A targeted approach to desired market segments via appropriate sales channels, enabling you to increase brand recognition, decrease risk, reach more customers and potentially increase profits.
Sales channels are how your products or services get to the customer.
Whether you sell a product or service to other businesses (business-to-business, or B2B) or to consumers (business-to-consumer, or B2C), there are three primary sales channels: direct (such as through your in-house sales team, your own retail store or your own website), indirect (such as through another retailer or website, a distributor or affiliates), or multi-channel (a hybrid approach including both direct and indirect methods).
1. Create a list of your current sales channels and potential sales channels.
2. Complete an assessment of your current channels. Ask yourself and your staff the following questions:
What are my customers’ needs?
How could my product/service meet those needs?
Who is my ideal customer and what are their shopping habits?
How can I reach more of my ideal customers? Am I where my ideal customer can be found?
3. Answer the questions below.
Which channels do your competitors use?
Does this channel reach the desired geographic location where your target customers are?
What are the barriers to entry for each distribution channel? These could include cost, competitors, time to establish a foothold, etc.
What is the cost of each distribution channel and how will this affect your cash flow? Can the cost be passed on to customers in the form of price increases or must it be absorbed?
How will using a particular channel affect your pricing and how will that affect your profit margins?
What are the costs (both in money and time/manpower) for the sales and marketing efforts required for each channel?
Are there potential conflicts with existing sales channels? Will one sales channel cut into sales via another?
4. Determine whether you have any existing relationships with potential channel partners (people and companies that can help you move your product or service through sales channels) such as wholesalers, retailers, distributors, consultants, etc. Such relationships can ease your entry into a particular channel.
5. Identify the Strengths, Weaknesses, Opportunities and Threats associated with each sales channel.
6. Create a final list of sales channels you will employ.
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