Marketing bán hàng - Chapter 14: Channel information systems

Chapter 14Channel Information Systems1Learning ObjectivesUnderstand importance of information systems for management of channelsElements of channel information systemsHow information systems are used to impact channel service objectivesPerformance measures for channelsUnderstand principles of channel implementation SDM – Ch 142Tata McGraw Hill PublishingCIS PurposeCIS is Channel Information SystemsCIS is the orderly flow of pertinent operational data both internally and between channel members, for use as a basis of decision making in specified responsibility areas of channel managementCIS is of primary use of sales managers.SDM – Ch 143Tata McGraw Hill PublishingInformation - AdvantagesUseful in marketing planning – helps improve quality of marketing decisionsCan help tap market opportunitiesProvides an alert against competitionHelps spot trends – favourable or otherwiseHelps develop action plans for growthGives feedback on consumer needsSDM – Ch 144Tata McGraw Hill PublishingClassification of InformationBased on the use made of it by marketing – planning, operations, decision making or controlBased on subjects – consumers, products, competition, channels, promotions, pricing, sales volume, value etcOperations data – facts and figuresAlso based on assumptions, anticipated occurrences – forecasts relating to the channel systemSDM – Ch 145Tata McGraw Hill PublishingInformation ProcessCOLLECTIONUSEPROCESSINGSTORAGESDM – Ch 146Tata McGraw Hill PublishingInformation ProcessCollection: acquiring and placing raw data – monthly sales by each territoryProcessing: analyzing data to get meaning out of it – arranging, modifying and interpreting the data by the user – comparison of sales between periodsStorage: keeping the information intact till it is neededUse: application of information for management decision making – sales data of the last 6 months to forecast the sales of the next month.Development.SDM – Ch 147Tata McGraw Hill PublishingDeveloping a Channel MISDecide what information is requiredDecide who will use the informationwhen and for what purposeOrganize information in a manner suitable for interpretation and actionSDM – Ch 148Tata McGraw Hill PublishingUse of InformationPlanning: sales forecasts or distributor indentsControl: expenses against budgetThere is always a cost of collecting information. If data collected is not used properly, the data provider will hesitate to give the information.The channel MIS works at the sales operational level. It has very little strategic intent.SDM – Ch 149Tata McGraw Hill PublishingSources of DataReports (oral and written) and records of channel members, sales peopleLetters, statements and market researchAny other info collected by the sales people and the channel members from the marketExternal sources like business publications, magazines, newspapers, trade journals.In a dedicated channel system the collection of info is well streamlined – in the JC meetingWith use of IT enabled systems collection and processing has become simpler.SDM – Ch 1410Tata McGraw Hill PublishingA Good Channel MISIntegrated system to handle all regular dataUseful decision support systemReflects the style of the marketing organizationUser friendly and user orientedConvincing to the providers of the info as to its purposeBe cost effectiveNot need for verification from other sourcesBe fast and totally reliableSDM – Ch 1411Tata McGraw Hill PublishingElement ImportanceIn a good channel MIS, it is necessary to define upfront for each element of the MIS, the following:Purpose of the infoSource of the infoAction possible Impact on customer serviceSDM – Ch 1412Tata McGraw Hill PublishingCompetition TrackingPurposePlan day to day corrective action to protect market shares and shelf spaceSourceTrade, channel partners and sales peopleAction possibleSpot action while in the market and taken by channel partners or sales peopleImpact on serviceTimely action to provide better support to the trade and retain their goodwillExampleSDM – Ch 1413Tata McGraw Hill PublishingChannel Performance EvaluationSDM – Ch 1414Tata McGraw Hill PublishingEvaluation CriteriaChannel system can be evaluated on how well it provides time, place and possession utilitiesFormal channel evaluation only with contracted channel membersIndependent wholesalers and retailers may not accept any evaluation by a companyPeriodicity of evaluation and parameters like achieving targets market coverage etc agreed with channel partners.SDM – Ch 1415Tata McGraw Hill PublishingDistributor EvaluationOnce a month by the sales people on the performance of the previous month on all agreed criteriaCriteria varies with the category of channel member, nature of the product and the nature of customers.SDM – Ch 1416Tata McGraw Hill PublishingEvaluation Each of the primary criteria can be given a weightage and performance scores worked Criteria Weightage % - XCriteria score (1 to 10) - YWeighted score X*YSales target achievement5073.50Inventory management1581.20Selling resources1571.05Market coverage1080.80Back office support1060.60Overall performance score – 7.15SDM – Ch 1417Tata McGraw Hill PublishingEvaluation Each of the primary criterion can be broken down into it components and also rated.CriterionWeightage % - XScore 1 to 10 - YWeighted score X*YPrimary sales1581.20Secondary sales5073.50Achievement of secondary sales target2071.40Sales growth by period1080.80Market share achievement560.30Sales target achievement – Performance score 7.20SDM – Ch 1418Tata McGraw Hill PublishingEvaluation Overall RankingsChannel memberOverall performance scoreRankingA7.391B7.202C7.153D6.894E6.565F5.606SDM – Ch 1419Tata McGraw Hill PublishingOverall Rankings - ActionBottom 20% to be warned to improve performanceTop scorers have potential to give more business to the company – to be encouragedConsistent poor performance will entail dismissal SDM – Ch 1420Tata McGraw Hill PublishingImplementation PrinciplesMore relevant where member is bound by a contract. Wholesalers and retailers are involved in the implementation to the extent that the company wants to cover them with its product presence.The most critical issue in implementation is the ‘intensity’ of distribution desired. This is more relevant to FMCG, pharma kind of products and not so much for consumer durables or industrial products SDM – Ch 1421Tata McGraw Hill PublishingInfluencing FactorsIntense distribution allows consumer to shop where he likes for the productIntensive distribution increases sales – good companies insist on retail distribution intensitySelective or exclusive distribution may result in loss of sales opportunitiesChannel members feel widely distributed product must be a fast seller. Equitable efforts are required in selling all brands and packs of the same company SDM – Ch 1422Tata McGraw Hill PublishingInfluencing FactorsIntensive distribution is more expensive and requires more supervisionFor consumer electronics or durables intensive distribution may result in ‘free-riding’ situationsChannel members prefer selective distribution – the company should give the products only to themSDM – Ch 1423Tata McGraw Hill PublishingInfluencing FactorsIf a brand has a strong consumer franchise, no outlet can ignore it – HLL brands – distribution becomes intensiveChannel partner or reseller also has a choice on what he wants to stock and sellIf the product category is important and competition is severe, selectivity is a costly option SDM – Ch 1424Tata McGraw Hill PublishingImplementing RulesLow value goods: cigarettes, soaps, shampoos – intensive distribution – fmcg kind of low investment but mass based.High value goods: electronic goods or consumer durables – buyer makes comparisons across outlets – selectiveSpecialty goods: Mont Blanc pen or Tag Heuer watches – exclusive distribution. SDM – Ch 1425Tata McGraw Hill PublishingIntensive - FactorsInfluence of channel principal decreases with intensityChannel member’s competitors also have same productsHigher quality positioning does not match higher intensityDepends on the target marketTakes into account the importance of the market and prevailing competition – more intense the competition, more the intensity of distributionSDM – Ch 1426Tata McGraw Hill PublishingSelective - FactorsCan cut costs but may prove inadequate – lower selling expenses, higher promotional allocations, larger transactions, more accurate forecasting of demandChannel members margins may be betterBetter influence over channel membersManufacturer attracts more aspirantsSuitable for new product or testing the marketSDM – Ch 1427Tata McGraw Hill PublishingKey LearningsChannel information systems is to collect and analyse data about operations of channelsCIS uses methods and sources to collect, process, store and use pertinent information for decision makingSteps for development of a CIS are: decide info required, organize info in a suitable manner and decide users with purposeA CIS can include all elements of interest to sales managers to operate betterSDM – Ch 1428Tata McGraw Hill PublishingKey LearningsThe channel evaluation system checks as to how well the system reaches the products or services to customersChannel implementation is guided by the ‘intensity’ of the distribution requiredFor products with a large consumer base, intensive distribution is preferredUnder specific circumstances, selective or exclusive distribution has advantages. SDM – Ch 1429Tata McGraw Hill Publishing