B2B Marketing Managing Channels PGDM–B2B–RS–14
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Transcript of B2B Marketing Managing Channels PGDM–B2B–RS–14
XIME / PGDM-B2B –RS–1404-March-2010
B2B Marketing
Managing Channels
PGDM–B2B–RS–14
Amarnath Krishnaswamy
XIME / PGDM-B2B –RS–1404-March-2010
Plan for this Session
• Managing Channels– Business Marketing
Channels– Intermediaries– Channel Design
Producer CustomerIntermediary
• Managing Services– Role & Importance– Buying Services– The Marketing Mix
XIME / PGDM-B2B –RS–1404-March-2010
Channel Functions
Producer CustomerIntermediary
Assortments
Transporting & Inventory
ReducingTransactions
Massing & BreakingBulk
Materials Handling
XIME / PGDM-B2B –RS–1404-March-2010
Marketing Channel Functions
• The Marketing Channel is the link between the manufacturer and the customer
• Includes all the tasks necessary to accomplish this:– Contacting– Negotiating– Contracting– Transferring title– Financing – Servicing– Stocking– Transporting
• Channels can be Direct / Indirect / Combination
XIME / PGDM-B2B –RS–1404-March-2010
Business Marketing - Channels
Manufacturer
Channel 1
Channel 2
Channel 3
Channel 4 Manufacturer’s Representatives or Sales Branch
BusinessDistributor
Customer
Manufacturer’s Representatives or Sales Branch
Manufacturer
Manufacturer
Manufacturer
BusinessDistributor
Customer
Customer
Customer
Channel for return of goods – Reverse Channel
XIME / PGDM-B2B –RS–1404-March-2010
Direct Distribution
• No intermediaries.
• Used when:– Volume / value of transactions warrant it
• Direct marketing eliminates the links but not the functions
• Sales force used could be “Generalists” or “Specialists”.
XIME / PGDM-B2B –RS–1404-March-2010
Indirect Distribution
• One or more intermediaries
• Used when:– Unit volume / value of each customer is small– Credit– Other considerations!
XIME / PGDM-B2B –RS–1404-March-2010
Innovations in Marketing Systems
Horizontal Marketing System
Hybrid Marketing System
Two or more companies at one channel level join together.
Example:
Petrol pumps - used for marketing auto parts (Fan belts, etc)
A company sets up two or more channels to reach one customer segment
Example:
Direct & distributors
XIME / PGDM-B2B –RS–1404-March-2010
Channel - Intermediaries
• Nomenclature of the intermediaries (Indirect) on the basis of the role they play
– Consignment Agents
– Distributors
– Representatives (Indenting Agents)
– Jobbers
– Brokers
– Retailers
XIME / PGDM-B2B –RS–1404-March-2010
Intermediaries – Distributors/Cons. Agents
• Classification– General Line: Stock an array of products– Specialists: Focus only on related products– Combination: Cater to both business and consumer markets
• Responsibilities– Defined area– Contact customers– Product availability– Assembly (If required)– Service
XIME / PGDM-B2B –RS–1404-March-2010
Intermediaries - Representatives
• Independent, or work for another organization• May handle related products too • Does not ‘own’ the product at any time
• Responsibilities
– Defined area– Contact customers– Good knowledge of the product
XIME / PGDM-B2B –RS–1404-March-2010
Intermediaries - Others
• Jobbers: Like ‘Reps’, but title of goods pass to them even though the material doesn’t. (In-transit sales )
• Brokers: Bring buyers and sellers together for a commission.
• Retailers:
XIME / PGDM-B2B –RS–1404-March-2010
Channel Design
• Developing Channels– Where none existed– Modifying existing ones. Do not wait for them to
evolve!
• Channel design done in stages:– Stage 1: Define objectives– Stage 2: Identify constraints– Stage 3: Allocate the activities (tasks)– Stage 4: Define alternatives– Stage 5: Select channel
Steps are very much the same as used in case analysis
XIME / PGDM-B2B –RS–1404-March-2010
Stage 1 – Define Objectives
Channel structure can be based on:
• Costs / Profits – helps decide between direct and indirect channels
• Marketing Goals – Call frequency, control et al would help decide the number of distribution points and manning
XIME / PGDM-B2B –RS–1404-March-2010
Stage 2 – Constraints
Options for channel structure could be limited by trade practices, competition, company policy and the environment:
1. Availability of good intermediates
2. Established trade patterns
3. Product characteristics
4. Company’s resources – financial / others
5. Competitive strategy
6. Geographic dispersion of customers
XIME / PGDM-B2B –RS–1404-March-2010
Stage 3 – Allocate the tasks
Assess what the task entails against the competence of the link.
– Some new products, for example, may require a high level of technical competence vis-à-vis others
– “Selling” the efficacy of drugs to doctors
XIME / PGDM-B2B –RS–1404-March-2010
Stage 4 – Channel Alternatives
Requires that the following be defined:
1. Number of channels
2. Levels in channel
3. Types of intermediaries required
4. Number of intermediaries required
XIME / PGDM-B2B –RS–1404-March-2010
Stage 5 – Channel Selection … (1)
• Define an ideal channel
• Compare with existing channel and the channel developed to conform with management objectives & constraints
– The systems are comparable. No change needed
– Existing & Feasible Systems comparable but differ from ideal
Careful Review (See Step 6 in “Procedure)– All 3 are different and if feasible lies between existing and
idealImprovements possible
XIME / PGDM-B2B –RS–1404-March-2010
Stage 5 – Channel Selection … (2)
Procedure for evaluating channel selection
Process Key Analytical Activities
Step 1Define customer requirements
Assess
(1) Sales assistance
(2) Locational convenience
(3) Buying convenience
(4) Range of possible services
Step 2Evaluate potential intermediaries
(1) Direct / Indirect Sale
(2) Types of intermediaries needed.
Step 3 Analyze costs
Find answers to the following:
a) Feasible to satisfy customer totally?
b) Types of supplier support needed
c) Costs for each
XIME / PGDM-B2B –RS–1404-March-2010
Stage 5 – Channel Selection … (3)
Evaluating channel selection (Contd.)
Process Key Analytical Activities
Step 4 Specify constraintsWhat are the objectives and constraints set by management? Specify channel based on these.
Step 5 Compare options
Compare
(1) Existing Channel
(2) Channel developed in Step 4
(3) Ideal
Step 6Review constraints and objectives
Use experts / consultants.
XIME / PGDM-B2B –RS–1404-March-2010
Stage 5 – Channel Selection … (4)
Evaluating channel selection (Contd.)
Process Key Analytical Activities
Step 7 Evaluate gapsIf gaps exists, analyze reasons for them
Step 8 ImplementationModify the ideal system according to objectives and constraints
XIME / PGDM-B2B –RS–1404-March-2010
Channel Behaviour
• Channel is most effective when:– Each member is assigned tasks it can do best– All members cooperate to attain overall channel
goals
• If this does not happen, conflict occurs– Horizontal Conflict: Amongst members at the
same level in the chain (E.g. Retailer with Retailer)– Vertical Conflict: Between different levels in the
same channel (E.g. Distributor with Retailer)
• Some conflict could promote healthy competition!
XIME / PGDM-B2B –RS–1404-March-2010
Before we break up …
• Would anyone who has set up, or modified, a distribution system like to share his experiences?
• If you were the President of XIME, what would you do to extend the delivery of its programmes?
XIME / PGDM-B2B –RS–1404-March-2010
All the B’s!
Bait and Switch
To advertise low priced items that aren’t actually available
Beat the Bushes
Marketing to unconventional or rural areas
XIME / PGDM-B2B –RS–1404-March-2010
Moving Forward
Next Session: PGDM-RS-15
Date: Tuesday, Mar 11, 2010
Subject: Quiz (RS-09 to RS13)
Managing Channels (Logistics)
XIME / PGDM-B2B –RS–1404-March-2010