Marketing Channel Strategy

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demand for this service output, though: its internal service facilities could make 
it less dependent on the manufacturer’s technical service or repair facilities, and 
it could have excess units in inventory that can be “swapped out” for a faulty 
unit until it is fixed.
 
•
Assortment/variety demands refer to segments’ preferences for a deep assort-
ment in a given category and for a wide variety of product category choices. 
In our laptop example, we might ask, how intense is each segment’s demand 
for an assortment of computer brands, and how intense are their demands 
for a variety of computers, peripherals, software, and so forth? The business 
buyer probably has very precise brand demands (HIGH demand), because it 
wants conformity across the units in use in the company. This end-user has a 
LOW demand for assortment. Aggregated across the entire population of busi-
ness buyers, though, our laptop marketer may observe considerable diversity 
in brand preferences. Thus, we must consider the different types of variety 
demands when studying markets from a micro (customer-specific) versus a 
macro (market-wide perspective) perspective. The business buyer may have 
a MEDIUM to HIGH demand for variety (e.g., software to do word process-
ing, spreadsheets, and database management; printer ports and PC cards as 
peripherals), depending on the variety of tasks this buyer wants the laptops to 
perform. Among personal use buyers, the demand for variety is probably very 
LOW, because they tend to be the least sophisticated users and may demand 
only the most basic word processing or gaming software. However, their 
assortment (brand choice) demands may be HIGH; unsophisticated consum-
ers often want to see a broad selection of models and brands before making 
a purchase decision. Student buyers probably fall in between, at a MEDIUM 
level, in their demand for assortment/variety: they may have more applica-
tions or uses for the laptop, and thus demand more peripherals and software 
programs, but they may not need to see a wide assortment of brands before 
making the purchase (the relevant brand set may be small if a school has dic-
tated “acceptable” brands).
 
•
Demands for customer service differ widely among the business, personal use, and 
student buyers in terms of not just levels but also types of customer service. The 
student buyer probably values home delivery very highly, as few students have 
cars to carry large items back from the store; the personal use buyer may not 
care about home delivery but value in-home installation services; and the busi-
ness buyer likely cares little about either of these benefits but demands trade-in 
options on older machines.
 
•
Finally, information-sharing demands can be separated into pre- and post-sale 
information elements. Before purchase, a buyer may need information about 

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differences in physical product attributes, how components fit together in a 
system, and how to use the new, state-of-the-art features. After purchase, the 
buyer instead may have questions about which add-on peripheral devices can be 
used with the computer and how or what software programs versions to install 
onto the machine. The personal use buyer likely places the highest value on 
both pre- and post-sale information sharing, because she or he is unlikely to 
have a “support group” in place to provide key information about what, how, 
and where to buy. A student buyer may have more post-purchase informational 
needs than pre-purchase ones, particularly if the school recommends a certain 
subset of laptops for use. The business buyer probably has relatively low infor-
mational demands, both pre- and post-purchase, particularly if the company is 
large enough to identify and specify approved laptop models, then support them 
after purchase. However, a procurement specialist at the company may have sig-
nificant pre-sale informational needs at the time decisions are made about which 
laptop models to select and support.
When completed with codified information, the service output segmentation 
template supports several strategic uses:
1. It can reveal why sales tend to cluster in one segment, to the exclusion of oth-
ers. If post-sale service is poor, it will be difficult to sell to personal use and 
student buyers.
2. It may suggest a new channel opportunity for building sales among an 
underserved segment. Perhaps a channel structure can be designed that is 
ideally suited to the needs of student buyers. Competitors that otherwise 
fight solely on the basis of price for these sales then would be locked out of 
the sales channel.
3. Commonalities between and across segments, previously thought to be totally 
distinct, might emerge. For example, personal use and student buyers may share 
enough similarities that both can be served with only minor variations on a 
single channel theme.
4. The template can suggest what channel form would be best suited for serving 
each segment. Thus, it provides inputs to match segments to channels.
This list of service output demands cannot completely and fully characterize 
every demand in a specific market. For example, the customer service demand 
likely requires distinctions into pre- and post-sale service elements, as does the 
information-sharing service output demand. However, this framework provides an 
initial means to understand the types of service outputs firms must provide to 
appeal to end-users.

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TABLE 10.2
Service Output 
Segmentation 
Template

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