What are the Six Cs of channel strategy? Give examples showing how each of these can impact channel partner decisions.

Question

What will be an ideal response?

Answer 1

Cost Estimating channel costs includes (1) the initial investment in creating the channel and (2) the cost of maintaining the channel. As companies expand into new markets, many search for ways to increase the efficiency of local distribution systems by eliminating unnecessary middlemen, thereby shortening the channel to the customer.

Capital An inadequate global market distribution system is expensive in terms of both adding cost to the product and creating long-term damage to the brand and the company's reputation. If a channel network is already in place, the investment is low; however, if the company needs to develop or greatly improve an existing system, the cost can be very high. 

Control The more control the company wants in the channel, the more expensive it is to maintain. As a result, companies generally look for a balance between channel control and cost. The complexity of global supply chains coupled with lack of local market knowledge make the task of creating a distribution system so expensive that all but the most accomplished global marketers rely on local distribution networks in foreign markets.

Coverage Local distribution networks around the world may lack full exposure to a given market. Even in the United States, for example, complete coverage of a consumer market necessitates multiple distribution channels. As a result, it is necessary to evaluate which distribution network best reaches the target customers, which may not necessarily be the network with the widest distribution. 

Character The long-term nature of channel decisions makes character an issue in selecting the best channel partner. The capabilities, reputation, and skills of the local channel partner should match the company's characteristics. A service-oriented company should look for local channel partners with a reputation for excellent service and high customer satisfaction.

Continuity Changing a distribution system creates anxiety among customers and gives competitors an opportunity to take advantage of inevitable inefficiencies and disruption of service. Identifying channel partners with a long-standing presence in the market provides some security; however, the best local partners are also the most difficult to establish a relationship with as they frequently already have established involvement with competitors.