1.3 Channels
Channels can be considered as interfaces between the company and its customers. A channel combines activities, people and organisations to deliver a product or a service to customers. This building block of the canvas tries to answer the question: how do businesses reach customers?
Osterwalder et al. (2010, p. 27) defines five channels which can be categorised according to the control (own or through a partner) and the type (direct or indirect). Table 1 shows how channels can be classified.
Control of the channel | Type of channel | Type | Definition |
---|---|---|---|
Own | Direct | Sales force | A team of employees who directly engage with customers or clients to promote and sell the organisation's products or services. This involves personal interaction, often face-to-face or via phone calls. |
Web sales | An official website used to sell products or services. | ||
Indirect | Own stores | Retail outlets owned and operated by the organisation where customers can directly purchase the organisation's products. | |
Partner | Partner stores | Retail outlets owned by other companies that sell the organisation's products, often alongside products from other brands. | |
Wholesaler | An intermediary that buys large quantities of products from the manufacturer and sells them in smaller quantities to retailers, who then sell them to the end customers. |
The organisation controls its own channels directly, but partner channels are controlled by others. Direct channels connect the organisation straight to the customer, cost more to set up, but give the organisation more control. Indirect channels, on the other hand, go through partners who share some of the business risk and cost less to set up.
Activity 1
Match the examples on the left side with the right type of channel.
Using the following two lists, match each numbered item with the correct letter.
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Wholesaler
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Sales force
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Web sales
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Own store
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Partner store
a.A large warehouse that buys products in bulk and sells them to small retailers.
b.The local farm shop which sells fresh eggs and seasonal vegetables
c.A team of company employees who visit local pharmacies to sell cosmetic products to loyal clients every two months.
d.An electronics store that sells different brands of computers and other electronic gadgets
e.The Eurostar website which sells the tickets of the trains which cross the English Channel
- 1 = a
- 2 = c
- 3 = e
- 4 = b
- 5 = d
One or more channels can be used at different stages to deliver the value proposition to customers. A company can mix and match channels to interact with customers at various points in the customer relationship.
Look at the following table to understand the phases of the delivery of a value proposition.
Phase | Definition | Example |
---|---|---|
Awareness of the proposed products and services | At this stage, the customer learns about the existence of the product or service | Social media ads, TV commercials, and billboards that introduce a new smartphone |
Evaluation of the value proposition | The customer gets a chance to try out or learn more about the product or service | Free samples of cosmetics, trial periods, or demo videos of a new software application |
Purchase | In this phase, the customer buys the product | Buying a pair of shoes from the brand's official website or from a physical retail store |
Delivery | This is how the product or service reaches the customer | Receiving the ordered shoes through home delivery or picking them up from a store |
After sales | During this phase, customers stay in touch with the company for support and to manage the ongoing relationship after the purchase | Calling customer service for help with a product issue or getting software updates for a device |
Now test your understanding by doing the following activity related to the purchase of a fitness tracker.
Activity 2
Match the different examples related to the purchase of a fitness tracker with the phases of the customer relationship.
Using the following two lists, match each numbered item with the correct letter.
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Seeing an Instagram ad about the new fitness tracker.
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Trying the fitness tracker at a demo station in a local electronics store.
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Buying the fitness tracker from the company’s official website.
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Receiving the fitness tracker through home delivery after purchasing it online.
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Calling customer service for help with setting up the fitness tracker with an iPhone or an Android smartphone.
a.Delivery
b.Evaluation of the value proposition
c.Purchase
d.After sales
e.Awareness of the proposed products and services
- 1 = e
- 2 = b
- 3 = c
- 4 = a
- 5 = d