CHANNEL MANAGEMENT | JAIIB RBWM IMPORTANT NOTES PART 1
This post covers the New & Latest JAIIB RBWM Syllabus 2023 topic of Channel Management to pass paper 4 of JAIIB easily.
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Now, let’s understand one of the most important topics from Module C of Retail Banking Syllabus 2023 (under Support Services).
CHANNEL MANAGEMENT | IIBF RBWM 2023
Channel Management is a common phrase in sales and marketing lingo.
It is defined as the process by which a company develops various marketing techniques and sales strategies in order to reach the largest possible customer base. A channel is just a way or place of sale to market and sells your products. The ultimate goal of any organization is to create better relationships between customers and products.
Channel management includes:
- the marketing and sales strategies companies use to reach and satisfy their consumers,
- the techniques they use to empower partners who assist them in the sales process, and how they manage their vendors.
When building a channel management solution, each channel should have clear goals. In addition to setting clear goals for each channel, it should:
- Identifiable suitable products for specific channels,
- Clearly defined policies and procedures for managing channels,
- Design sales & marketing programs for each channel to meet actual customer needs.
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OBJECTIVE OF CHANNEL MANAGEMENT | 2022 MODULE C OF RBWM
Channel Management’s main purpose lies in optimizing the communication process between companies and their customers by segmenting the channels based on customer characteristics such as needs, buying patterns, success factors, etc. and customizing programs, including goals, policies, products, sales, and marketing programs.
It also helps in determining what is expected of each established channel and clearly defines a framework for each of those channels to get to the desired outcome.
To be brief:
Channel Management is there to establish direct customer communication across all channels in business while ensuring that the company brand is consistently used in all communications.
CHANNEL LEVELS & THEIR TYPES
The term “channel level” describes the middleman in the marketing distribution chain who sits between the producer and the final customer. Every level of the channel contributes to making the product available to the final consumer. There could be zero, one, two, three, or more channel levels between the manufacturer and the customer.
Channel levels often come in 3 different categories:
‘0’ LEVEL: This type of marketing channel is also known as direct marketing because there is no middleman involved and the producer sells to the consumer directly.
For example, It includes channels like direct mail, telemarketing, door-to-door sales etc. Dell online sales are one good example of zero-level channel marketing.
‘1’ LEVEL: A 1-level channel has 1 intermediary, typically a retailer between a manufacturer and a consumer.
Example: Insurance in which an insurance agent works as an intermediary between the insurance co. and the customer. E-commerce is also an excellent example of 1 level channel.
‘2’ LEVEL OR ‘3’ LEVEL: MULTI-LEVEL
‘2’ LEVEL: 2 level channel involves the movement of goods:
- from the company to an intermediary,
- from the intermediary to another and
- then to the customer.
This is also popularly known as “breaking the bulk” in the FMCG market. A widely used two-level marketing channel, especially in the FMCG & consumer durables industry that consists of a wholesaler & a retailer.
Therefore, the products pass from the firm to the distributor, who then sells them to the retailer, who then sells them to the consumer.
In the FMCG and consumer durables industries, the three-level channel can combine the roles of a distributor on top of a dealer and a retailer.
The ice cream is stocked in cold rooms that are refrigerated by C&F agents at this market.
- Then, these ice creams are delivered to regional distributors with cold rooms for refrigeration.
- The distributors then deliver the ice cream to neighbourhood merchants, who will have 10 to 12 tiny refrigerators.
- And then finally, it is transported to the retailer which will have 1-2 freezers of each company to be ultimately sold to the end consumers.
The business channels can be managed through:
Channel architecture provides the basic framework for a channel. It describes how the product is provided to the consumer by the producer of the product.
It describes the business plans for expanding the market and improving the e-commerce channel, including specific actions it will take to increase sales.
A key component of sales management is how one will manage their sales team and other partners. To help drive sales, one will need to figure out what incentives to offer.
It involves establishing, managing, and maintaining relationships with vendors, affiliates, etc.
Sales and operations planning:
Matching the goods or services a business produce with the demand involves taking the time to find out what people want.
Example: Hosiery Industry. If the product or service is more popular during certain times of the year (e.g., Diwali/winter), one would increase its production in the spring and summer.
In this method, pricing strategies are based on channel relationships. An example of pricing as channel management is the sale of certain products only in upscale areas by a luxury bakery.
Channel partners and customers are concerned with how a business will deliver on its obligations. Example: Will the logistics be managed properly (such as handling refunds and product exchanges) or not?
If a conflict arises between channels, this aspect addresses how to put in place the solution to resolve it in a fair and productive manner. One must address this conflict if their e-commerce solution undercuts the affiliates. One must always be careful when designing channels so that they don’t conflict with one another.
The strategies that should be used to maximize revenue from a business’s inventory are managed when revenue is managed. It is indeed feasible for a retail establishment to offer swimsuits at a full price up to the summer’s conclusion. After that, the stock will likely be discounted to make place for fall and winter products.
Whether a business sells online, through social media, or in physical stores, boutiques, etc., how will it develop a consistent brand experience across all channels this is what is answered in this aspect. It should happen no matter where the customers go if the brand voice emphasizes making them feel loved and appreciated. Different beauty brands make their customers feel pampered.
As one can massage oneself, apply makeup, and so forth in person, this is much easier to do. It is essential to use the right words, offer exclusive deals, etc. to give the same personal touch to the online experience.
PROBLEMS FACED IN CHANNEL MANAGEMENT
Difficulties are common in any type of management. For this reason, we need to find a solution to achieve maximum returns from this particular channel. This segment discusses the challenges that the definition of channel management can face.
- Distributor sales are reduced due to multiple channels. B. The company’s sales are split when the producer chooses the online channel.
- Supply chain management and shipment delays
- Conflicts arise when distributors sell competitors’ products (which can occur due to excessive competition).
- Too little advertising and marketing
- Diminishing Enthusiasm at End of Mediator
- Poor communication between dealers and manufacturers
Hope you understood all there is to understand about Channel Management from the prescribed 2023 Principles & Practices of Banking Exam.
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