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ELICIA: So our next block that we'll look at is channels.

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It's how the customer receives the product or service.

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How do they actually get it into their hands?

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And you can think of this in two parts.

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You can think of it with sales and distribution.

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To make it a little bit more concrete, let's take a look at Tesla.

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So if we look at their sales, what you had

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previously with manufacturers like Ford, Chrysler, they had franchise models.

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So they had other people owning these lots,

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and they would sell these cars on behalf of the manufacturer.

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What Tesla does is it owns the whole channel.

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It owns from the very start where it's manufacturing

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your car all the way through to these showrooms, which

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is actually distribution.

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So they tie through these sales into their distribution with showrooms.

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And what I mean by this is they don't have those sale lots.

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They have these kiosks--

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informational kiosks-- that looks super slick and futuristic

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with computer monitors and models of the car, models of the engine.

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And you can go and look at these.

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You can't order them.

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You can't actually walk off these lots or showrooms with a car.

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You just get to know the car.

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And what they do is they have sales people, but they see them as educators.

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And they actually position them inside of these showrooms or showcases,

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and you order through Tesla.

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And then they make it once you've placed your order, and you get it delivered.

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So they changed distribution.

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They changed the face of the channel.

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And that is one way that they are changing the face of their whole BMC.

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