Strategic Channel Plan for Startech company - Essay Example

Introduction Strategic channelling is the process of a business setting frameworks and methods throughwhich it will use to promote its business through marketing, supply and distribution in order to set it apart in the line of business t is involved in as well as help in profit maximization for that particular organisation. Strategic planning is most important in that it helps a business organise, coordinate and even plan on strategies in line with its objectives and goals. With increased uptake of technology in the 21st century, many businesses are beginning to redefine their business channels with the previously existing channels being done away with and a surge in consumer to business channels. This has not only seen a change in business, marketing strategies but has also seen a growth in new businesses and also a formation of relationships that tend to lean on consumer satisfaction by most business. For a business like Startech the internet is of huge rewards to them as they can expand their business to reach clients from all over the world, in addition clients can easily access their services via the web and they clients can have ease of access to the Startech customer support who would help them with products and services and most important consumers can now access quality goods and services as well as Startech can maintain contact with the customers. For any company that is operating in a dynamic environment such as that Startech is operating in the channels of business need careful consideration and several factors need to be put into careful consideration. The most important factor in this is the clientele. What does the clientele mostly need and does the business have it? Such careful consideration will help the organisation set mechanisms and frameworks that will help the clients access the goods and services. It also helps the firm come up with considerations on what channels they will set up. To begin with we shall study the marketing channels by looking at the strategy, framework and the functions. A marketing channel is the link that a business has built to see te transfer of goods from the point of manufacturer to the point of consumption. Marketing channels are generally involved in the transfer of ownership and are important to any business organisation as they facilitate the linking of the producer and the consumer of the goods. Through the various marketing channels and through the transfer of ownership of the goods the producer is able to understand and note the needs of the consumers and work towards meeting them. It is also important in that it helps n organisation come up with a pricing mechanism by factoring in all the costs involved in the transfer of the goods from the producer to the consumer, a firm is able to come up with prices that will enable them maintain their margins as well as ensure the goods and services are competitive in the market. A marketing channel also incorporates several factors into it by being involved in the promotion and advertising of the particular goods that is up for sale. Through marketing channels, firms are able to boost and increase their sales in the business which subsequently leads to better revenues and profits. The marketing channels are normally conducted by a department in an organisation or by an independent company tasked with the mandate of ensuring that the company’s goods and services are fast moving in the market. The marketing channel is also known as the distribution channel and is overall involved in activities that promote brand loyalty and brand visibility. The marketing channel of a business also institutes policies and frameworks that are geared at helping the business achieve its short term and long term goals as far as sales are concerned through setting targets and acting in line with company goals and objectives. There are normally three types of communication channels. The communication channel which is involved in the exchange of information between the producers and potential clientele, the distribution channel which is majorly involved in delivery of the goods from the producer to the consumer or the clientele and the service channel that is involved in the transaction of business between the producers and the consumers. Between the producer and consumer, there is normally the presence of intermediaries who are responsible for enhancing business between the producer and consumers. The producer will turn the raw material and give it to distributors who will be charged with the mandate of tasking the goods closer to the consumers. The distributor will then set a shop or give the goods to wholesalers who will then give the goods to retailers as there are closer to the consumers of the products. A marketing channel is important in any organisation and for a company like Startech there supply chain should be clear cut. The need for distributors for their products may not be necessary as their products may need after sale services such as installation and delivery which means the Marketing channel for such a company should be more consumer based which implies that there should be the producer of the goods who reaches directly to the consumer in offering the goods and services. This channel of distribution is known as direct marketing. This channel of distribution is important in that it is fast and economical thereby saving cost and which means the pricing of the products is low as there are no intermediaries. In addition, the producer has full control of the distribution which means that he is directly responsible for the brand marketing and can easily make decisions which pertain the products distribution. In addition the middlemen are eliminated which is most important for the business as it streamlines the business products and distribution channels. While selling directly to consumers several channels can be used e.g. direct ordering through the company website or via direct call as well as telemarketing, delivery of the product directly to the consumer through courier or postal services. A consumer market consists of consumers who have almost similar needs. A business may at times group its customers into segments which will enable them to target specific markets with their goods and needs. In doing so a market is able to tackle individual consumer needs as well as deliver goods and services that are relevant towards a given market segment. In distribution channel segmentation is equally important as the individual needs of consumer are tackled and met in tailor made ways that ensure consumer satisfaction. The process of market segmentation involves careful consideration and strategising. It is important for a firm to first study its market base keenly and understand the consumers that they have. This is important in that the organisation is able to learn how and which method they will use to segment their business as well as the marketing channels that will need to be segmented. After that process, the firm now needs to identify their key markets for growth as these will help them forecast and tackle the needs well. In this they also need to identify the already successful markets that will ensure the process of segmentation helps them retain the already existing customers as well. The firm also needs to engage in prioritization of the customer value. What does a particular consumer bring into the business? This will help them take care of the needs of the top consumers and also help in making tailored made product6s for a particular consumer. A firm also needs to engage in a market research to help I identify the best channelling options and which channelling options have been proven to be successful. After conducting the above a firm needs to conduct a benchmark on consumer satisfaction which will help them make policies and set frameworks that are geared towards ensuring this very important need is met. These are important steps a firm may apply hen identifying the best market segmentation channel they may use for both the market and distribution of the goods and services. The meeting of the unique needs of each client is most important in ensuring the perpetual growth of a business. In market segmentation, there are some basic criteria that are normally applied in this. This includes considering the geographical location of the consumers and how many consumers are located within a given place. In doing so one may have the products that are delivered to them tailor made for that region. Another factor to consider in this is the client size by conducting a consumer value analysis. Is the client a big time customer or a small customer and what value do they have in a given company’s accounts. A firm may also consider the purchasing behaviour of the clients. Are the consumer’s small time or biog time buyers and what do they buy and how often is the buying conducted? It is also paramount to consider the taste and preferences of the users of the product in marketing segmentation. When creating these segments the consumers or users whose needs are almost the same should be grouped into one to easily access as well as have the goods and services that they prefer the most delivered to them. For a consumer based company like Startech, they need to consider the type of clientele that they have first by conducting a customer value analysis. They can then categorise their consumers based on the value they have in the company and how much they are bringing in. The firm will then have the big consumers in one category and a department in firm can the n handle such consumers and as well as the rest of the consumers. In addition Startech can categorise the consumers based on the geographical location. If the consumers are based in a given state or county, their needs may be almost similar which will make handling such needs easily when they are segmented. This also can imply that a marketing and distribution channel can be set for them to suit their various needs. Another marketing segmentation channel that can be applied by Startech is one that based on the Purchases and buying behaviour. If several consumers normally buy a given product they may be categorised based on that. In addition the buying behaviour of the consumers is also another method that may be used. What is it that these consumers buy the most and what is it worth? Such categorisation will help the company meet individual needs and preferences easily. In the event that Startech finally comes up with clearly defined marketing segments, it needs now to build distribution channels that are geared towards ensuring that consumer needs are well tackled. These may include the setting up of shops in areas that have several and many of the consumers based on geographical area. The importance of marketing segmentation is that it helps a company grow its market share as the consumers of the product will be satisfied based on their needs being tackled in tailor made ways. In addition, the marketing segmentation is a way of cost cutting. This is by identifying the direct link to the consumers and helps reduce the cost which may be incurred in sorting the consumers’ individual needs. In addition, it helps in easily marketing new goods and products of the consumers as the direct link with the consumers through segmentation will help ease in communication. Segmentation is also an easy strategy for marketing the company into new and emerging markets as well as brand relevance and recognition. A supply chain is the connection of channels that are involved in the delivery of a good or a service. The supply chain details the movement of goods and services as raw materials into the industry, the manufacture and transportation of the finished products to the end where the consumers receive and use the goods. The supply chain analysis then is the analysis of the input which is the raw materials that are involved against the output which is the end product of the manufacturing process with a keen interest at the value addition along the supply chain. The value added in the supply chain is the sequential operation that is involved in the physical movement and creation of a product from the raw materials into a finished product. The supply chain is normally represented by a chain which is normally mapped to show the overview of the various stages involved. The mapping of the chain is shows the various interactions and processes that are responsible for the full product development. The other process involved in the supply chain involves the process of quantifying the various inputs in the chain into monetary terms. The importance of the quantification is that it helps channel enough and appropriate resources towards the manufacturing process. The importance of the supply chain analysis is that it helps businesses to establish business contacts and partnerships that focus on consumer satisfaction and those that are strategy based. Moreover the supply chain management is important to a firm which in that they help develop a networked economy which enables the firm to compete on a global front as well as act as a catalyst for expansion. A firm that identifies the various aspects of its supply chain is then able to project on the pricing as well as come up with strategies geared towards ensuring the goods and services they are selling are reaching a great number of consumers. For Startech, most of the goods and services need to be sold directly to the consumers. The market it is involved in somewhat dynamic and the supply chain should be flexible such that it can incorporate the various market changes that would otherwise affect their goods and services. Some parts that Startech is involved in selling and supplying may be priced at higher prices than at market value. This means that Startech should standardise the pricing based on the market dynamics with regards to the supply market. For Startech the supply chain analysis should factor in the cost involved in getting the products from the manufacturers, the cost involved in delivery of the goods to the end consumer as well as the ensure that the products they are involved in selling are fairly priced which is the most important factor in supply chain. The Channel Structure and intensity is also an important factor in the supply chain analysis. The channel structure is the shape through which a firm adopts to ensure that the goods and services that they specialise in are available in a given market. Channel structure is normally determined by several factors among them the willingness by the management to take over the control and distribution of the good and service they are dealing in, cost and economics of performing the distribution and finally the magnitude of the distribution. Channel structure has three sub-structures channel intensity, the type of intermediaries that are used in the channel and also the length of the channel based on the intermediaries that are involved. Channel length is determined by the intermediaries and number of middle men that are available for a good to reach the consumer from the producer which also determine the levels. This means that a two level channel has the producer and consumer, while a three level channel may have the producer, consumer and wholesaler or retailer. The channel intensity is normally the number of intermediaries present between the producer and the consumer. Channel intensity comes into place when the product that a firm is dealing in is available at almost every other store. In determining the channel structure, it is important to put several key factors into consideration among them the needs of the consumers and how they want their needs met, the alternative paths that one may take in distribution as well as the market systems and structures. When we consider such factor, a firm can put into place mechanisms which will increase their product presence. For Startech which is a company that is geared towards helping IT experts find their hardware solutions,. It is important to put into place mechanisms which will ensure the marketability of the products to the end user. This implies that the number of intermediaries between the consumer and producers should be as minimal as possible which will ensure that end users receive services that they pay for as well as ensure that they receive their orders as soon as they order them. The structures that Startech put into place should also be comprehensive and those which will ensure the clientele both existing and new can easily access the goods and services easily and without hassle. They should also ensure that the clientele also receives quality after sale services for the products that need installation as well as support service in case of faults and other product eventualities. Gap is a situation where the channel of distribution or the marketing channel of a firm does not meet the individual needs and wants of a given market situation. In gap analysis we normally compare the actual performance against the expected or the potential market performance. Gap also occurs in a situation where the channel is operating at extremely high prices and hence does not service the output demand as may be projected by the company. This may have dire implication of the company goals and objectives and hence the need by companies to come up with strategic and tactical plans to cover these eventualities. The gaps are normally caused by several factors among them being high legal costs and constraints that may otherwise hamper a firm’s performance by being too rigid hence hindering growth of company. Such legal bounds lead to high operation costs for firms trying to leap and meet those needs. Other causes of gaps in distribution channel are the environment from which a firm is operating. There may be too many firms dealing with the same products which may fuel cut throat competition and hence lead to a gap. Others may be lack of leadership from the management which will lead to underperformance, over supply of products and demand falls short. To tackle the gaps that may be existing in a market, a firm may decide to change the market segmentation model and adopt a new one which is focused on a specific target market or specific segment. A firm may also decide to invest in new technologies which may attract new clients. The firm may also expand on the market segment or even hire a marketing specialist to deal with the demand shortfalls as well as steer the company towards improving the channel flows. Gap analysis is therefore a technique that firms normally apply to determine the strategy and steps it will take in improving on their current state of affairs to new state of affairs based on the current performance. Gap analysis is also referred to as need assessment and involves a couple of factors that are applied to ensure that a company fortunes are turned. Among these are Looking keenly at the current situation by studying the factors and the current happenings. The firm then lists the objectives and factors that would favour the company’s future objectives and factors that would help the company achieve such objectives. After that the company then needs to highlight and put into place strategies that will help it achieve the objectives. Startech may have several gaps that are existing. These gaps may be in the quality of services that the client is receiving against the expectations which may then be a cause of fall in the sales they are making. Startech may then conduct a gap analysis based on such projections and ensure that the clients are receiving better services. The gap analysis may have to be aligned with the company goals on service delivery. Startech should institute a quality and assurance department which is tasked with the mandate of ensuring quality services for all the clientele. The department should also set standards and expectations which should be communicated to the staff to ensure customers receive quality. In case the gap is caused by external factors such as the market segments they have put into place, Startech may then be forced to revaluate its segmentation and redefine its systems to ensure more sales in the various segments. Consumers normally buy products from a firm but some of the consumers exude more power and influence more weight and power than others and have better controlling ability. This means that channel power is the influence that a party within a given channel has over other members in the same channel. Channel power may be exuded in several ways among these is the product power which happens when a firm that manufacturers a given product has super normal demand and this means they have better power and influence against other manufacturers in the market. Channel power may also be manifested in wholesale power. This is where the products a wholesaler receives is high and hence gives him undue control over the retailers in a given market segment. Others include the retailer power where a retailer has influence on the suppliers based on the customers they are receiving in the market. For any given company having either of those powers is important as it gives them a sense of bargaining in the market. They can negotiate deals with either parties as well as command influence in the channel they are involved in. Channel power helps a brand to stand out in a given market segment. Startech can exude channel power by being the number one source for all product and services that any IT professional may need and may be using. This would help it expand in that area of expertise to new and emerging markets. Channel conflict is very common in any business. Most businesses believe that by having multiple distributors they will increase their sales. Channel conflicts normally occur when the producers of the product decide to sell their goods directly to consumers and totally ignore the intermediaries in between. Channel conflict also occurs when the appointed intermediaries of a company to supply its product have to compete against each other in an environment in order to increase the sales of the manufacturer. Channel conflict is normally a dangerous situation for the manufacturers as it may lead to some of the intermediaries withdrawing their distribution contracts and also they may decide to completely ignore the products of a given manufacturer due to this. It is important to note that channel conflict cannot be completely eliminated as the lack of a channel conflict for any manufacturers means that there are gaps in the markets and the demand for their products is somewhat limited. However, channel conflict can be disastrous to a business as it hampers customer satisfaction as the competing companies will result to lower prices but offer low quality services. The channel conflict may also lead to an erosion of the channel relationships thereby existing between the producer and the intermediaries offering their goods and services. To avoid channel conflict, Startech may appoint distributors to handle segments they made under the market segmentation strategy which would then ensure good working relationships among all its partners. Strategic alliances are partnerships and agreements that business form with partners to achieve set goals and objectives. Strategic alliances involve joint ventures, distribution agreements and even project and capital funding. The strategic alliances are most important in that they fuel a company’s growth and ensure that when partners join forces and resources they mutually benefit from the new deals. Strategic alliances are of most importance in the rapidly dynamic markets. They are also important when a company is venturing into a new or international market and it needs the proper distribution channels to access that market. Strategic alliances are important in that they help start-ups raise enough capital and resources to run their business. They also help a company enjoy economies of large scale. This means that a company that a company that has huge orders is able to sell even more. Most important is that the strategic partnerships are of immense aid in the distribution of products. When a company needs the strength to ensure that their goods and services reach the target market, they need mechanisms into place that will enable them to access distributors as well as have partnerships with distributors to enable them have their product to the consumers. Startech may have distribution agreements with manufacturers of products who want their goods out in the market and hence a partnership on distribution will be most important especially with market dynamics brought about by the internet. In addition, Startech can have such agreements with partners and distributors it has appointed in various market segments. The importance of this is that the goods that Startech is seeking to supply will reach all the market segments easily and which will then be a boost to Startech’s already established markets as well as help in exploiting new and developing markets for the company. However, the strategic partnerships may not always be of great benefit to both partners. The most recurrent and outstanding problem is mistrust and lack of commitment among the partners which would greatly hamper the working relationship of both partners and not benefit the business. Numerous conflicts may arise in the business on how the partnership will work with each partner wanting to have their way and to achieve their goals. There is also the risk of one partner opting out of the partnership which may be another problem in that the business as they may have all the trade secrets of the business and hence become competitors. A problem that may also arise is that of conflict of interest with those of one partner not being achieved like those of other partners which may result from the partnership agreement. Vertical integration is a strategy that is adopted by companies where a single company controls a huge stake in a market where it controls the production and distribution activities of a given product and hence exudes immense power and control in the market place. Vertical integration is normally in three types; forward integration which is a company controlling the distribution activities of the product it is involved in producing, backward integration which is a company owns a product that is normally an input of the finished product and balanced integration which is the combination of the forward and backward integration. Vertical integration is of immense benefit to the companies involved as they are able to cut cost on production as securing raw materials as two companies is cheaper affair. In addition, the cost of production and operation is lower when companies are working together instead of as one separate entity. It is also of benefit to the firm as it gives it a competitive edge in an otherwise competitive market. The integration is also important in that it helps the company improve on its supplying of goods by coordinating its supply chain management activities. For any company involved in a dynamic market, having exclusive rights of manufacture and supply can be a great cost cutting measure. For Startech having control over both its supply by for example owning the distribution rights or delivery rights may help it as an entity save much as well as improve its production activities. Legal technicalities form the hugest bulk in the operation of a business. Legal costs are also extremely high and the policies may be extremely rigid thus hindering the running of a business. Some of the legal policies that in marketing channels include; pricing policies which are put into place through price controls to safeguard the consumer. However, these legal policies may hamper the operations of a business in that the costs of operations may surpass revenues hence lead to losses in a business. Other policies are market coverage policies which may hinder the operations of a firm as well as act as barriers of entry into a market. Ownership policies that seek to safeguard the proprietary rights. However, this may also hamper innovation and invention as the high legal boundaries set to safeguard this may put off some of the potential investors. In a nut shell, the markets are full of legal constraints which may make most businesses shy away. Some of the policies and constraints may also make the distributors shy away as they lead to territorial restriction as the distributors cannot enter the market of other distributors hence limiting sales. Retailing is the act of selling goods to the consumer or the end user. The retailers get the goods from the manufacturers directly or through the wholesaler who are the intermediaries and have them in small quantities for the end user in small and reasonable quantities. Retailing is normally done from fixed locations. In the recent past there has been a significant growth in the market which has seen a surge in online retailing services. Retailing is important in that it helps to break bulk. Retailers get their goods in bulk and the consumers would want huge load s of good. The functions of retailers are to break the goods into small quantities befitting the consumer. The retailers also provide a variety of goods to the end user based on their needs and specification. However the retail market is faced by a number of challenges among them stiff competition in the market as there are a huge number of retailers providing similar goods that target the same market. Retailers are also faced with huge barriers of entry occasioned by the high legal cost as well as high cost of establishment in whatever area they are located in. The retailers also suffer from a huge uneducated work force which may be a problem when dealing with the consumers. To tackle these problems the retailers engage in branding which is normally promoted by manufacturers and top producers to help market both the retailers and the corporations. With market dynamics, Startech can engage in online retailer to ensure they meet the end user needs and specifications for products. This may also be of importance in helping the company diversify its clientele Wholesaling is the sale of goods in large quantities to both the retailers and other institutions for resale and for their own large scale use. Wholesaling involves a couple of activities such as sorting, grading and repacking for the smaller markets. Wholesaling is important in that it is a source of gainful employment. The wholesalers also create form and time utility by holding goods in their stores. The wholesalers also provide access to goods that consumers need. Franchising is a situation where independent businesses are able to share brands, marketing and distribution services. The franchisor is the firm that allows other firms to operate under it for fees and licences which will then help promote its business. Franchises are important and easy ways if a business growing its brand and hence acquiring immense benefits resulting from that. Supply chain is a network of business that are involved in ensuring that the end user receives goods and services by operating in an intertwined environment. Supply chain involves all the activities involved from the acquisition of raw materials to the delivery of the finished product to the end user. Supply chain helps a firm tackle challenges arising from distribution, information management and even cash flow. Work Cited Meltzer, Johansson. Defining Supply Chain Management, in: Journal of Business Logistics, Vol. 22, No. 2, 2001. Simchi-levi E. Designing and Managing the Supply Chain, third edition, McGraw Hill, 2007. Armstrong, Gregory. Marketing: an introduction ([European ed.). Harlow, England: Financial Times Prentice Hall, 2009. StarTech.com, http://intrl.startech.com/ retrieved on 7th June 2012 Perry, Martin. Vertical Integration: Determinants and Effects. Chapter 4 in: Handbook of Industrial Organization. North Holland, 1988. De Castro, Little. Controversy: Commodification and exploitation: arguments in favour of compensated organ donation, New York: University of the Phillipines, 2003 Read More