Analyzing Consumer Service Needs

As previously noted, marketing channels may be thought of like customer value delivery systems in which each channel member add up value for the customer. Therefore, designing the distribution channel begin with discovering out what targeted consumers desire from the channel. Do consumers desire to buy from nearby locations or are they eager to travel to more distant centralized locations? Would they instead buy in person, over the phone, through the mail, or using the Internet? Do they value breadth of collection or do they prefer specialization?  Do consumers desire many add-on services (credit, delivery, repairs, installation) or will they get this elsewhere? The quicker the delivery, the bigger the assortment provided, and the more add-on services supplied, the bigger the channel's service level.

But by providing the fastest delivery, biggest assortment, and most of the services may not be probable or practical. The company and its channel members can not have the resources or expertise needed to provide all of the desired services. Also, providing greater levels of service results in greater costs for higher prices and the channel for consumers. The company has to balance consumer service requirement not just against the feasibility and costs of meeting these requirement but also against customer price preferences. The success of off-price and discount retailing indicate that consumers are frequently willing to accept lower service levels if it means lower prices.