Article S6.7 Research on Distribution Channel Management Seminar Leader: Githa Heggde Welingkar Education, Bengaluru, India githa.heggde[at]welingkar.org A distribution channel is a chain of intermediaries, each passing a product down the chain, before it finally reaches the consumer. It bridges the gap between the producer and the consumer. Effective channels serve targeted market segments, maximise sales, minimise cost, and help producer companies gain a sustainable competitive advantage in delivering superior value to their customers. The channel partners (such as dealers, distributors, resellers) play a crucial role in the effective functioning of the channel. Their needs and goals may not always be aligned to those of the producers or the consumers. Channel managers--managers of the producer organisation, responsible for distribution performance--need to design effective distribution channels and work in collaboration with the channel partners, taking any corrective actions based on periodic assessment and monitoring. Heggde's research sought to answer the following questions relating to the management of distribution channels: How to build and maintain long-term positive channel relationship? Do the producers know what their resellers need or what type of support to provide? How are decisions regarding channel design taken? Which factors do the channel partners and channel managers give importance to in order to deliver value to the customer? As such, it was an empirical research which sought to find any empirical patterns in the world of distribution channel management. Her research included three different sectors in its scope, capturing a large cross section of businesses, representing goods (fast-moving consumer goods [FMCG] sector), services (insurance sector) and a combinations of both (mobile telecom sector). These three highly competitive sectors depend heavily on intermediaries having extensive networks for distributing their offerings. The research was designed to capture any differences with respect to channel management among the three sectors. The following hypotheses were tested:
Internal data of selected channel partners, internal data of selected channel managers, and structured interview with selected channel partners and companies across geographies and verticals were consolidated and analysed to see if any pattern or trend exists. The population and sampling frame for the FMCG sector, mobile telecom sector, and insurance sector were taken from the CII News 2000, Cellular Operators Association of India, company executives, and company records. The researcher made use of the stratified random sampling technique for data collection. This method is frequently used by researchers when they come across a population which contain distinctive subpopulations that appear to vary considerably. The method often improves the representativeness of the sample. Both primary and secondary data sources were used in the research process. While the primary data were collected by nondisguised structured questionnaires and interview with company top executives, the secondary data were collected from journals, books, Web sites, and company records. A pilot study was also undertaken in four companies in each sector with significant market presence. Data analysis techniques such as Friedman’s test, factor analysis, discriminant analysis, chi-square test, gap analysis were used. It was concluded that while the high-performing distributors (HPD) focused on sales turnover and market development, the low-performing distributors (LPD) were more interested in gross margin and promotional assistance. This conclusion also stands reason because HPD are more established players than LPD; accordingly, HPD may have a greater capacity to benefit from long-term business strengths, whereas LPD would need more short-term assistance. Purely empirical research studies like this indicate observed patterns and trends in the data and help us postulate the possible underlying generative mechanism that might produce those patterns and trends. Reference Gujarati D. N. (2004). Basic econometrics (4th ed.). New Delhi, India: Tata McGraw-Hill. Reported by Biswajit Pal with inputs from Mousumi Padhi and D. P. Dash. [Feb 8, 2009] Copyleft Xavier Institute of Management, Xavier Square, Bhubaneswar 751013, India Research World (ISSN 0974-2379) http://www1.ximb.ac.in/RW.nsf/pages/Home |
