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This document explores the evaluation of channel member performance within logistics frameworks, highlighting factors such as control degree, product complexity, and the importance of channel members. It outlines steps for assessing channel effectiveness, including determining customer needs, measuring performance against established criteria, and taking corrective action where necessary. Furthermore, the discussion focuses on the productivity and profitability of distribution channels in relation to external factors, providing a comprehensive guide for organizations to optimize their logistics strategies.
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LogisticsPPS9b Topic 6
context M • Scope and frequency – factors: • Degree of control by M – strong if have contract with others or have strong acceptance for its products • Importance of the channel members for M (rely totally on or partly?) • The more complex the product, the broader the scope of evaluation (unit value and volume) • Intensive vs selective (number of channel members) Comprehesive performance evaluation = Channel member performance audit Member performance Day-to-day sales
Channel member performance audit Develop performance measurement criteria Evaluate channel member against those criteria Take corrective action if needed
Performance measures in marketing channels Effectiveness Equity Productivity Profitability
Evaluating total channel effectiveness • Determine customer needs for channel service: • Locational services • Lot size • Delivery time • Product variety Step 1 Determine which channel institutions are responsible for providing which channel services Step 2 Determine how well customer needs are being met Step 3 Take corrective action, if needed Step 4 Reinforce effective performance Step 5
Taking the five steps into consideration, evaluate the effectiveness of the marketing channel systems for the following: • FMCG’s • Cellphones • Medical services
Channel system productivity Measure how efficiently an intermediary uses resources i.e. • Land • Labour • Capital to generate output = sales volume, gross margin & value-added variables Output Productivity = Input
CHANNEL SYSTEM PROFITABILITY Distribution channel environment: Consumer-demand Technology Consumerism and trade actions Legal regulations Economic conditions Competitive conditions Labour unions Capital and international markets Distribution channel member policies: Product assortment to be carried Market segments and territories to be served Ordering time and minimum order requirements Safety margin, never-out-list and other inventory policies Prices, discounts and buy-lease policies Advertising and sales promotion obligations Credit and payment policies Distribution channel structure: Number of channel levelsTypes of institutions participating at each level Number of establishments of each institutional type Functions performed at each channel level Extent of routinisation of transactions Incidence of postponement/ speculation in the channel Distribution Productivity
Corrective action • Clarify tasks by marketing managers in channel • Use of power perhaps necessary to reinforce expectations/ requirements • Elimination i.e. YOU’RE FIRED!
Read through Page 264 – 265 When modification of the existing channel may become necessary.
case study Page 266 – 268 and answer questions on page 268
