Objectives of Marketing Intermediaries

Formulating the Channel Objectives Formulation of channel objectives is the first step in designing a channel system. The objectives clarify what is sought to be achieved by having the channels. All firms seek to realize certain common objectives by having the channel. In addition, they may also have some specific objectives depending on their unique circumstances.

Channel Objectives will Decide Channel Design Channel objectives will determine the channel design the firm should adopt.

Objectives, Firms Commonly Seek from Channels

• Effective coverage of the target market
• Efficient and cost-effective distribution
• Ensuring that consumers incur minimum exertion in procuring the product
• Helping the firm to carry on manufacturing uninterrupted, confident that the channels will take care of sales
• Partnering the firm in financing and sub-distribution tasks

Linkage between Channel Design and Channel Objectives
Channel objectives	Channel design
Channel design
Provide locational convenience to customers; make the products available everywhere (strong reach).	Go for vast network of outlets. Make available all products/all pack sizes (1,800 Stock keeping units) in all outlets and allow of the customer to pick what he wants.   This means the outlets have to be backed by an extensive network of CFAs/stockiest/warehouses/delivery facilities.
Provide speedy delivery; fulfill orders from outlets within 24 hours.	This again means extensive back-up and a multi-tier design.
Reliance Textiles (Vimal)
Use channel to project the exclusive Image of Vimal fabrics.	Go for exclusive showrooms (Vimal has a chain of over 2,000 showrooms).
	Ensure that the outlet in itself serves as a communication device.
Concentrate on urban market to fall in line with the segmentation/positioning strategy.	Have showrooms in all cities/Class I towns of the country. Have jumbo showrooms in the metros/big cities.
Philips (Appliances / Personal care products)
Cover the market intensively and extensively.	Have a three-timer channel, with C& F agents, distributors, and retailers. Philips has set up a large base of 2,200 retailers.
Make after-sales service an integral part of channel function.	Establish APSCs (authorized Philips service centers); Philips now has 110 APSCs, four CRCs (consumer response centers), and a team of 60 engineers liaising with the APSCs.
	Motivate the channel for attending to service requirements.
	Philips gives a guaranteed 30 per cent return on investment to the APSC.
Bind barriers to competitors through channel strength.	Pre-empt the march of competitors by embracing practically all strong dealers in the market as Philip dealers.

We can take an example of Hindustan Lever to explain it better.

Lever lays down the objective that Lifebuoy should be available in more than 80 per the villages of India; its channel design takes shape in line with this objective. Similar is the case, when FACT, the fertilizer firm, lays down the objective that in the home market of any company, no farmer should have to travel more than 3 km to buy its products.

We can take this forward a little more and state that marketing objectives determine channel objectives, and the latter determine the channel design. Usually, with the channel objectives, the broad contours of the channel design also get fixed. In the Lifebuoy example, given the channel objective to cover 80 per cent of the villages, the channel design has to naturally ensure a very intensive network of dealers spread through every nook and comer of rural India. As a corollary, a multi-tier channel, consisting of C&F agents, re-distribution stockiest, retailers, and village level shops, will have to be the choice. In fact, HLL uses almost every village shop to sell Lifebuoy.

Above chart gives several illustrations of the linkage between channel objectives channel design. It will be clear from the chart that the channel design/channel strategy of a firm flows directly from its channel objectives.

In the case of Castrol, for example (cited in the chart), engine oil is a convenience good and a medium involvement product. Castrol knows that if a customer does not find engine oil at a given outlet, he may switch to another brand. Castrol accordingly stresses ‘reach and ‘speedy delivery’ in its channel strategy. And, once these two factors are set as the main channel objectives, it automatically leads to the channel design, which Castrol has adopted.

Channel objectives	Channel design
Archie’s gifts and Greetings
Proximity to customers	Establish outlets close to the target buyers—the upper echelons of society.
	Go for exclusive shops/shop-in-shops.
Convert low involvement puchase into high involvement purchase.	Go for trendy interior design and peppy ambience
Make purchase of greeting cards/gifts as enjoyable experience. BBLIL (Premerger with HLL)	Stock a wide range of highly appealing merchandise.
Make the products available everywhere (Strong reach).	Embrace all types of shops, supermarkets, grocery stores and kirana shops, as part of the company’s channel. BBLIL has adopted a three-tier channel with C & F agents, redistribution stockiest and retailers.
Provide choice of brand; ensure different brands are available at the right place, right time.	Provide for proper inventory / delivery back up.
Always give fresh stocks to consumers.	At each level, minimize the distance between issuing and receiving points.
Louis Philippe Promote Louis Philippe as a complete and premium wardrobe line, with shirts, trousers, ties, socks, blazers, belts, etc. Cover the target market (the will-to-do gents) adequately.	Go for exclusive showrooms; ensure availability of the whole line at these outlets. Showrooms alone will not be enough
	Go for dress circles (similar to showrooms, but stocks are bought and resold by the retailer)
	Go for multi-brand outlets too.
Maintain an edge over competition by competing on quality, service, image and value. ITC-Tobacco Division	Go for Shop-in-Shop in super stores like Akbar Alis, Mumbai, where special areas (shops within shops) are available for exclusive marketing of specific brands.
Ensure easy availability of ITC cigarates.	Go for CFAs as well as wholesalers, who will distribute / resell to retailers (ITC has more than 8,000 retailers).
	Go for different types of retailers; Branded, traditional and Non-traditional.
Build brands through merchandising.	Have branded retailers / franchisee retailers who sell only ITC cigarettes and not other brands.