So now we're going to put on our channel strategist hat, and we're going to figure out how we can solve this problem. How can we help consumers, to build the house that they want and truly need. The first step in answering this question, is to think about what channel benefits do these consumers want. Now you've had some time to think about it. But often what happens in class, is that students will list a number of factors, such as financing. Clearly, the fact that customers cannot save and do it inconsistently, means that somebody needs to help them to save, so financing is an important part of it. And it is true that in many developing countries, financing is key to raising the standard of living. But financing is not enough here. Just because customers have the money, doesn't mean they'll actually be able to build and get the house to stand. So this case, while it deals with social needs and social business, it's not really a case about microloans. So what else do they need? Another big need, is the need for education. As we noted, families are not naturally architects. They don't know, how to build walls. They don't know how to make the right bricks or how to put in a roof well, so they need education, and they need someone to help them with this process. All right, so now we've identified at least the most critical channel benefits that a customer needs in order to build their house. All right, so now we've identified at least the most critical channel benefits that a customer needs in order to build their house. All right, so now we've identified at least the most critical channel benefits that a customer needs in order to build their house. So what a customer needs, is a variety of different products or assortment, and in package sizes they're useful. All right, so now we've identified at least the most critical channel benefits that a customer needs in order to build their house. As well. Another thing, that customers need might be storage or warehousing. We know that a lot of the supplies, are left out in the open, and they're subject to ruin and waste from environmental elements. All right, so now we've identified at least the most critical channel benefits that a customer needs in order to build their house. All right, so now we've identified at least the most critical channel benefits that a customer needs in order to build their house. All right, so now we've identified at least, the most critical channel benefits that a customer needs in order to build their house. The next thing we want to do is, we want to ask ourselves how important are each of these channel benefits? Remember that a central aspect of any channel benefit analysis, is that we're trying to ultimately identify, what that utility function looks like for a particular and customer, in this case, the Mexican homebuilder. We've identified that as utility function, as a function at this point, of so far, five different channel benefits. All of these are important. But of course, we can't provide all of these without limits to them. So what we want to do, is we want to think about which of these, are most important, and we can do that by assigning weights to each of these channel benefits. And some of those with weight should then equal 100. Remember, in our discussion of channel benefits, we talked about how channel benefit valuations or weights could vary from one customer group to another. We also talked about how these valuations could change for a single customer, depending on the purchase occasion that they're facing. So if we look at and we asked ourselves here, which of these channel benefits are the most important for customers? Often times a set of weights for each of these, ranging from anywhere from 10 to 15 to maybe as much as 30 or 40 might be assigned. In class what often happens, is that financing is often given a weight of 20 or 25 because it is pretty critical. And compared to that, a lot of students would also say that education is very important. So at this point, we've already used 50 of our 100 points. So what we might then think about, is how important each of these things are. So, package size variety in the right assortment is important. You might then give that, a weight of 15. The delivery which happens not that frequently. But it is necessary. Might also get, a weight of 15 and then storage, which, it seems, given the amount of time it takes to actually build a room. It seems that storage would be important as well. So we might give that, a weight of 20. Now, what's important to recognize here, is not what the numbers are exactly. Okay? We want this analysis, to help point us in the right direction and to help facilitate a discussion of the trade offs of each of these benefits. So instead of quibbling, over whether or not the weight for education, should be 25 or 27 or 28 maybe storage is better to be 18. If we could at least use this for now, as a starting point in a working assumption, then I think you'll get a better sense of the larger picture and how to really use this framework to drive your analysis. So the most important things that customers need, at this point, is financing and education, and less important, although still important enough to be remembered, is delivery and package size. Storage is also right behind the importance of finance and education. Now, at this point, we've basically identified the demand side of our channel equation. We've identified, what it is the customers want and how important each of those benefits are. The next thing to do, is to look at the existing channel and to grade how well the existing channel, really provides each of these things. If so, if we were to sign a grade on how well the current channel delivers these benefits, to customers. What would you say? Would you say, would you assign these benefits? And A, customers are absolutely receiving exactly what they want. A, a B, a C, a D or even an F. Well in class. Many students say this would probably be a D or an F. They say, maybe it's a D because you do have. Does that help saving? Although they're not always like the best, at doing that and enabling that in a way that is both consistent and very honest. A lot of students would say education would get a grade of F ,because there is almost no education in this particular channel. Students will often say that package size, variety and an assortment might be, well, if they are generous to see, if they're not more likely a D or enough. Because most package sizes and most products are not sold in the assortment and sizes that customers actually need. There's very little storage, that's effective at this point. So you might agree this an F, and finally, the delivery when it happens, maybe very inconsistent if it happens at all. And in fact, the case is unclear about whether or not, delivery, is really even available to everyone. So here again, you might read this, an F. Now look at these grades. We don't need a computer GPA. For this, because I think it's enough to just look at these grades and to recognize that, this is a set of grades that you would not want to bring home to your parents. And that is, the state of the current channel in the case, at this point. So then the next question to ask here. So at this point, we've identified the demand side of our channel problem. We've identified what it is that customers want and which of these channel benefits are important. The next thing to ask ourselves, is to turn our attention to the supply side and to say what channel design, do we need in order to supply these benefits? In other words, what are the channel functions, flows in activities that are needed to address each of these
