Koon, Richard E.
March 1987
Marketing Science;Spring87, Vol. 6 Issue 2, p177
Academic Journal
This article focuses on the channel design decision model. In 1981 when the IBM Personal Computer was announced, it was decided to market the product line through an alternate sales channel. This was a major change from sole use of the IBM direct sales force. The model's channel allocation results for the industrial products division of a large company represent the current IBM focus for channels vis a vis customer segments. Had the author been able to quantify the model's parameters in 1981 when the channel decisions were being formalized, the model might have yielded a similar direction. Several years of channel conflict may have been avoided. In that early period a number of channel as well as nonchannel decisions had to be made. The major channel decisions involved inventory points, size of shipments, scheduling of deliveries, communication of product knowledge, e.g., training, AIR financing, and on-going strategy for achieving geographic coverage. In addition, a new IBM sales force had to be structured to call upon the channel headquarters and retail stores. The goodwill parameter, while not formally defined as such, was handled through extensive discussions relative to the importance of the IBM name on pricing and product demand. While there was no high degree of quantification as suggested by the Rangan Model, it was an important consideration in making some of these early channel and nonchannel decisions.


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