Self study area

This building block defines how an organization communicates with and provides value to its chosen customer segment. Channels can be categorized as marketing, sales or distribution channels.

Most companies use different ways to attract a customer and separate strategies on how to retain them. If the organization is targeting more than one customer segment it is advisable to list separate channels for different customer segments.
Companies have the choice of using physical channels or web/mobile channels to deliver their value proposition to their customer segment. 


A Distribution channel can be direct (the manufacturer sells directly to the customer), or it can contain intermediaries who may buy and resell the product (merchants), or represent the manufacturer without owning the product (agents and brokers).

Some issues to be considered when selecting a distribution channel:

• The number of customer segments or the size of the market the company is targeting.
• Investment required by the distribution channel – an analysis of the different associated costs such as absolute value cost, cost per customer fixed and variable costs and the profitability of each channel.
• Whether the product is standard or a non-standardized product which needs to be tailored to the customer needs so the company needs to have direct contact with the customer.

Main functions of channels:

• Providing the customer with the value proposition.
• Providing customers with an opportunity to study and evaluate the organization’s value proposition.
• Providing customers with the facility to buy their chosen products or services.
• Providing the customer with after sales services.
• A medium through which an organization can educate its chosen customer segments about the products and services it provides.