Brand Management (MKT624)
VU
1. Customer reach - Direct or Indirect It is the determination of the most optimal level of cost-efficiency and customereffectiveness, which becomes the basis of whether you want direct or indirect channels. The channels, in other words, must save costs and provide customers value. Direct channels include • Direct sales • Telemarketing • E-marketing Indirect channels include intermediaries like • Distributors • Wholesalers • Retailers 2. Operating efficiencies Once you have decided upon the method of customer reach – direct or indirect – your objective then must be to achieve operating cost efficiencies. The costs must not be high to the point of adversely affecting profits. Direct channels offer higher margins, but then the responsibility of channel management costs rests with the company. E-marketing is fast becoming the norm in the western markets. It is a much cheaper way of reaching a much bigger customer base in diverse areas. The companies that have started e-marketing as a supplement to their traditional channels are experiencing higher levels of sales, in addition to sales from stores. Those that started their business with emarketing as the core model are not dependent on any intermediaries. Indirect channels offer lower margins, but then the channel management costs are minimal. 3. High level of service quality Direct marketing assures a good level of service because of a direct interface with the customer, but it could be expensive for maintaining a direct sales force. Indirect marketing removes the company from customers and, hence, poses a greater challenge of providing good level of service. Companies are dependent upon intermediaries to offer service to customers, and they are too busy with different lines of products that they handle. Also, intermediaries take over the ownership of the product and control its distribution, removing the company away from controls. Indirect marketing therefore has an inherent disadvantage in not being as responsive to customers as direct marketing. It is interesting to note that within what looks like direct channels does carry an indirect element. Retailers have started e-marketing offering delivery to their customers. This enhances their level of service to their customers. Manufacturers may not do so for the limitation of items they produce, whereas retailers having a host of items from various companies are better poised to directly serve their customers. What is not to be overlooked is the fact that prior to retailers’ direct service to their customers the goods came from manufacturers, hiding that part to customers. This is the element of indirectness and a case of B2C channel system, in which retailers stock their items from different members of the channel and offer a service to the end-users of different brands. © Copyright Virtual University of Pakistan
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