14. Channel Requirements

Channel Options

For most products there are a number of alternative marketing channels or routes to market. It is important to recognise that different channels will market the same product differently and with greater or lesser success.

All product definitions recognise (implied or explicit) the channel options available and assume distribution channel strengths that can be used to advantage. It is particularly important that you have a good understanding of the strengths and weaknesses of different channels that apply to your market. This should be in terms of supportable product prices, supportable product characteristics, product support capabilities, added value service capabilities.

Products that are right for one distribution channel are not necessarily right for another. Some channels will be good for example at selling high volume products at a relatively low absolute price (e.g. retailers). Others will be good at selling low volume products at high prices (e.g. distributor direct sales).

The diagram below illustrates some of the possible routes to market for a manufacturer.

Discounts, Margins and Mark-ups

Different routes to market have different discount, margin and mark-up structures. It is important to clearly understand these different structures and clearly document discount, margin and mark-up requirements within the product definition. As people frequently confuse these different terms it is useful to review exactly what each means.