Business and Investment Center

Overhead Can Be Considerable

Administrative and employee overhead associated with Knowledge Management (KM) can cut into efficiency and effectiveness, especially when the typical transaction is very brief. Customers may resent being asked personal questions when they place orders, for example. Saving and submitting customer questions for management to review and include in the store of frequently asked questions (FAQs) in the corporate web site takes time. At issue is whether the expected return on investment in the time spent creating a bank of FAQs or other information makes economic sense.

Knowledge Management Is in Flux

Changes in the KM industry, including abuse of the Knowledge Management vocabulary and concepts by vendors and consultants, obfuscates what would otherwise be simple comparisons of products and services. For example, many database companies and reengineering consultants became KM companies overnight by simply modifying copy in their sales brochures. Companies intent on implementing a KM program have to wade through the unsubstantiated claims from vendors, many of which are made with jargon that serves only to obscure simple (and less expensive) concepts.

Investment Requirements Can Be Significant

Establishing and maintaining a KM program can be an expensive proposition. A KM system for customer support is an ongoing investment, not a one-time expense. Consider that as soon as the sales reps stop adding questions and answers to the bank of FAQs, the value of the KM system drops precipitously. Eventually, the point will be reached when the time spent searching through the FAQs might not be worth the time or effort of the customer support staff.

Channel marketing intermediaries exist because they offer value in making goods and services more available and accessible to the targeted markets. Channel intermediaries offer contacts, experience, specialization, and economies of scale to organizations that cannot offer these attributes on their own. Marketing channels allow producers to realize the benefits that only larger organizations may be able to support. Each channel intermediary provides value in the form of:

• Information

Collect and disseminate marketing information about potential and current customers, competitors, and other aspects of the marketing process.

• Promotion

Develop and share marketing communications designed to inform and attract customers.

• Negotiation

Reach final agreement on the price and other terms of the transaction.

• Funding

Acquire access to funds to finance inventories at different levels of the marketing channel.

• Risk taking

Take on risks associated with performing the functions of the channel. Obsolete or damaged inventory, bad debt, and slow payment are a few examples of this risk.

• Physical possession

Store and move products from raw materials to the final customers.

• Payment options

The buyers’ payment of their bills to the sellers through banks and other financial institutions.

• Title

Transfer title of ownership from one organization or person to another.

In a functional sense, these are some examples of the types of resources that marketing channels offer. Each adds value to the promotion, the transaction, or the services associated with the purchase:

• Accounting services

• Advertising planning assistance

• Catalog services

• Co-op advertising programs

• Consumer advertising

• Employee training

• Financing

• Insurance programs

• Inventory control systems

• Management consultation services

Through their acquired expertise and economies of scale, channel members offer these activities more efficiently than organizations, particularly smaller ones, could provide on their own. The marketing channel allows the producer and the channel members to do what they each do best in higher volumes.