Marketing ChannelsMarketing ChannelsChapter 5Chapter 5

Gap AnalysisGap Analysis

OutlinesOutlines

• Channel Gap definition and zero-based channel

• Questions need to be answered in designing ideal channel system

• Source of gaps• Environmental bounds• Managerial bounds• Types of gaps• Closing channel gaps

What is channel gap?What is channel gap?

• When distribution channel does not meet service output demands.

And/or

• When the channel operates in relatively high cost

And/or

• When it can’t perform the necessary channel flowWe can say “the channel has a gap”

So, zero-based channel isSo, zero-based channel is

The channel that meets service output demands at a minimum cost of performing the necessary channel flow

But this channel may not exist or may seem difficult to build

• Can I eliminate any function without damaging customer or channel satisfaction ?

• Is there any redundant activities ?• Can I shorten a process time ?• Can I automate any activity ?

CAN I REDUCE CHANNEL OPERATION COST ?

Questions need to be Questions need to be

answered when designing a answered when designing a

channelchannel

Environmental Boundso Local legal constraintso Local physical, retailing infrastructure

Examples :•Electric car•Sidebar 5.1 : CDWG initiative•Sidebar 5.2 : Electronic Bill Payment system•Sidebar 5.3 : Reverse logistics (Bookstores)

Source of gaps (1/2)Source of gaps (1/2)

Managerial Boundso Lack of knowledgeo Optimization at a higher level

Examples :•A computer company return policy•Sidebar 5.3 : Reverse logistics (Bookstores)

Source of gaps (2/2)Source of gaps (2/2)

Types of gaps (1/4)Types of gaps (1/4)

Demand side gaps (service value gap)Happens when

SOS < SOD or

SOS > SODWhere :SOS : Serive output suppliedSOD: Service output demanded

Types of gaps (2/4)Types of gaps (2/4)

SOS < SOD example :

Discount stores provide value less than customers perceived utility for the price paid

Types of gaps (3/4)Types of gaps (3/4)

SOS > SOD example :

Music stores provide higher than demanded customer service (more cost).

Targeted customers have a good internet experience and they prefer to download music from internet.

Types of gaps (4/4)Types of gaps (4/4)

Supply side gaps Happens when

The total cost of performing all channel flows is too high

Example : employees training cost and turnover in CDW

Closing channel gapsClosing channel gaps

Demand side gaps :•Expanding-contracting level of service output•Offering multiple tiered service output level•Change segment(s) targetedSupply side gaps :•Change the role of current channel member•Investing in new technology•Bringing new distribution function specialist to improve channel flow

The gap analysis templatesThe gap analysis templates

Demand-side gap analysis template

Supply-side gap analysis template

Source : Marketing Channels 7th Ed. Coughlan et al.

Gap analysis frameworkGap analysis framework

Source : Marketing Channels 7th Ed. Coughlan et al.

Q&AQ&A

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