m5 assignment
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MAR5409_PPT_ch10.pptx0
Chapter 10 Managing Business Marketing Channels
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The alternative paths to business market customers
The critical role of industrial distributors and manufacturers’ representatives in marketing channels
The central component of channel design
Requirements for successful channel strategy
Chapter Outline
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Channel structure must be designed to accomplish marketing objectives
Business marketer must manage the channel to achieve prescribed goals once channel structure has been specified
Dimensions of Channel Component
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Numerous alternatives
Differences in marketing goals
Need for separate and concurrent channels due to diverse business market segments
Challenges in Selecting the Channel
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Link between the manufacturer and the customer
Accomplishes all the tasks necessary to get the product/service to market
Tasks can be performed by the manufacturer or be delegated throughout the channel
Channel of Distribution
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Channel Tasks
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Making contact with potential buyers
Negotiating
Contracting
Transferring title
Communicating
Arranging financing
Servicing the product
Providing local inventory, transportation, and storage
Figure 10.1 - B2B Marketing Channels
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Large and well defined customers
Customers insisting on direct sales
Sales involving extensive negotiations
Selling has to be controlled to:
Ensure that total product package is properly implemented
Guarantee a quick response to market conditions
Complex product and sales opportunities and highly customized solutions
Feasibility of Direct Sales Approach
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Need for Indirect Distribution
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Fragmented and widely dispersed markets
Prevalence of low transaction amounts
Purchase of a number of items in one transaction
Figure 10.2 - Typical Sales Cycle: Tasks Performed Throughout the Sales Process
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Figure 10.3 - Multichannel Integration Map: Simple Example of High-coverage Partnering Model
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Provide a valuable tool for:
Coordinating sales channel activities
Managing crucial connections and exchange between the activities
Assist in IT-driven channel coordination with no loss of information
Customer Relationship Management (CRM) Systems
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Participants in the Business Marketing Channel
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Industrial distributors
Manufacturers’ representatives
Small, independent businesses serving narrow geographic markets
Full-service intermediaries who take title to the products they sell
Most pervasive and heavily used for maintenance, repair, and operations (MRO) supplies
Distributors
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Employ both inside and outside salespersons
Outside - Making regular calls on customers and handling normal account servicing and technical assistance
Inside - Taking telephone orders, processing orders, and scheduling delivery
Larger distributors achieve operating economies
Automating the operations to significantly reduce the sales and general administrative expenses
Distributors (continued)
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Functions of Distributors
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Having products readily available
Serving as manufacturer’s selling arm
Providing credit
Offering wide product assortments
Delivering goods
Offering technical advice
Meeting emergency requirements
Services Provided by Distributors
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Supply chain and inventory management
Automatic replenishment
Product assembly
In-plant stores
Design services
Classification of Distributors
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General-line distributors
Stock an extensive variety of products
Specialists
Focus on one line or on a few related lines
Combination house
Operates in industrial and consumer markets
Depends on the manufacturer’s requirements and the needs of target customer segments
General-line distributor offers the advantage of one-stop purchasing
Specialist provides the manufacturer with a high level of technical capability and a well-developed understanding of complex customer requirements
E-collaboration - Critical strategic force in the managing channel relationships
Choosing a Distributor
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Work independently
Represent several companies in the same geographic area
Sell noncompeting but complementary products
Have expert product knowledge combined with a keen understanding of the markets and customer needs
Give the business marketer more control as the firm maintains title and possession of the goods
Manufacturers’ Representatives
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Act as manufacturers’ selling arm
Making contact with customers
Writing and following up on orders
Linking the manufacturer with the industrial end users
Offer technical advice while enhancing the customer’s leverage with suppliers
Are paid a commission on sales
Develop their field experience while working as salespersons for manufacturers
Manufacturers’ Representatives (continued)
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In small, medium-sized, and large firms
In conditions of limited market potential
To service distributors when a manufacturer sells through hundreds of distributors
To reduce overhead costs
Need for Manufacturers’ Reps
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Different market segments require different channel structures
Distinct approaches
Large accounts are called on by the firm’s own sales force
Distributors handle small repeat orders
Manufacturers’ reps develop the medium-sized firm market
Differences in purchase behavior
Factors Influencing the Choice of Intermediaries
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Dynamic process of developing new channels where none existed and modifying existing channels
Best conceptualized as a series of stages that the business marketing manager must complete
Specifies the structure that provides the highest probability of achieving the firm’s objectives
Focuses on channel structure
Channel Design
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Refers to the underlying framework
Number of channel levels
Number and types of intermediaries
Linkages among channel members
Channel Structure
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Figure 10.4 - Channel Design Process
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Figure 10.5 - Customers Drive the Channel Design Process
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Selecting good channel participants and making sure that all tasks and obligations are assigned and understood
Motivating members to perform tasks necessary to achieve channel objectives
Controlling inter-channel conflict
Controlling and evaluating performance
Channel Administration Process
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Ongoing process
Through one of the following options
Discussions with company salespeople and existing or potential customers
Trade sources
Selection of Channel Members
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Beginning with the understanding that the channel relationship is a partnership
Developing a trusting relationship with the reps
Improving communication through recognition programs, product training, and consultation
Informing the reps of plans, detailing objectives, and providing positive feedback
Specifying the cooperative efforts each firm requires of its partner
Motivating Channel Members
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Bringing in distributors or reps for the purposes of:
Reviewing distribution policy
Developing marketing strategy
Supplying industry intelligence
Providing compensation policies that meet industry and competitive standards
Motivating Channel Members (continued)
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Ways to Control Conflict
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Channel-wide committees
Joint goal setting
Cooperative programs involving a number of marketing strategy elements
Effectively cooperating within the channel
Offering benefits and resources that are superior to what other partners could offer
Aligning oneself with other firms that have similar corporate values
Sharing valuable information on expectations, markets, and performance
Refraining from taking advantage of one’s partners
Building Trust and Commitment
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