If you want to know what channel positioning is, why it's important and what potential threats there are, this one's for you.

1. Channel Positioning
Prepared by: Harneet Maggu & Neha Randhawa

2. What is Channel Positioning?
How an organization views its relationship with channel
members as a partnership OR Strategic Alliance
Offers benefits on a long-term basis
Supplier Reseller Customer

3. Channel Positioning
• Suppliers need to consider the reseller a valued
partner in its process
• Develop a working relationship that builds mutual
self-interest and Better coordinate efforts to satisfy
customer requirements
Continuum of Intensity of Distribution

4. Channel Offering vs Channel Positioning
When a supplier creates a reseller
value proposition with distinct
bundle of core products, capability-
building programs and incentives
Creating a reputation among
resellers for delivering superior
value
Compensates reseller for efforts and
encourages them to provide
augmented services to build total
customer experience (TCE)

5. Four Steps in Channel Positioning
1. Determine reseller performance expectations
2. Assess the reseller value of channel offering
elements
3. Craft a reseller value proposition and channel
offering
4. Communicate the reseller value proposition

6. How do you evaluate the contributions you
as a supplier and your resellers are making
to provide value to targeted market
segments?

7. Marketplace Equity
• The value a customer firm receives from acquiring a
particular supplier’s product or service through a
particular reseller in its local trade area
• Result of reseller equity and brand equity
• Reseller equity – value of acquiring a supplier’s
offering from a particular reseller vs other authorized
resellers in the local trade area

8. Marketplace Equity
• Brand equity – value of
acquiring a particular
supplier’s offering vs
other competing
supplier’s offerings
• Channel equity – value
reseller receives from
channel offering supplier
provides

9. Why is Marketplace Equity Important?
• Determines nature of partnership between supplier
firm and its reseller
• Determines respective profit margins
• Let’s walk-through an example…

10. Example – Brand equity vs Reseller equity
You are a customer manager and contact a reseller to
buy a product. They are currently out of stock. You have
two options:
• Option 1: You want that particular brand of product
so you contact other resellers to see if it’s available.
• Option 2: The reseller convinces you to purchase a
competitor’s comparable product, since it’s in stock.
In either scenario, who has more equity power?

11. Example – Brand equity vs Reseller equity
• Option 1: You want that particular brand of product
so you contact other resellers to see if it’s available.
Brand equity is superior to reseller equity since you are
willing to contact other resellers for that particular
brand of product.
Supplier firm has power advantage over resellers.
Supplier directs all marketing efforts.
Supplier takes lion’s share of profits.

12. Example – Brand equity vs Reseller equity
• Option 2: The reseller convinces you to purchase a
competitor’s comparable product, since it’s in stock.
Reseller equity is superior to brand equity since the
reseller has convinced you of its key value elements
such as product availability, 24/7 delivery, credit
policies, etc.
Reseller has power advantage over suppliers.

13. Building Brand Equity is Vital to Create “Pull”
• Avoid having supplier products viewed as
commodities by building on brand equity
• Eg. Lightbulbs
• Marketing communications and support services, eg.
toll-free help line
• Vital to create “pull” demand

14. Reseller Equity Important to Add Value
• Customize market offerings and TCE they offer
customer firms
• Improve quality of customer services (on-time
delivery, route maintenance, credit)
• Promote their firm to end customers
• Ensures customer loyalty, cross-sell opportunities,
avoid intense price competition

15. Four Steps in Channel Positioning
1. Determine reseller performance expectations
2. Assess the reseller value of channel offering
elements
3. Craft a reseller value proposition and channel
offering
4. Communicate the reseller value proposition

16. Determine Reseller Performance Expectations
• Supplier managers determine expectations of reseller
performance by specific goals:
1. Market access
2. Value-added services
3. Cost-to-serve targets
4. Intended TCE
5. Management professionalism

17. Determine Reseller Performance Expectations
• Determine reseller requirements:
– Facilities and personnel
– Technical and marketing expertise
– Repair and service work
– Professionalism (strategic planning, financial
management, operations, succession planning)

18. Four Steps in Channel Positioning
1. Determine reseller performance expectations
2. Assess the reseller value of channel offering
elements
3. Craft a reseller value proposition and channel
offering
4. Communicate the reseller value proposition

19. Assess the Reseller Value of Channel Offering
Elements
• Three main elements
of channel offering:
1. Channel core
elements
2. Capability-
building programs
3. Incentive
programs

20. Assess the Reseller Value of Channel Offering
Elements
• Channel core elements
– Basics reseller requires from suppliers
– Adequate financial returns, strong brand equity
• Capability-building programs
– Enable resellers to strengthen own performance
and enhance value they provide to customers
– Training programs, info-sharing systems,
collaborate policies

21. Assess the Reseller Value of Channel Offering
Elements
• Incentive programs
– Motivate short term improvements in reseller and
salesperson performance
– Bonuses for supplier’s salespeople
– Growth rebate for resellers
– Contents for reseller salespeople
• Be mindful of what competitors are offering resellers

22. Supplier’s Role in Resellers Offering
• Value of channel offering through bundles or solution
• Bundle – collection of loosely connected products
and services a supplier consolidates into a
transaction at a discounted price
• Solution – deliberately engineered and integrated
group of products or services a supplier markets for a
premium price

23. Construct a Channel Positioning Matrix to Determine Value

24. Four Steps in Channel Positioning
1. Determine reseller performance expectations
2. Assess the reseller value of channel offering
elements
3. Craft a reseller value proposition and channel
offering
4. Communicate the reseller value proposition

25. Craft Reseller Value Proposition and Channel
Offering
• Use the value assessment and channel positioning matrix to
devise a reseller value proposition
• Develop distinct value proposition for each type of reseller
• Most potent reseller value proposition tends to be closely
related to role of supplier’s offering
– Eg. Reseller-offering platform – increased reseller traffic
(high product turnover)… use “pull” promotions
– Eg. Reseller-offering peripheral – ability of partner to cross-
sell item, increasing reseller’s lines per order or transaction
profitability… reward cross-selling purchases
– Eg. Reseller-offering accessory – promote ability to
sweeten transaction profitability… merchandising
assistance, special deals to promote impulse buying

26. Craft Reseller Value Proposition and Channel
Offering
• Reformulate channel offering based on assessment
• In highly competitive industries (core elements),
capability-building programs are useful to
differentiate
• Incentives are short-term and competitors can copy
easily
– Use sparingly
– Provide incentive to reseller firm rather than
employees

27. Four Steps in Channel Positioning
1. Determine reseller performance expectations
2. Assess the reseller value of channel offering
elements
3. Craft a reseller value proposition and channel
offering
4. Communicate the reseller value proposition

28. Communicate Reseller Value Proposition
• Actively communicate reseller value proposition
through full range or promotional tools
• Supplier must deliver what it’s promised to reseller
• Reinforce value proposition at every opportunity
• Constantly monitor market and adjust according to
channel positioning matrix
• Conduct reseller satisfaction studies frequently, at
least annually to assess

29. Channel Communication System

30. Thank you!
Q&A

31. Bibliography
• Business Market Management, Third Edition, J.C.
Anderson, J.A. Narus and D. Narayandas, Pearson
Prentice Hall, 2009
• Marketing Channels – A Management View, Eighth
Edition, B. Rosenbloom, Thompson - South Western,
2011
• Growth Process Toolkit, Distribution Channel
Optimization, Frost & Sullivan
• 3Cs of Positioning - Part II: The Channel. AIPMM article.
http://www.aipmm.com/html/newsletter/archives/0001
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