So let's begin by making sure that we will all take away the critical points from this case. The first important takeaway is this notion of finding the explosive value. How can we as channels strategists regularly see and recognize these opportunities, like the interstitial spaces between Coke bottles, the excess capacity, and the opportunity that can be turned into revenues. Well, the short answer is that we need to find out what the customer wants. We will refer to these as channel benefits. They answer the question of how it is that customers want to buy. Now, in the balance of this course, I will give you the frameworks and tools for determining a customer's valuation and preferences for channel benefits. Once this is determined the next thing that must be done is to line up the channel members to create the explosive value that customers desire. So you can think of the benefits that customers desire as the demand part of a channel model, and the channel partners as the supply portion. Both the demand and the supply needs to meet in order for value to be created. Customers drive the demands and channel partners supply the value that they want. Many channel partners are selected because of the value adding activities that must be applied to the product, such as access to a distribution channel, the storing and moving of goods, and the educating or co-championing of solutions. A third key takeaway is the need to offer the right incentives to channel partners. What kind of margins and rewards should be put in place to get your channel partner to do the right activity at the right place in time. You saw on the Cola Life Channel, the transporters, warehouses, retailers, and basically every player in the channel who touched the product in some way, shape, or form is given a margin. This margin reflects the relative service value that these players create, and moving products to the end customer. Let's just take a minute here to think more deeply about the implication from simply incorporating these incentives along the channel in terms of creating value for end-users. The way medicines currently get to the children that need them is through a health center, which may or may not be close to their homes. The stock availability at the health center, maybe a third or less of what a retail shop located closer to the family might be. Now, while the products from the health center are free and therefore very affordable, the prices to the Cola Life model are not outside of the customers reach. But because of the unique packaging that Cola Life provides, along with the education materials, the likelihood of a child receiving both the necessary medicines and correctly administering the medicines are vastly improved. The product itself is all that is really needed to solve this problem. So what this means is that by having the end-user pay a price they can afford, this enables the entire channel system to provide a huge downstream benefit to the end customer, which we see right here. In fact, the chances of the child who needs the treatment, getting the correct treatment has been improved 17 times over, and that is unbelievable throughput. I am sure that if any of you were to improve your firm's downstream throughput by 17 times, you would be made an organizational hero. There's just no doubt. So let's continue now where we left off with our key takeaways. One key concept that you'll learn about in this course is how to be a strategic or smart skeptic about your channel partner in their motives and intentions. You will learn what the risks are when working with an organization whose goals and strategic objectives are very different from your own. Finally, we saw that Simon didn't get the collaboration from Coke that he wanted. Instead, an organization called Project Last Mile got the cooperation that Cola Life hoped for. Having the right relationship in place, and that can mean not too much or not too little, but just right is the correct answer here. In this course, you will receive a framework and analytical approach for doing just that. It's also worth noting that these four aspects are what differentiates this class from a supply chain management course or B2B marketing course. Those are great courses and you should take them, but they do not overlap with channel strategy. Supply chain strategy focuses on the movement of goods, so there's a big emphasis on logistics. It also focuses on cost reduction. But in marketing, we tend to be a costly area. If you're in finance, you know that marketing is always asking for bigger budgets, for product development, sales force incentives, or advertising campaigns. We like to, and we need to spend money. This is because our focus in marketing is not on cost reduction, it's on revenue creation and supplying products that can extract a consumer's maximum willingness to pay. A channel strategy course is an in depth look at only one of the four P's of marketing. If you've taken an introduction to marketing class or a core course, a principals course, you were taught the four P's of marketing, which are products, pricing, promotions, or communications and placement. This course is all about the placement variable and how you can create value through that alone. We don't focus on promotions or pricing, and we're completely agnostic to the product. It's really about how you go to market. In contrast, a B2B marketing course would be about the four P's that businesses and organizations, and this is not a course on how to sell to businesses.
