GAP ANALYSIS

Chp 6 with Duane Weaver

OUTLINE
Sources of Gaps Types of Gaps Combined Channel Gaps Closing Demand-Side Gaps Closing Supply-Side Gaps Gap Analysis Template

Sources of Gaps
Key questions:
1. 2. What non-valued functions can be eliminated without damaging customer or channel satisfaction? Are there to be any redundant activates? Which of them could be eliminated to result in the lowest cost for the entire system? Is there a way to eliminate, redefine, or combine certain tasks in order to minimize steps in a sale or reduce its cycle time? Is it possible to automate certain activities in a way that reduces the unit cost of getting products to market, even though it will lead to increased fixed costs? Are there opportunities to modify information systems to reduce the costs of prospecting, order entry, or quote generation activities?

3. 4.

Sources of Gaps
Most common Gaps due to: Environmental Bounds
Local legal constraints Sophistication of local physical and retailing infrastructure E.g.? poor thought about target end-users demands for service outputs and the most cost effective manner of delivering them.

Managerial Bounds
Lack of knowledge about channel Corporate wide channel savings may create gaps in specific channels (E.g.: inventory for Europe)

Types of Gaps
DEMAND SIDE: ServiceValue Gap
SOS<SOD too low service output
(Tupperware) - demand (National semi-conductorprice still to high for low service output) - supply

SOS>SOD too much service output

Surfeit of service not valued by customer (Byerlys) and thus profits too low or price too high

Check Service Output by Service Output Check Segment by Segment

Types of Gaps
SUPPLY SIDE: when total cost of all channel flows jointly is too high.
Signs:
Inventory found everywhere in channel Too little investment results in inefficient outdated approaches Not enough of one channel flow (bottlenecks)

NOTE:

It is possible to have one channel flow priced too high if it enables the other channels to perform more cost effectively such that the entire flow is lower-priced.

Combined Channel Gaps

See Table 6.2 p. 147 If gap is cost-side with right amount of service outputs then: do not reduce or increase service output whilst reducing costs. If there is a demand-side gap with too low a service output level combined with high cost supply-side gap, do not cut service provision to reduce costs. Imperative to have proper identification of the source of the gapdo not just use the first obvious problem. Understand the segment well. See Figure 6.3, p. 149

Closing Demand-Side Gaps

1. Offer multiple, tiered service output levels to appeal to different segments 1. Expand or retract amount of service level output to the target market 1. Altering the list of segments targeted (resegmentation by channel flow efficiencies)

Closing Supply-Side Gaps

1. Changing roles of current channel members 1. Investing in new distribution technologies to reduce total channel flow costs 1. Introducing new distribution function specialists to improve the function of the channel

Gap Analysis Template

See Table 6.3, P. 154
Demand Gaps (first line) Supply Gaps (second line) Target-Segment Specific Like a SWOTbut rather:
environmental and managerial constraints, Desired Outcomes, Tactics to close, and predicted channel behavior changes

THANK YOU!