Setting Channel Objectives and Constraints

Channel objectives should be stated in terms of the wanted service level of target consumers. Generally, a company can recognize several segments wanting several levels of channel service. The company should decide which of the segments to serve and the best channels to utilized in each case. In each of the segment, the company desire to minimize the entire channel cost of meeting customer service need.

The company's channel aim is also influenced by the nature of the company, its products, competitors, marketing intermediaries and the environment. For instance, the company's size and financial situation find out which marketing functions it may handle itself and which it has to give to intermediaries. Companies selling perishable products can require more direct marketing to ignore delays and too much handling. In some of the cases, a company can want to compete in or near the similar outlets that carry competitors' products.  In other cases, producers can avoid the channels utilized by competitors. At last, environmental factors like economic conditions and legal constraints can affect channel objectives and design. For instance, in a depressed economy, producers desire to distribute their goods in the most economical way, by using shorter channels and dropping unneeded services that add to the last price of the goods.