Channel Management

Channel management is a technique for selecting the most efficient channels or routes to market for
your products and services, and deriving the best results from those channels by applying appropriate
financial, marketing or training resources. Channels to market include such distribution methods as
direct sales from a website, sales force or call center and indirect sales through distributors or retailers.
You analyze the effects of channel management by measuring factors such as changes in your share of
the market or the volume of sales via certain channels, the changing costs of going to market through
certain channels, and varying levels of customer satisfaction achieved by certain channels.

Market Share

By selecting the most effective channel to market and focusing resources on that channel, you can
increase market share. If you market your products through retailers or distributors, for example, and
you appoint a manager to support your channel customers, you can compare your market share before
and after the program to analyze the effects of channel management. Or by selecting more than one
channel you can analyze each from a broader perspective, ultimately choosing one as superior to the
others, or continually analyzing each to maximize earnings from long-term multiple channels.

Costs

Different channels incur different management costs. With direct sales through a call center or sales
force, calculate the cost of recruitment, employee benefits, training, marketing support and related
costs such as travel to determine the channel management cost. To calculate the cost of managing
indirect channels, include the costs of marketing and training, product information, communications,
the discount you offer the channel, and the costs associated with a dedicated channel manager. By
comparing changes in your management costs with the resulting volume of sales in the channel, you can
identify the most effective management strategy.

Sales

Customer preference can influence the volume of sales through different channels. The most important
change for many companies is the growing importance of sales through the Internet -- because people
like to shop online. As part of your channel management strategy, monitor the changing volume of sales
through different channels. By comparing sales, you can analyze the effect of focusing management
resources on channel growth.

Satisfaction

You must ensure that your customers are satisfied with the quality of service they receive through your
channels. Carry out a customer satisfaction survey to identify any problems in a channel that requires a
change in management strategy. If, for example, customers complain that waiting times for a call center
are too long, take action to improve call center service wait times. If customers are concerned that they
cannot get technical advice from your distributors, improve the distributors' product and technical
knowledge. You can analyze the effects of customer service management initiatives by measuring
changing levels of customer satisfaction.

Definition of 'Market Leader'

Definition: A market leader could be a product, brand, company, organisation, group
name which has the highest percentage of total sales revenue of a particular market.
Market leader dominates the market by influencing the customer loyalty towards it,
distribution, pricing, etc.

Description: Market leader can be attributed to a firm which has the largest market
share in a given industry. The term could also be ascribed to a firm which has the
highest profitability margin as well. The market share is calculated by dividing the
volume of goods sold by a particular firm by the total number of units in the market.
Market leadership as a concept holds much relevance in the internet age because over
a period of time we have seen large number of companies becoming market leaders.

Market leader often enjoys the first -mover advantage in new markets. Let’s look at
some examples of market leaders in the digital space. Microsoft was the first company
to launch operating system (Windows) and web browser (Internet Explorer) in the
market. Apple as a company was the first one to introduce the concept of portable
media device in which music can be stored on a drive, ipod. Market leadership is not
about sales and dominance but it is more about how relevant the product is for the
audience. Apple generates more revenue by selling iPods compared to other
manufacturers who are selling MP3 players. It is all about innovative ideas which will
help the company to connect with the relevant audience. The company tries to introduce
those products in the market which can add value to the customer. Market leaders often
unveil products which can redefine the customer experience in terms of product quality,
longevity, ease of operating that product etc.

What is a Market Leader

A market leader is a company with the largest market share in an industry that
can often use its dominance to affect the competitive landscape and direction the
market takes. Such a company may be the first to develop a product or service,
which would allow it to set the tone for messaging, define the ideal product
characteristics, and to become considered by the market as the brand that
consumers associate with the offering itself.

Definition
Related Terms
Brand, product, or firm that has the largest percentage of total sales revenue (the market share) of a
market. A market leader often dominates its competitors in customer loyalty, distribution coverage,
image, perceived value, price, profit, and promotional spending.

What Defines a Market Leader?

by Ian Linton

Gaining market share is critical to business growth.

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What Makes a Company a Leader in an Industry?

A market leader holds the largest share, or the highest percentage of revenue, in the market in which it
competes. Market leaders enjoy a number of benefits as a result of their position. They can attract
quality employees and build a strong distribution channel. Their market dominance can help to sustain
future revenue as customers will have confidence in a proven supplier. They may also be able to control
prices in the market through economies of scale.

Risk

A market leader represents minimal purchasing risk. When companies are making buying decisions, they
like to minimize risk. Buying from a market leader reduces risk because a large number of other
customers have chosen and successfully used the company’s products, according to the IPO Group. The
phrase “nobody ever got fired for buying from IBM” summarizes that characteristic of market leaders.

Awareness

A market leader enjoys high levels of awareness among purchasing decision makers. Market leaders use
high levels of advertising and marketing communications to build the strength of their brand. The high
level of exposure can help to ensure that they are considered when customers are considering suppliers
for their next purchase. High awareness also helps leaders to control their marketing costs compared
with competitors who would have to invest much more to gain share.

Trust

Trust is a defining characteristic of a market leader. Customers expect that market-leading products
meet the highest technical standard and comply with industry regulations. They trust that the product
will do the job, according to advertising agency Pauley Creative. Market leaders build that trust by
participating in setting industry standards, publishing authoritative technical papers, speaking at
industry conferences and collaborating with customers on technical issues.

Partnership
Partnership is important to achieving and maintaining the position of market leader. Leaders attract
high-quality development partners who work with them to develop new products or improve existing
ones. Development partners see opportunities to gain access to a large market and acquire the kudos of
working with a market leader. Leaders can also build a strong distribution network by attracting the
leading channel partners in their sectors. Channel partners see opportunities for significant revenue gain

Innovation

Market leaders tend to be innovative in adopting new business processes and technologies that give
them a competitive advantage, states the Harvard Business School. However, they tend to make
changes that are incremental rather than radical so that they can protect their position of leadership.

What Is SWOT Analysis?

SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to
evaluate a company's competitive position and to develop strategic planning. SWOT analysis
assesses internal and external factors, as well as current and future potential.

A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at the strengths
and weaknesses of an organization, its initiatives, or an industry. The organization needs to keep
the analysis accurate by avoiding pre-conceived beliefs or gray areas and instead focusing on
real-life contexts. Companies should use it as a guide and not necessarily as a prescription.

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Understanding SWOT Analysis

SWOT analysis is a technique for assessing the performance, competition, risk,
and potential of a business, as well as part of a business such as a product line
or division, an industry, or other entity.

Using internal and external data, a SWOT analysis can tell a company where it
needs to improve internally, as well as help develop strategic plans.
Using internal and external data, the technique can guide businesses toward
strategies more likely to be successful, and away from those in which they have
been, or are likely to be, less successful. An independent SWOT analysis
analysts, investors or competitors can also guide them on whether a company,
product line or industry might be strong or weak and why.
Strengths
 What advantages does your organization have?
 What do you do better than anyone else?
 What unique or lowest-cost resources can you draw upon that others can't?
 What do people in your market see as your strengths?
 What factors mean that you "get the sale"?
 What is your organization's Unique Selling Proposition (USP)?
Consider your strengths from both an internal perspective, and from the point
of view of your customers and people in your market.

Also, if you're having any difficulty identifying strengths, try writing down a list
of your organization's characteristics. Some of these will hopefully be
strengths!

When looking at your strengths, think about them in relation to your

competitors. For example, if all of your competitors provide high quality
products, then a high quality production process is not a strength in your
organization's market, it's a necessity.

Weaknesses
 What could you improve?
 What should you avoid?
 What are people in your market likely to see as weaknesses?
 What factors lose you sales?
Again, consider this from an internal and external perspective: do other people
seem to perceive weaknesses that you don't see? Are your competitors doing
any better than you?

It's best to be realistic now, and face any unpleasant truths as soon as
possible.
Opportunities
 What good opportunities can you spot?
 What interesting trends are you aware of?
Useful opportunities can come from such things as:

 Changes in technology and markets on both a broad and narrow scale.

 Changes in government policy related to your field.
 Changes in social patterns, population profiles, lifestyle changes, and so
on.
 Local events.

Tip:
A useful approach when looking at opportunities is to look at your
strengths and ask yourself whether these open up any opportunities.
Alternatively, look at your weaknesses and ask yourself whether you could
open up opportunities by eliminating them.

Threats
 What obstacles do you face?
 What are your competitors doing?
 Are quality standards or specifications for your job, products or services
changing?
 Is changing technology threatening your position?
 Do you have bad debt or cash-flow problems?
 Could any of your weaknesses seriously threaten your business?
Tip:
When looking at opportunities and threats, PEST Analysis can help to
ensure that you don't overlook external factors, such as new government
regulations, or technological changes in your industry.