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GAP ANALYSIS

GAP ANALYSIS. Chp 6 with Duane Weaver. OUTLINE. Sources of Gaps Types of Gaps Combined Channel Gaps Closing Demand-Side Gaps Closing Supply-Side Gaps Gap Analysis Template. Sources of Gaps. Key questions:

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GAP ANALYSIS

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  1. GAP ANALYSIS Chp 6 with Duane Weaver

  2. OUTLINE • Sources of Gaps • Types of Gaps • Combined Channel Gaps • Closing Demand-Side Gaps • Closing Supply-Side Gaps • Gap Analysis Template

  3. Sources of Gaps • Key questions: • What non-valued functions can be eliminated without damaging customer or channel satisfaction? • Are there to be any redundant activates? Which of them could be eliminated to result in the lowest cost for the entire system?Is there a way to eliminate, redefine, or combine certain tasks in order to minimize steps in a sale or reduce its cycle time? • Is it possible to automate certain activities in a way that reduces the unit cost of getting products to market, even though it will lead to increased fixed costs? • Are there opportunities to modify information systems to reduce the costs of prospecting, order entry, or quote generation activities?

  4. Sources of Gaps • Most common Gaps due to:poor thought about target end-users’ demands for service outputs and the most cost effective manner of delivering them. • Environmental Bounds • Local legal constraints • Sophistication of local physical and retailing infrastructure • E.g.? • Managerial Bounds • Lack of knowledge about channel • Corporate wide channel savings may create gaps in specific channels (E.g.: inventory for Europe)

  5. Types of Gaps • DEMAND SIDE: Service–Value Gap • SOS<SOD too low service output • (Tupperware) - demand • (National semi-conductor…price still to high for low service output) - supply • SOS>SOD too much service output • Surfeit of service not valued by customer (Byerly’s) and thus profits too low or price too high • Check Service Output by Service Output • Check Segment by Segment

  6. Types of Gaps • SUPPLY SIDE: when total cost of all channel flows jointly is too high. • Signs: • Inventory found everywhere in channel • Too little investment results in inefficient outdated approaches • Not enough of one channel flow (bottlenecks) • NOTE:It is possible to have one channel flow priced too high if it enables the other channels to perform more cost effectively such that the entire flow is lower-priced.

  7. Combined Channel Gaps • See Table 6.2 p. 147 • If gap is cost-side with right amount of service outputs then: do not reduce or increase service output whilst reducing costs. • If there is a demand-side gap with too low a service output level combined with high cost supply-side gap, do not cut service provision to reduce costs. • Imperative to have proper identification of the source of the gap…do not just use the first obvious problem. Understand the segment well. • See Figure 6.3, p. 149

  8. Closing Demand-Side Gaps • Offer multiple, tiered service output levels to appeal to different segments • Expand or retract amount of service level output to the target market • Altering the list of segments targeted (re-segmentation by channel flow efficiencies)

  9. Closing Supply-Side Gaps • Changing roles of current channel members • Investing in new distribution technologies to reduce total channel flow costs • Introducing new distribution function specialists to improve the function of the channel

  10. Gap Analysis Template • See Table 6.3, P. 154 • Demand Gaps (first line) • Supply Gaps (second line) • Target-Segment Specific • Like a SWOT…but rather:environmental and managerial constraints, Desired Outcomes, Tactics to close, and predicted channel behavior changes

  11. THANK YOU!

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