Identify the operational components of channel performance. Explain how each impacts channel performance, and describe how these factors are influenced by the type of channel system used

Question

What will be an ideal response?

Answer 1

(1 ) Customer reach affects a business's volume. One of the primary objectives of a marketing channel is to reach target customers. That has to be done in a way that is cost effective and provides the level of service quality sought by target customers. Every marketing channel differs in its structure and its ability to reach customers. With direct marketing channels, a company engages in direct contact with customers with direct sales, direct marketing, telemarketing, and digital marketing. With the exception of digital marketing, direct marketing channels limit customer reach due to the high cost. Indirect marketing channels include channel intermediaries, such as wholesalers, distributors, retailers, original equipment manufacturers, and value-added resellers, which allows for a much broader customer reach at a lower cost.
(2 ) Operating efficiency has to do with the cost to serve customers. Marketing channels vary in their cost structure. A direct marketing channel offers higher margins, but the company must bear the full cost of channel management and of marketing expenses. An indirect channel has lower margins but lower costs of marketing and channel management. In this case, the channel intermediary receives a portion of the margin in exchange for distribution and carrying out some of the marketing channel functions. Digital marketing (which is a direct channel) has improved the operating efficiency of many businesses by lowering variable costs and marketing expenses as well as reducing other operating expenses in many cases.
(3 ) Service quality influences customer retention. Every channel also has different levels of service quality. With direct marketing channels, companies have the opportunity to control service quality because they have the advantage of a direct customer interface. This allows for service enhancements, mass customization, and quick response to customer problems. Indirect marketing channels remove the business from the end-user customer. As a result, they are dependent on channel partners to adequately deliver desired levels of customer service. Because indirect channel intermediaries often represent many different lines of products, their product knowledge and commitment to specific customer needs may not be as complete. Digital marketing channels that improve order fulfillment and track deliveries without multiple phone calls have the potential to lower cost and improve customer satisfaction.