Channel Information Systems Purpose Information - Advantages Classification of Information Information Process Developing a Channel MIS Use of Information Sources of Data Competition Tracking Elements of a Channel Information System Channel Performance Evaluation IT System for Channels Intensive Distribution

1. Chapter 14
Channel Information
Systems
Prepared By:
Mr. Nishant Agrawal

2. Learning Objectives
• Understand importance of information systems for
management of channels
• Elements of channel information systems
• How information systems are used to impact channel service
objectives
• Performance measures for channels
• Understand principles of channel implementation

3. Channel Information Systems Purpose
• CIS is the orderly / organized flow of pertinent / relevant
operational data both internally and between channel members,
for use as a basis of decision making in specified responsibility
areas of channel management
• CIS is of primary use of sales managers.

4. Information - Advantages
• Useful in marketing planning – helps improve quality of
marketing decisions
• Can help tap market opportunities
• Provides an alert against competition
• Helps develop action plans for growth
• Gives feedback on consumer needs

5. Classification of Information
• Based on the use made of it by marketing – planning,
operations, decision making or control
• Based on subjects – consumers, products, competition,
channels, promotions, pricing, sales volume, value etc
• Operations data – facts and figures
• Also based on assumptions, anticipated occurrences –
forecasts relating to the channel system

6. Information Process
COLLECTION
USE
PROCESSING
STORAGE

7. Information Process
• Collection: acquiring and placing raw data – monthly sales by each
territory. Ex. Monthly sales by each territory
• Processing: analyzing data to get meaning out of it – arranging,
modifying and interpreting the data by the user – comparison of sales
between periods
• Storage: keeping the information together till it is needed
• Use: application of information for management decision making –
sales data of the last 6 months to forecast the sales of the next
month.

8. Developing a Channel MIS
Decide what information is required
Decide who will use the information
when and for what purpose
Organize information in a manner suitable
for interpretation and action

9. Use of Information
• Planning: sales forecasts
• Control: expenses against budget
• There is always a cost of collecting information.
• If data collector is not properly, the data provider will hesitate to
give the information.
• The channel MIS works at the sales operational level.

10. Sources of Data
• Reports and records of channel members, sales people
• Letters, statements and market research
• Any other info collected by the sales people and the channel
members from the market
• External sources like business publications, magazines,
newspapers, trade journals.
• With use of IT enabled systems collection and processing has
become simpler.

11. A Good Channel MIS…
• Integrated system to handle all regular data
• Useful decision support system
• Reflects the style of the marketing organization
• User friendly and user oriented
• Convincing to the providers of the info as to its purpose
• Be cost effective
• Not need for verification from other sources
• Be fast and totally reliable

12. Element Importance
• it is necessary to define upfront for each element of
the MIS, the following:
– Purpose of the info
– Source of the info
– Action possible
– Impact on customer service

13. Elements of a Channel Information System
• Market information
• Competition tracking
• Primary Sales
• Secondary Sales
• Pricing Sales
• Pricing trends
• Promotion history
• Inventory Control

14. Competition Tracking
Purpose Plan day to day corrective action to protect market
shares and shelf space
Source Trade, channel partners and sales people
Action
possible
Spot action while in the market and taken by
channel partners or sales people
Impact on
service
Timely action to provide better support to the trade
and retain their goodwill
Example

15. Channel Performance
Evaluation

16. Evaluation Criteria
• Channel system can be evaluated on how well it provides time,
place and possession utilities
• Formal channel evaluation only with contracted channel
members
• Independent wholesalers and retailers may not accept any
evaluation by a company
• Periodicity of evaluation and parameters like achieving targets
market coverage etc agreed with channel partners.

17. Distributor Evaluation
• Once a month by the sales people on the performance
of the previous month on all agreed criteria
• Criteria varies with the category of channel member,
nature of the product and the nature of customers.

18. Evaluation
• Each of the primary criteria can be given a weightage
and performance scores worked
Criteria Weightage
% - X
Criteria
score (1 to
10) - Y
Weighted
score X*Y
Sales target achievement 50 7 3.50
Inventory management 15 8 1.20
Selling resources 15 7 1.05
Market coverage 10 8 0.80
Back office support 10 6 0.60
Overall performance score – 7.15

19. Evaluation
• Each of the primary criterion can be broken down into it
components and also rated.
Criterion Weightage
% - X
Score 1
to 10 - Y
Weighted
score X*Y
Primary sales 15 8 1.20
Secondary sales 50 7 3.50
Achievement of secondary sales
target
20 7 1.40
Sales growth by period 10 8 0.80
Market share achievement 5 6 0.30
Sales target achievement –
Performance score
7.20

20. Evaluation Overall Rankings
Channel
member
Overall performance
score
Ranking
A 7.39 1
B 7.20 2
C 7.15 3
D 6.89 4
E 6.56 5
F 5.60 6

21. Overall Rankings - Action
• Bottom 20% to be warned to improve performance
• Top scorers have potential to give more business to
the company – to be encouraged
• Consistent poor performance will entail dismissal

22. Channel Implementation
• Wholesalers and retailers are involved in the implementation to
the extent that the company wants to cover them with its
product presence.
• The most critical issue in implementation is the ‘intensity’ /
“Power” of distribution desired.
• This is more relevant to FMCG, pharma kind of products and
not so much for industrial products

23. Influencing Factors
• Intense / Strong distribution allows consumer to shop where he likes
for the product
• Intensive / concentrated distribution increases sales – good
companies claim on retail distribution power
• Selective or exclusive distribution may result in loss of sales
opportunities
• Channel members feel widely distributed product must be a fast
seller. Equitable efforts are required in selling all brands and packs of
the same company

24. Influencing Factors
• Intensive distribution is more expensive and requires more
supervision
• For consumer electronics or durables intensive distribution may result
in ‘free-riding’ situations. Ex: Customer can get information from one
store and purchase from other shop
• Channel members prefer selective distribution – the company should
give the products only to them.
• If a brand has a strong consumer franchise, no outlet can ignore it –
HUL brands – distribution becomes intensive

25. Influencing Factors
• Channel partner or reseller also has a choice on what he wants
to stock and sell
• If the product category is important and competition is severe,
selectivity is a costly option

26. Implementing Rules
• Low value goods: toothbrush, soaps, shampoos – intensive
distribution – FMCG kind of low investment but mass based.
• High value goods: electronic goods or consumer durables –
buyer makes comparisons across outlets – selective
• Specialty goods: Mont Blanc pen – exclusive distribution.

27. Intensive Distribution
• Channel member’s competitors also have same products
• Higher quality positioning does not match higher intensity
• Depends on the target market
• Takes into account the importance of the market and prevailing
competition – more intense the competition, more the intensity
of distribution

28. Selective - Factors
• Can cut costs but may prove inadequate – lower selling
expenses, higher promotional allocations, larger transactions,
more accurate forecasting of demand
• Channel members margins may be better
• Better influence over channel members
• Manufacturer attracts more aspirants
• Suitable for new product or testing the market

29. IT System for Channels

30. Key Learnings
• Channel information systems is to collect and analyse data
about operations of channels
• CIS uses methods and sources to collect, process, store and
use pertinent information for decision making
• Steps for development of a CIS are: decide info required,
organize info in a suitable manner and decide users with
purpose
• A CIS can include all elements of interest to sales managers to
operate better

31. Key Learnings
• The channel evaluation system checks as to how well the
system reaches the products or services to customers
• Channel implementation is guided by the ‘intensity’ of the
distribution required
• For products with a large consumer base, intensive distribution
is preferred
• Under specific circumstances, selective or exclusive distribution

32. End of Session
“Life is not about finding
yourself. Life is about
creating yourself."