Three forces are changing the normal rules controlling the distribution channel: proliferating customer needs, changes in the balance of forces in the channels, as well as changes in strategic priorities. Many companies outsource the distribution functions to third parties. Others, using IT, direct marketing, database marketing, and other options to contact customers directly, so the role of a distributor or dealer develop. And some firms, while experimenting with a number of distribution options before committing to one system. Companies also have to deal through the specialists rather than generalists, because experts tend to be more focused and nimble than the manufacturer in a turbulent environment. The authors propose a strategic approach to planning for the future configuration of the channel, control channel, and resource commitment. Channel must address the needs of customers, make sure that the customer sees value in the company, to be efficient, and handle any new products and services that arise. The authors suggest that the company first evaluate their current distribution channels, the profitability of each channel, its market coverage and the cost of each channel function. Further, the company has to choose the location of the channel based on sound design principles that recognize that the distribution strategy should contribute to the overall business objectives. "Hide
by Erin Anderson, V. Kasturi Rangan, George Day Source: MIT Sloan Management Review 13 pages. Publication Date: July 1, 1997. Prod. #: SMR030-PDF-ENG
