Description
This presentation highlights various marketing channels in industrial markets.It covers channel management.
Channel Management in Industrial Markets
Marketing Channels:
Interdependent Organisations Orchestrated Networks Making Offerings for use
Primarily used to satisfy and also to stimulate
Economic Utility
Form The quantity/mode of the product most preferred by the customer
Time
The availability of the product when the customer needs it. The availability of the product where it is needed. In B2B, it involves rapid/frequent product delivery. The process by which the customer obtains ownership or the right to use a product/service.
Place
Possession
Marketing Flows
Commercial Subsystem
Physical Possessions Ownership Physical Possessions Ownership Physical Possessions Ownership
Wholesaler
Negotiations Financing Risking Ordering Payment
Negotiations Financing Risking Ordering Payment
Retailer
Promotions
Promotions
Promotions Negotiations Financing Risking Ordering Payment
Consumer
Producer
Marketing Flows
?
Functions have to be performed These can be interchanged or changed among channel members, depending upon the specialisation & division of labour Interdependence of the participants is the core
?
Marketing Channel Flows from Customer to Supplier
Channel Roles
?
Improve Efficiency: Reducing Transactions Sorting: Accumulation, Allocation, Break-bulk Assorting
?
?
?
Routinisation: to reduce bargaining and speeding up Facilitator Search
Provide fast delivery Provide segment-base product assortment Provide local credit
Why Do Some
End Users
Prefer Distributors? Distributors Can…
Provide product information
Assist in buying decisions
Anticipate needs
Buy and hold inventory
Combine manufacturers’ outputs
Why Do Some
Suppliers
Prefer Distributors? Distributors Can…
Share credit risk
Share selling risk
Forecast market needs
Provide market information
Channel Participants
?
?
?
?
? ?
Participants participate in the performance of the flows Assistance has to improve the performance for the end user Intermediaries include those who may not be obvious End user can also be opted in as a participants Channels in a state of constant flux New members can always move in
Fluidity in the Channels
? ?
?
Channels always evolving Fluidity a function of Changing demands of customers Availability of Technology Entry of the new participants Shifting power within the channels
Channel Design
What kind of services
What kind of Functions Who is in the best position
Customer Intimacy
To deliver superior customer value
Operational Excellence
Critical Issues in Channel Design
Channel Design Decisions
Intensity of distribution issues:
Through marketing intermediaries or a direct channel? 1) Kinds of channel partners 2) Structure of channel flows 3) How competitive advantage can be built One channel, dual distribution or multidistribution?
Channel Control (cont’d)
To Overcome Divergence ? Communication ? Cooperation across the channel ? Inducements for suitable behaviour ? Clearly defined authority system
Control in the Channel segments
?
?
?
?
Power: Rewards, coercion, expert, identification, legitimate Channel Power: Current sources of leverage would combine various components Channel Conflicts: Arising out of Goal Divergence Domain Issues: which customer which area how to satisfy
Understanding Dependence
?
?
Dependence a function of Utility Value, benefit and satisfaction Alternatives available Imbalance can lead to Feeling of exploitation
Direct Sales Approach is Viable When:
1. The customers are large and well defined.
2. The customers insist on direct sales.
3. Sales involve extensive negotiations.
4. Control of the selling job is necessary to ensure proper implementation of the total product package and to guarantee a quick response to market conditions.
Three Primary Distributor Classifications
General-line distributors • They stock and extensive variety of products. Specialists • Focus on one line or on a few related lines. Combination House • Operates in two markets: industrial and consumer.
• Frequently, the manager has little flexibility in the selection of channel structures because of trade, competitive, company, and environmental factors. • The decision on channel design may be imposed on the manager.
Factors Limiting Choice of Industrial Channel 1. Availability of Good Intermediaries • Traditional Channel Patterns 3. Product Characteristics 1. Company Financial Resources 2. Competitive Strategies 3. Geographic Dispersion of Customers
Channel Alternatives Issues
1. The number of levels to be included in the channel. 2. The types of intermediaries to employ. 3. The number of channel intermediaries. 4. The number of channels to employ.
doc_262459145.ppt
This presentation highlights various marketing channels in industrial markets.It covers channel management.
Channel Management in Industrial Markets
Marketing Channels:
Interdependent Organisations Orchestrated Networks Making Offerings for use
Primarily used to satisfy and also to stimulate
Economic Utility
Form The quantity/mode of the product most preferred by the customer
Time
The availability of the product when the customer needs it. The availability of the product where it is needed. In B2B, it involves rapid/frequent product delivery. The process by which the customer obtains ownership or the right to use a product/service.
Place
Possession
Marketing Flows
Commercial Subsystem
Physical Possessions Ownership Physical Possessions Ownership Physical Possessions Ownership
Wholesaler
Negotiations Financing Risking Ordering Payment
Negotiations Financing Risking Ordering Payment
Retailer
Promotions
Promotions
Promotions Negotiations Financing Risking Ordering Payment
Consumer
Producer
Marketing Flows
?
Functions have to be performed These can be interchanged or changed among channel members, depending upon the specialisation & division of labour Interdependence of the participants is the core
?
Marketing Channel Flows from Customer to Supplier
Channel Roles
?
Improve Efficiency: Reducing Transactions Sorting: Accumulation, Allocation, Break-bulk Assorting
?
?
?
Routinisation: to reduce bargaining and speeding up Facilitator Search
Provide fast delivery Provide segment-base product assortment Provide local credit
Why Do Some
End Users
Prefer Distributors? Distributors Can…
Provide product information
Assist in buying decisions
Anticipate needs
Buy and hold inventory
Combine manufacturers’ outputs
Why Do Some
Suppliers
Prefer Distributors? Distributors Can…
Share credit risk
Share selling risk
Forecast market needs
Provide market information
Channel Participants
?
?
?
?
? ?
Participants participate in the performance of the flows Assistance has to improve the performance for the end user Intermediaries include those who may not be obvious End user can also be opted in as a participants Channels in a state of constant flux New members can always move in
Fluidity in the Channels
? ?
?
Channels always evolving Fluidity a function of Changing demands of customers Availability of Technology Entry of the new participants Shifting power within the channels
Channel Design
What kind of services
What kind of Functions Who is in the best position
Customer Intimacy
To deliver superior customer value
Operational Excellence
Critical Issues in Channel Design
Channel Design Decisions
Intensity of distribution issues:
Through marketing intermediaries or a direct channel? 1) Kinds of channel partners 2) Structure of channel flows 3) How competitive advantage can be built One channel, dual distribution or multidistribution?
Channel Control (cont’d)
To Overcome Divergence ? Communication ? Cooperation across the channel ? Inducements for suitable behaviour ? Clearly defined authority system
Control in the Channel segments
?
?
?
?
Power: Rewards, coercion, expert, identification, legitimate Channel Power: Current sources of leverage would combine various components Channel Conflicts: Arising out of Goal Divergence Domain Issues: which customer which area how to satisfy
Understanding Dependence
?
?
Dependence a function of Utility Value, benefit and satisfaction Alternatives available Imbalance can lead to Feeling of exploitation
Direct Sales Approach is Viable When:
1. The customers are large and well defined.
2. The customers insist on direct sales.
3. Sales involve extensive negotiations.
4. Control of the selling job is necessary to ensure proper implementation of the total product package and to guarantee a quick response to market conditions.
Three Primary Distributor Classifications
General-line distributors • They stock and extensive variety of products. Specialists • Focus on one line or on a few related lines. Combination House • Operates in two markets: industrial and consumer.
• Frequently, the manager has little flexibility in the selection of channel structures because of trade, competitive, company, and environmental factors. • The decision on channel design may be imposed on the manager.
Factors Limiting Choice of Industrial Channel 1. Availability of Good Intermediaries • Traditional Channel Patterns 3. Product Characteristics 1. Company Financial Resources 2. Competitive Strategies 3. Geographic Dispersion of Customers
Channel Alternatives Issues
1. The number of levels to be included in the channel. 2. The types of intermediaries to employ. 3. The number of channel intermediaries. 4. The number of channels to employ.
doc_262459145.ppt