

How the status of the target market is an important factor affecting the choice of business channels, is one of the main basis for business channel decision-making. Market factors include: the size of the target market range and potential demand, the degree of market concentration and decentralization, customer purchasing characteristics, market competition.

(2) commodity factors.

Due to the natural properties of various commodities, different uses, etc., the business channels used are not the same. Mainly include: the nature of the commodity, the fashion of the commodity, the degree of standardization of the commodity and services, the size of the value of the commodity, the market life cycle of the commodity and so on.

(3) the conditions of the production enterprise itself.

Mainly including: the enterprise's production and operation scale, the enterprise's reputation and image, the enterprise's management ability and management experience, the degree of control of the enterprise channel.

(4) environmental factors and so on.

Basic elements of business channel management

I. Channel members

Broadly speaking, any component that constitutes the IT industry chain is a channel member. Therefore, vendors, agents, distributors, and users are channel members, and is a basic channel member (basic channel member), because they have ownership of IT products or services and accordingly assume substantial risk. In addition to the basic channel members, such as advertising agencies, public relations companies, market research organizations, transportation companies, etc., they do not own the IT products or services and do not bear the corresponding market risks, but they have a facilitating role in the process of transferring the IT products or services from the vendors to the users, and therefore such channel members are categorized as special channel members. member.)

Relative to special channel members, basic channel members play a more critical role in the healthy development of the industry chain system, so the basic channel members are the main focus of business channel management.

Not only do such business channel members and relationships exist in the IT industry chain, but similar business channel members and relationships also exist in any other industry chain, only the channel members are called differently. Therefore, leaving aside the specific industry chain, extracting the **** of many industry chain business channel members, you can summarize the basic channel members and relationships.

Two, channel structure

The structure of business channels can be divided into length structure, i.e., hierarchical structure; width structure and breadth structure of three types. The three types of channel structure constitute the three major elements of channel design or channel variables. Further, the length, width and breadth variables in the channel structure completely describe a three-dimensional channel system.

1, length structure (hierarchical structure)

Length structure of the business channel, also known as the hierarchical structure, refers to a channel structure defined according to the number of channel intermediaries (purchasing and selling links), i.e., the number of channel tiers. Typically, a business channel can be categorized into zero, one, two and three levels according to the number of channel levels it contains.

The zero-level channel, also known as the direct channel, is a channel structure in which no channel intermediaries are involved. Zero-level channel can also be understood as a special case of distribution channel structure. In a zero-level channel, the product or service is sold directly from the producer to the consumer. Zero-level channels are the main channels taken by the sales of large or valuable products and products with complex technology and the need to provide specialized services. In the IT industry chain, some well-known domestic and foreign IT companies, such as Lenovo, IBM, HP and other companies to set up a major account department or industry account department belongs to the zero-level channel. In addition, DELL's direct sales model, is a typical zero-level channel.

The first-level channel includes a channel intermediary. In the industrial market, this channel intermediary is usually an agent, commission merchant or distributor; while in the consumer market, this channel intermediary is usually a retailer.

The secondary channel consists of two channel intermediaries. In industrial markets, these two channel intermediaries are usually agents and wholesalers, while in consumer markets, these two channel intermediaries are usually wholesalers and retailers.

Three-tier channels include three channel intermediaries. This type of channel is mainly found in daily necessities with broader consumption, such as meat food and packaged instant noodles. In the IT industry chain, some small retailers are usually not the target of large agents, therefore, the first level of specialized distributors are derived between large agents and small retailers, thus the three-tier channel structure emerges.

2, the width of the structure

The width of the channel structure, is based on the number of channel intermediaries at each level of the number of a channel structure to define. The width structure of the channel is affected by the nature of the product, market characteristics, user distribution and corporate distribution strategy and other factors. The width structure of the channel is divided into the following three types.

Intensive distribution channel (intensive distribution channel), also known as extensive distribution channel, that is, the manufacturer in the same channel level to choose as many channels as possible intermediaries to distribute their own products of a channel type. Intensive distribution channels are found in the consumer goods sector for convenience goods such as toothpaste, toothbrushes, and beverages.

Selective distribution channel (selective distribution channel), refers to a channel level in a small number of channel intermediaries to choose a channel type of distribution of goods. In the IT industry chain, many products use selective distribution channel.

Exclusive distribution channel (exclusiveivedistribution channel), refers to a channel level in a channel to choose the only one channel intermediaries of a channel type. In the IT industry chain, this channel structure mostly appears in the general agent or total distribution level. At the same time, the launch of many new products also mostly choose the exclusive distribution model, when the market widely accepted the product, many companies from the exclusive distribution channel model to selective distribution channel model transfer. This is the case, for example, with Toshiba's notebook product channel and Samsung's notebook product channel.

3, the breadth of the structure

The breadth of the channel structure, in fact, is a diversified choice of channels. That is to say that many companies actually use a combination of channels, that is, the use of a mixed channel model for sales. For example, some companies target large industry customers and set up a major accounts department within the company to sell directly; for the large number of SME users, they use a wide range of distribution channels; and for consumers in some remote areas, they may use mail order and other methods to reach them.

In summary, the channel structure can be generalized into two broad categories: direct sales and distribution. Of these, direct sales can be subdivided into several, such as a major accounts department set up directly by the manufacturer, an industry accounts department or a sales company and its branches set up directly by the manufacturer. It also includes direct mail order, telemarketing, company online sales, and so on. Distribution can be further subdivided into two categories: agency and distribution. Both agents and distributors may choose to be intensive, selective and exclusive. Figure 3 graphically outlines the types of business channel structures.

Three, channel control

In a nutshell, channel control refers to the comprehensive regulation of the entire channel system through a series of measures such as management of the channel, appraisal, incentives, and channel conflict resolution. The company established a channel system, only completed the first step in the realization of the distribution goals, and to ensure the successful completion of the company's distribution goals, but also must be established on the channel system for the channel control in a timely manner.

Channel control constitutes the core content of business channel management. Channel structure and channel construction is a relatively easy thing, while channel control throughout the entire life cycle of the channel system operation.

Business Channel Case Study

Case 1: China Mobile's Business Channel Case Study 1

I. The Role of Business Channels in the New Circumstance

The mobile communication industry is a service industry, which is closely related to the life of the general public. Over the years, mobile communications services have been very popular, the number of mobile subscribers and business volume are accelerating the development trend.

In the market more and more segmented environment, customer demand for mobile communications services show multi-level, innovation, differentiation trend, differentiated channel construction will become a competitive advantage. The rapid market expansion of mobile operators must rely on a wide range of efficient business channel system, along with the intensification of competition in the market of mobile communications services, China Mobile's business channel system construction and management to adapt to the requirements of the market changes should also be constantly developed and improved.

Second, the current situation of the mobile company's business channels

At present, the mobile operator's channel system mainly consists of two types: the main control channel: from the property rights point of view refers to the China Mobile directly mastered, directly involved in the management of the core channels, including self-built business hall channels, self-service stores, customer service, customer service hotline, mobile Web site and so on.

Social distribution channels: from the level of cooperation mainly refers to in addition to China Mobile's self-built channels, the use of social resources to expand the sales channels, is an important supplement to China Mobile's core channels.

The mobile business market environment is changing rapidly, mobile operators only rely on the main control channel does not ensure that the competition in the advantage. Therefore, China Mobile in vigorously improving its own business channels on the basis of the function, but also to continue to strengthen the social channel business service function, so as to enhance the comprehensive service level.

Three, the mobile company business channel problems

1. Poor channel order, resulting in insufficient control of the overall channel

At present, China Mobile's business channels mixed, the number of small, small, extremely unstandardized, decentralized, lack of chain of scale advantages, management difficulties. User instability, inflated release number, etc. increased the mobile company's sales costs, but also reduces the efficiency of the business.

2. Channel conflict is obvious

Franchise stores engaged in wholesale business in large numbers, no regional restrictions, loose relations between each other, the control of the downstream point of weak, easy to cause confusion in the price, vicious price cuts and competition, and "rushing goods". The imbalance of channel resource allocation leads to serious cross-district tampering. Cross-area tampering is the result of part of the channel to use the batch card card profit-making, while ignoring the construction of retail channels, ignoring the local market sales and service, the impact of the normal sales channels.

3. Social business channels in the agent selection process is not standardized

The assessment of quantitatively unclear to the agent's rewards and penalties, resulting in the decline in the attractiveness of the mobile company to the intermediate channels, the loyalty and centripetal force on behalf of the point is very low, the level of service is uneven, and the channel-related customer complaints have remained high.

4. Mobile companies to take the traditional "sitting business" business model

This mode of operation caused by the channel members of the service capacity is weak, market information feedback is slow, the enterprise's own channels in-depth market, in-depth user capacity is not strong, the agent agent, the lack of a thorough understanding of the telecommunications business of the associated channels, affecting the business capacity of the channel. The business ability of the channel.

5. Mobile companies and the lack of close relationship with the agent

Social business channels lack the initiative and initiative to provide quality services, from the perspective of the mobile operator, the agent itself is not regarded as a partner, but only regarded as the company's agents. From the point of view of the agent, the agent is an independent legal person, the sale of communications terminals is their main business, they will not put too much energy into the mobile operator's agent.

6. Channel coverage is relatively single

Because of the rapid expansion of the market and business, China Mobile has not yet invested more energy in the group customers, commercial customers, important customers to carry out precise business.

7. Channel management concepts need to be improved

The main performance: focus on sales, light service business; focus on advertising, light relationship business; ignore the internal business. Mobile internal channel management work is also flawed, mainly in the management force is not enough and the management of the center of gravity shift leads to mobile companies can not really control the mobile channel resources and improve the channel centripetal force.

Four, the corresponding countermeasures to improve

1. Establish efficient own channel

Use of social distribution power to lay a high-coverage, low-cost channels. Mobile companies need to rationalize the existing channel system, from the elimination of channel blind spots, restrictions on cross-area tampering, optimize the channel structure, the establishment of controllable and efficient hierarchical channel management system. The establishment of full coverage of mobile business channel system, a reasonable proportion of different types of channels and scale.

2. Provide a differentiated channel system

Establish an effective mechanism to communicate product information and effectively collect the latest market information, to meet customers' individualized and heterogeneous service requirements, and to ensure customer loyalty to the business channel. China Mobile should choose different modes of business channels according to the characteristics of different services, and establish the core competitiveness of the channel by making wide, deep, strong and refined channels:

(1) refinement. For the old user group, young people and mobile crowd, differentiated channel terminal construction, construction of the brand stores of Dynamic Belt.

(2) Make wide. Make full use of the existing channel resources to realize effective channel coverage, cover non-contracted channels through distribution, and develop electronic channels such as the Internet and SMS.

(3) Strengthen. Strengthen the construction and sales ratio of own channels and core channels, enhance its control over the terminal market, and develop main channels such as GSM brand stores and cooperative business halls.

(4) Deepen. Through the improvement of service and communication functions, it helps to enhance the strategic support effect of the channel to consolidate old customers and develop new business.

3. Improve the sales capacity of business channels, correctly handle the relationship with intermediaries, give full play to the synergistic role of channel members

Mobile companies should be in the operating capacity, sales network, customer resources, financial qualifications, creditworthiness and other indicators of the qualification of agents for review. Attention to agents and agents of standardized, legalized management, in the cooperation agreement to clarify the rights and obligations of both parties. Strengthen the maintenance work with agents and agents, and strengthen the training of agents' staff and agents. Recognize the value of building strategic cooperation, and select the appropriate partners to establish cross-industry strategic alliances.

4. In the agency mechanism, the reasonable development, strict control of the agency price system

This price system should ensure that the reasonable earnings of the agents, but also to avoid excessive concessions, so that the agent's profit margins are too large resulting in the pursuit of short-term benefits of the distributor's behavior. Enterprises to give agents of the external pricing should be unified, to avoid different prices for agents to produce the phenomenon of tampering.

5. Do a good job of channel incentives

China Mobile in the channel incentives have three choices: one is to "low advertising costs, high agency fees" way to incentivize the channel to induce consumers; two is to "high advertising costs, low agency fees The second is to "high advertising fees, low agency fees" to pull consumers and channel dealers; Third, through the regional branches of the social agents under the jurisdiction of the scope of the provision of a variety of sales support. Mobile incentives for channel members are:

(1) Positive incentives. Improve the satisfaction and loyalty of channel members to stimulate their work enthusiasm. Positive incentives to stimulate the enthusiasm of the channel for the purpose of incentives in the hope that more effective maintenance of channel relations, increase market share.

(2) negative incentives. Reduce or eliminate the dissatisfaction of channel members to avoid channel crisis. Negative incentives apply when the channel turbulence and other negative issues, in order to eliminate turbulence, to maintain channel stability, the operator can provide a series of support and preferential measures for the channel, in order to appease the channel, stabilize the situation.

6. In-depth understanding of the essence of the conflict of mobile distribution channels, do a good job of channel positioning, to solve the conflict between the channels

For benign conflict, China Mobile can use management resources, human resources, interests of resources to fully coordinate, promote benign conflict in the distribution channel to become the driving force of development. For the vicious conflict, China Mobile must take resolute means to eliminate or dissolve, because the vicious conflict is very destructive.

7. pay attention to the construction of business personnel, the implementation of competitive recruitment, the establishment of a sound incentive mechanism

Business management personnel is a more reasonable mode from technology to business. Recruitment of mobile business positions, it is best to recruit people with a technical background. In the process of China Mobile's international development, the quality requirements for business personnel have reached the standard of composite talents, in addition to business, technology, but also involves foreign language proficiency, public relations skills and other aspects. We have established a system of selection and elimination among the sales staff, so that excellent talents can be enrolled in the market business. The income of the sales staff will be variable and closely linked to their work performance. At the same time, to improve the mechanism of continuous learning and training of operational staff, thereby constantly improving the level of operational staff work, learning.

8. Establishment of internal supervision system reflecting all market-oriented, customer-focused In the construction and management of business channels, to reflect all market-oriented, customer-focused, the whole process of the implementation of the business supervision and oversight, and at the same time to strengthen the internal process of re-engineering, reduce friction between the front office and the back office, and improve work efficiency. The company actively manages all customer contact links and channels to ensure that service levels are consistent throughout the customer experience and to increase customer loyalty to China Mobile.

In the channel construction, we should focus on the customer, provide different services according to the customer's specific situation, and pay attention to the difference between different levels of customer service and the difference between different levels of customer preferential policies. In fact, the customer belongs to which channel is not important, the important thing is how each channel to serve these customers. Channel construction is not the work of one or two people, nor is it a department of customer service, but an overall work, the need for various departments to cooperate with each other, cooperate with each other to create a "*** with the service of mobile customers," the atmosphere.