Description
It Explains link between total distribution, cost and customer service.
Link between total distribution, cost and customer service
The total distribution network, cost and pricing strategies and the customer service levels all contribute to customer loyalty and repeat purchases building life-long relationships with customers. This is very important for industrial firms because an integrated approach to these 3 components can lead to following benefits: ? Cost advantage: Lower cost of production ? Vendor network: more closely-linked and efficient ? Benefits to customer: availability, right prices and excellent service
Distribution
? The number of channel members depend on the ? Kind of product ? Penetration required
? Channel membership ? Intensive distribution - Where the majority of resellers stock the 'product' (with convenience products, for example, and particularly the brand leaders in consumer goods markets) price competition may be evident. ? Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product. ? Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'.
? Benefits ? Widen reach ? After sale services ? Sales promotion ? Market information
? Critical factors ? Low cost ? Long term relation and loyalty ? Preservation of the brand value
Type of costs
? Fixed cost
? Variable cost
? Total cost = Fixed cost + Variable cost ? Semi-variable cost - equipment repair, maintenance
cost ? Direct cost – selling expenses, freight and raw material ? Indirect costs – production overhead, quality control ? Allocated costs- administrative overhead and corporate advertising
Pricing strategies
? Competitive bidding – selling to govt undertakings ? Closed bidding ? Open bidding ? Pricing new products ? Skimming ? Penetration ? Pricing across PLC stages ? Growth ? Maturity ? Decline
Customer service: Methods used for industrial customers
? Major methods : Sales presentation and Negotiation
? Sales Presentations: For effective sales presentation, a
sales person should follow some guidelines : i. Plan and collect information before sales presentation. ii. Identify customer needs and satisfy them better than competitors. iii. Use “AIDAS” theory or any other theory of selling (Attention, Interest, Desire, Action, Satisfaction) ? Give importance to prompt customer service.
Negotiation method
• For
negotiation with customers use “I win, you win” or “win win” style, with following guidelines :
? Build an environment of trust & understanding. ? Identify the problem areas. ? Both sides work together, pooling ideas,
and resources. ? Regular frequency of concessions are important and not the size of concessions. ? Be responsive to corrections, if needed. ? Avoid legalistic approach. ? Be polite and humble. ? Importance should be on “end results” and not on “means”.
information,
Dealing with customers’ customers
?
With coordination and planning, a business marketer can promote its products to customers’ customer, if a need arises.
? E.G. Aircraft engine manufactures promote their engines to
Air lines (aircraft buyers), in addition to aircraft manufacturers.
Integrated approach
? An integrated approach to distribution, cost and customer service plays
an important role in successful industrial marketing
CORPORATE STRATEGY
Corporate
SBU ‘A’
SBU ‘B’
SBU ‘C’
BUSINESS STRATEGY
Distribution
Costing
Customer Service
FUNCTIONAL STRATEGY
Business to Functional
? Strategic
Business Unit (SBU) consists of an independent product or a product line that has its own competitors and a specific market ? Functional strategy aims at efficient utilization of resources to various functional areas ? It is short term in nature and is implemented operationally to achieve SBU’s objectives
Timely Customer Service for customized products
Multiple Channel Distribution with minimum intermediaries
Integration
Competitive and Cost Benefit Analysis to provide best deals
doc_724371620.pptx
It Explains link between total distribution, cost and customer service.
Link between total distribution, cost and customer service
The total distribution network, cost and pricing strategies and the customer service levels all contribute to customer loyalty and repeat purchases building life-long relationships with customers. This is very important for industrial firms because an integrated approach to these 3 components can lead to following benefits: ? Cost advantage: Lower cost of production ? Vendor network: more closely-linked and efficient ? Benefits to customer: availability, right prices and excellent service
Distribution
? The number of channel members depend on the ? Kind of product ? Penetration required
? Channel membership ? Intensive distribution - Where the majority of resellers stock the 'product' (with convenience products, for example, and particularly the brand leaders in consumer goods markets) price competition may be evident. ? Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product. ? Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'.
? Benefits ? Widen reach ? After sale services ? Sales promotion ? Market information
? Critical factors ? Low cost ? Long term relation and loyalty ? Preservation of the brand value
Type of costs
? Fixed cost
? Variable cost
? Total cost = Fixed cost + Variable cost ? Semi-variable cost - equipment repair, maintenance
cost ? Direct cost – selling expenses, freight and raw material ? Indirect costs – production overhead, quality control ? Allocated costs- administrative overhead and corporate advertising
Pricing strategies
? Competitive bidding – selling to govt undertakings ? Closed bidding ? Open bidding ? Pricing new products ? Skimming ? Penetration ? Pricing across PLC stages ? Growth ? Maturity ? Decline
Customer service: Methods used for industrial customers
? Major methods : Sales presentation and Negotiation
? Sales Presentations: For effective sales presentation, a
sales person should follow some guidelines : i. Plan and collect information before sales presentation. ii. Identify customer needs and satisfy them better than competitors. iii. Use “AIDAS” theory or any other theory of selling (Attention, Interest, Desire, Action, Satisfaction) ? Give importance to prompt customer service.
Negotiation method
• For
negotiation with customers use “I win, you win” or “win win” style, with following guidelines :
? Build an environment of trust & understanding. ? Identify the problem areas. ? Both sides work together, pooling ideas,
and resources. ? Regular frequency of concessions are important and not the size of concessions. ? Be responsive to corrections, if needed. ? Avoid legalistic approach. ? Be polite and humble. ? Importance should be on “end results” and not on “means”.
information,
Dealing with customers’ customers
?
With coordination and planning, a business marketer can promote its products to customers’ customer, if a need arises.
? E.G. Aircraft engine manufactures promote their engines to
Air lines (aircraft buyers), in addition to aircraft manufacturers.
Integrated approach
? An integrated approach to distribution, cost and customer service plays
an important role in successful industrial marketing
CORPORATE STRATEGY
Corporate
SBU ‘A’
SBU ‘B’
SBU ‘C’
BUSINESS STRATEGY
Distribution
Costing
Customer Service
FUNCTIONAL STRATEGY
Business to Functional
? Strategic
Business Unit (SBU) consists of an independent product or a product line that has its own competitors and a specific market ? Functional strategy aims at efficient utilization of resources to various functional areas ? It is short term in nature and is implemented operationally to achieve SBU’s objectives
Timely Customer Service for customized products
Multiple Channel Distribution with minimum intermediaries
Integration
Competitive and Cost Benefit Analysis to provide best deals
doc_724371620.pptx