Business Marketing Channels and Logistics PDF

7/27/2019 Business Marketing Channels and Logistics PDF

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Business Marketing Channels

and LogisticsAlliance University


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A marketing channel is defined as a set of

interdependent organizations that make a product orservice available to customers for use

The Market logistics consist of delivering completedproducts to customers and channel intermediaries

Marketing Channel and MarketLogistics


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Business marketing Channels are very different from the

channels used for consumer goods and services. The following are the factors affecting the nature of the

business marketing channels :

1)Geographic distribution : Industrial dealers / distributors

are geographically concentrated around the industrial marketFor Example : Gurgaon is Indiasauto hub. Large number ofauto parts manufacturers and distributorsthrive in Delhi andNCRs.

Distinctive Nature of BusinessMarketing Channels


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2)Channel Size : Industrial Channel size are short or non

existant. This is due to the technical expertise needed inselling and handling of industrial products

3)Characteristics of Intermediaries : Industrialmarketers use industrial distributors, manufacturers

representative or brokers to reach customers.Depending upon the industry the channel members maybe highly professional to raw brokers



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4) Mixed System : Industrial Marketers use a mix of

direct and indirect channels for reaching out toconsumers. For Ex : Tata Steel sales team directlyserviced its top 200 customers whilst the balance wereserviced by the dealership network

5) Electronic Channels : The E Channels are used for1)Providing information 2) Facilitating buying/ sellingFor Example : www.elecon.com



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Direct Channel :

Alternative structures of BusinessChannels

Manufacturer

Customer

Direct approach through sales team,

Mailers, E Mail or Tele Marketing

This model is viable in case of high valueDeals, when the buyer insists, when highlevel of technical and legal aspects areInvolved and when the clients areGeographically concentrated


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Indirect Channel :


Manufacturer

Distributors Manf.Rep BrokerComm.

AgentJobber

Merchants

Customers


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This model is viable when the transaction value is low,

the clients are spread across geographies, themanufacturer has limited resources, the industrialbuyers need to purchase many items in onetransaction



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Services performed by the middlemen are as follows

- Increasing customer number

- Customizing basis need

- Ensuring timely collections

- Facilitating after sales service- Risk taking

Why business marketers useintermediaries


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Possible benefits of involving distributors:

- Service advantage

- Timely delivery

- Credit facility

- Genuine information of products- Long term relationship

- Broad category of materials needed

Why Business Customers buy fromDistributors


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Channel Design is a dynamic process. It deals with

developing new marketing channels and modifyingthe existing ones

Channel Design


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Channel Design

Channel Objectives

Channel Alternatives

Evaluation ofAlternatives

Selection of ChannelStructure

Analyse Channel TaskAnd constraint


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The channel objectives are developed on the basis of 1)

Marketing Objectives 2) Customer needs 3) ProductCharacteristics

Examples :

-If marketing objective is to expand to new markets , test themarket and then make office investments then an agent /

merchant is a must initially rather than a distributor-In case the new market has certain legal aspects like localbusinesses should get 10 % margin then distributors / dealerscan be appointed

Channel Objectives


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Examples :

-Local customers initiate business via localacquaintances then agents are required

-Local customers need instant service then technicalintermediaries are required

-Customers emphasize on policies beyond anorganizations ambit , intermediaries can act as riskabsorbers

Customer Needs


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Examples :

- Product has great demand and manufacturer cannotreach across markets

- Product requires constant service support in differentlocations

Product Characteristics


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Various tasks performed by channel can be as

follows :- Order taking

- Order booking

- Order servicing

- Transport- Adding Value to product ( Eg : Assembling )

- Collection

Analyses of Channel Tasks


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While selecting a channel, an industrial marketer has

to face many constraints :- Competitive actions ( Competition increasing channel

penetration )

- Company policies ( E.g. Strong deadline in TOI Group)

- External environment ( e.g. Low consumerconfidence index)

- Customer Preferences

Channel Constraints


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Selective Distribution

Intensive distribution

Exclusive distribution

Vertical Marketing System

- Corporate

- Administered

- Contractual

Channel Alternatives


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Very well defined tasks and responsibilities

Sales Policy

Territorial coverage

Terms involved in assigning ChannelPartnerships


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Economic Performance of each channel

Degree of Control over channel member

Ex : TV 9 Gujarat v/s a giant agency in Gujarat

Degree of Commitment from each channel member

( Infibeam.com Aramex Local courier)

Evaluation of Channel alternatives


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The need so the hour is to select channels basis

customer needs and not merely company policy andfinancial considerations

Market Forces : Example 1)Divya bhaskar direct sellingdebacle in Gujarat

Selection of Channel


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Managing channel members include :

- Selecting channel members

- Motivating channel members

- Managing channel conflicts

- Performance evaluation of channel members

Channel Management


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The Channel members are selected on the following

basis : Location of customers

Experience in a particular genre

Financial Standing

Infrastructure

Management reputation

Selecting Channel Members


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Management Services ( Example : Pride Hotel Group-

Franchise Hotels) Vendor Managed Inventory

Financial advantages

Training services

Motivating Intermediaries


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Sources of conflicts are :

-Differences in objectives, interests, perceptions

-Dealings with customers

-Compensation

-Unclear territory boundaries

-Stringent company policy

Managing Channel Conflicts


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Methods of managing / controlling conflicts

-Effective communication network

-Joint goal setting

-Diplomacy

- Arbitration or Mediation

-Vertical marketing system (VMS)

Managing Channel Conflicts


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The common factors used to evaluate the performance ofeach channel member are :

- Sales figures- New Customers generated- Customer feedback- Support for new products

- Coordinating company marketing efforts ( Eg : DivyaEnterprise(distributor) offering residential help tocompany trainees in FMCG co.)

- Statistical techniques

Evaluating Channel Memberperformance


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An industrial product can be Machinery,

manufacturing plants, materials, and other goods orcomponent parts for use or consumption by otherindustries or firms.

An industrial product , in addition of being a physical

entity, is a bundle of economic, technical, legal andpersonal relationship between the buyer and theseller

INDUSTRIAL PRODUCT


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Industrial Marketers must understand that a product

strategy is flexible and dynamic. Industrial firms are required to make necessary

changes in the product strategy because of changesin 1) customer needs 2) technology 3) govt.policy(

Volvo Buses 2 doors) and 4 ) PLC

Changes in the Product Strategy


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Product Life Cycle


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Industrial PLC High Tech Products

Sales

NPDTIME

I/G STAGEM D

I and G stages are long but maturity

and decline stages is short due to rapidly changing technology


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Industrial PLC- Commodity

Sales

TIME

In a monopolistic situation the salesremain unaffected with passage oftime due to absence of competition .As competition increases sales decline


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A certain product gets success in domestic market. The

producing firm starts exporting these products withsuccessful results

Foreign manufacturers start production under license,JV,or start copying the product

Foreign manufacturers become competitive due to lower

costs These manufacturers start exporting to the country where

the product was originally made

Original Manf Strategy : Product / Process Patent

International PLC Louis Well


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Introduction Stage : Certain Industrial products get

accepted rapidly after introduction whereas some aregradually accepted.

For gradually accepted products the marketingstrategy should concentrate on market awareness

efforts. For fast accepted products the companyshould brace for intense competition

Example : Residential Wind Turbines

Application of PLC theory toMarketing Strategies


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Growth Stage : As the product enters the growth

stage ( high sales and profits) , the industrial marketershould focus on 3 key areas viz. 1) Improve productdesign to offer more benefits to customers 2)Improve distribution 3) reduce price as production

increases Example : Helix Wind Mills offering higher energy

production

Application of PLC theory toMarketing Strategies


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As the product enters the maturity stage , the

marketer must focus on 1) entering new markets 2)keep existing customer satisfied by excellent servicestandards 3) cut marketing, production and othercosts to maintain profit margins

Example : Wind energy 7 has tremendous potential in

Indian markets owing to power shortages and largeexpanse of rural places where electricity has notreached and open spaces are widely available

Maturity Stage


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In this stage the competition is severe and sales and

profits steadily decline The strategy adopted by industrial marketer is to

either withdraw the product from the market orintroduce a substitute product

For industrial products the decline is pretty rapidowing to technical advancements and highly learnedcustomer base

Decline Stage


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The steps involved in locating a product in its life cycle

are as follows :- Develop a trend analysis for the past 3 to 5 years

based on primary and secondary research basedinformation

- Analyse competitors market share and productperformance

- From the above analysis , fix the productsposition inlife cycle

Locating Products in their Life Cycles


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Developing Product Strategies forthe existing products


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Sales of a certain software dipping in market inspite of latestupdates done and a good sales team in place.

Possible reasons :- High price ( Cheaper substitutes available)- Lack of training for users- Unnecessary updates at regular intervals- Lack of basic hosting infrastructure at clients end ( ex TCS ion

on Mozilla platform ) Problem could be either one or a mix of some factors These should be resolved with high priority

Discussion of Product Strategy basedon evaluation matrix


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Brand

Brand Equity Purpose of Branding

- All class discussion

Branding in Business Markets


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ToBrand

or not

to

brand

Yes

No

Brand

planningand analysis

Stop

Brand

Strategy

Brand

building

Brand

auditing

Branding Process in BusinessMarketing


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Key Factors in brand planning are :

- Involvement of all ( Case of Tata Chemicals Ltd ad )- Brand continuity

Brand Planning and Analysis


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Brand Hierarchy has four levels in B2B marketing :

- Corporate brand- Family brand

- Individual brand

- Combination of above

Brand Strategy


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Personal Selling

Direct Marketing Advertising

Tradeshows

PR

Sponsorships

Brand Building Tools


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Business Organizations should periodically audit the

performance of their brands The process of brand auditing is as follows :

- Deciding the objectives of auditing

- Internal description of how the brand has been

marketed- Research

- Analysis and reporting the brand score

Brand Auditing


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The brand score card has four components viz :

- The functional performance of a brand- Ease of accessing the brand

- Brand Personality

- Brand Value

Brand Auditing


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Segmenting Business Markets


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Market Segmentation is a process of dividing a

market into groups of customers who have similarrequirements for a product or service offering

Business Marketers task is to identify these segmentsand decide which segments to target

Revisiting Segmentation


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Conduct marketing research to collect data on buying

firms and competition Identify and select macro-segments

Go for micro segmentation (if selected macro-segments do not explain difference in buying

behavior of buying firms) Profile selected target segments

Segmenting and TargetingFramework


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Micro Segmentation can be done using micro

variables like :- Buying situations

- Purchasing Criteria

- Buying Organizations

- Personal characteristics of buying center members

Micro Segmentation


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Benefits :

- Tailored Marketing Programs- Allocation of budgets can be done more effectively

basis customer segmentation

Limitations :

- Difficult to differentiate service levels in certainproduct classes

Benefits and Limitations of Marketsegmentation


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The segmentation in business markets is on the basis

of : 1) Micro and Macro Variables Marketers use sequential segmentation process to

obtain a detailed segmentation scheme

Bases for Segmentation


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Major Macro-variables Type of customer ( Govt, commercial, cooperative, institutional) or industry

Size of customer companies Usage rate of customers Customers geographic location Application, end-use, or benefits of the productMajor Micro-variables Buying situations(new task, modified rebuy, straight rebuy)

Organizational capabilities ( Focus on firms needing finacial / technicalsupport ) Purchasing criteria ( Focus on firms seeking quality / price) Personal characteristics of buying-center member ( Risk avoiders, risk

takers)

Bases for Segmentation


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Macro Variables are classified into :

- Industry Characteristics- Organizational Characteristics

Macro Segmentation


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Many industrial firms market their products or

services to different typesof industries For example : Tata Steel sells steel to Automotive,

construction, rail , consumer goods, shipbuildingindustries

Industry Characteristics


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Size of the customer organization

Location of the customer organization ( Example :Ad agencies setting up satellite offices to service bigand key accounts )

Organizational Characteristics


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Micro segments are the homogenous group of customerswithin the macro segments. Thus industrial marketersdivide macro segments into micro segments only ifnecessary

The micro variables used in the micro segmentation are asfollows :

- Buying situations- Purchasing Policies

- Purchasing criteria

- Personal characteristics of the buying center members

Micro Segmentation

l f i l i


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Intas Pharma services Asia, Middle east, Africa and USAmarkets

Asian Markets like Srilanka, Singapore and Thailand areserviced by satellite offices whereas major markets likeAfrica and USA have marketing offices in place

Within Africa the focus is more on Government clients andin USA the focus is on commercial and government

establishments In Africa , priority is given to clients who enter into a

advancepayment deal , whereas in USA the focus is onestablishing long term ties with the clients

Example of Sequential Segmentationprocess

i f ff i


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Measurable

Substantial Differentiable

Actionable

Requirements for EffectiveSegmentation


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After segmenting the market , the firm should engage

in selecting the right target segments These segments are selected on the basis of :1) size

and growth 2) profitability analysis 3) Competitiveanalysis 4) Company objectives and resources

Targeting


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The company should find out what is the size and

growth potential for each market The trade journals and experts can suggest the

current size and growth potential of segments

Also statistical methods like time series analysis,

regression analysis can be used for the forecasting

Size and Growth


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There are 3 elements involved in analyzing the

profitability of each segment :- Market Potential

- Sales Forecast

- Profitability

Profitability Analysis


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Competitive analysis should be done basis

manufacturing facilities, financial strength, marketingprowess, product quality and managementreputation

Competitive Analysis


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An industrial firm should ask itself whether each

potential segment is in line with the firms long termobjectives

Examples

Company Objectives


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Concentrated Marketing

Differentiated Marketing Undifferentiated Marketing

Growing importance of Niche Marketing

Target Market Strategies


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Positioning is defined as the distinct place a product

or service occupies in the minds of the customersrelative to competing products

Positioning

P d f d l i g


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An industrial marketer should follow the following stepswhile developing a positioning strategy :

- Identify major attributes of differentiation :

Product Variables

Service Variables

Personnel Variable

Image Variable-Selecting the differentiating attributes

-Communicating the companysPositioning

Procedure for developing aPositioning Strategy


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Buyer Seller RelationshipAlliance University


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IdealTransaction

InefficientTransaction

InefficientTransaction

NoTransaction

Buyer Seller Relationship

CompatibleStyle

IncompatibleStyle

IncompatibleStyle


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Transactional relationship

Value Added / Exchanges relationship Collaborative / Partnering relationship

Types of Relationship


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Basically One time exchange with economy and necessity

at the center of the process Buyers look a transaction based relationship in situations

when the product / service is less specialized and not veryimportant for the overall achievement of the objective

Transactional buyers exhibit very less loyalty towards the

suppliers

The company sales force should try and extend this genreof customers to the next level i.e. Value added exchanges

Transactional Exchanges


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The focus of the value added exchanges is on

complete understanding of the present and futureneeds of the customer and meeting those needsbetter than the competitors to obtain a maximumshare of the customers business

The company sales force , if finds further potential inthe customer must try and escalate this relationshipto the next level viz. collaborative exchanges

Value Added Exchanges


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The core focus is on building commitment and trust

between the manufacturer and the customer Example : TOI Private Treaty Model

Collaborative Partnership


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Bringing the client on board

Building regular business ties with the client Increasing business volume and value from the client

whilst providing extended / specialized service to theclient

Drawing from his business model and helping herexpand the business to newer TOI led geographiesand investing in the organization to draw lucrativereturns

TOI Private Treaty Model


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Business Marketers have a range of relationship with different set ofcustomers viz. transactional , value added and collaborative. It is

important that these businesses develop effective relationshipmarketing strategies by going through the following steps :

- Linking CRM with customer database

- Selecting customers

- Developing relationship marketing strategies and objectives

- Implementing relationship strategies- Evaluating relationship objectives and strategies

Developing effective RM strategies


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For an effective relationship marketing strategy , a

firm should build database of each customer firm byincluding CLV, key decision influential, specific needsof goods and services, past purchases of variousproducts and services

Linking CRM with customer database


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Business Markets segment customers on the basis of

various variables ( example : Value , Service level) After this primary segmentation , the business

markets look into individual customer firms

Example : Refer to Excel Sheet- Final Data

Selecting customers

Developing relationship marketing


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Strategies by establishing from amongst

transactional,collborative or value added relationshipwith each customer

Implementing the relationship strategy involvesbifurcating sales focus into key accounts and

transactional accounts The culmination of these relations should be

monitored on a periodic basis

Developing relationship marketingstrategies and objectives


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Berry and Parasuraman have identified 3 approaches

for forming stronger ties :- Financial : Adding financial benefits to key customers

by offering special prices or volume discounts

- Social : This is done by individualizing and

personalizing customer relationships- Structural ( Times of India Classifieds software)

Relationship Marketing


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BUSINESS MARKETINGALLIANCE UNIVERSITY


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NATURE OF BUSINESSMARKETING


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Business marketing/ industrial marketing/ B2B marketing/organizational marketing is the marketing of products and

services to business organizations Business organizations include manufacturing companies,

government undertakings, private sector organizations,educational institutions, hospitals, distributors and dealers

These organizations buy to satisfy many objectives like

production of other goods and services, making profits,reducing costs and so on For Example : Bombardier Primove turnkey solution for

Trams (Public Transport)

WHAT IS BUSINESS MARKETING


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Consumer Marketing is the marketing of products

and services to individuals , families, and households.The consumers buy products and services for theirown consumption or use

WHAT IS CONSUMER MARKETING


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FACTORS BUSINESS MARKETS CONSUMER MARKETS

Market characteristics Geographically concentrated andrelatively fewer buyers

Geographically dispersed and massmarket

Product Characteristics Technical in nature and customized Non or less technical and lesserdegree of customization

Service Characteristics Service, timely delivery andavailability very important

Important to a lesser degree

Buyer behaviour Multiple functions involved in arational decision making, stableand long term interpersonalrelationship between the buyerand seller

Family dynamics, emotionaldecision making involved , lesserdegree of personal relationshipinvolved

Channel characteristics More direct , fewer channelmembers involved

Indirect and multipleintermediaries involved

Price Bidding / negotiated prices Best price or MRP

Promotional Personal selling Emphasis on advertising

Economics Derived demand, inelastic demand More elastic and direct demand

BUSINESS V/S CONSUMER MARKETS


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Value = Benefits / Cost

To estimate the customer value a mix of executiveopinion and statistical methods are used

Customer Value in Business Markets


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Derived demand

Fluctuating demand Stimulating demand ( SAIL Video)

Joint demand

Cross-Elasticity of demand ( Eg: Al v/s wood and steel)

Reverse elasticity of demand

Characteristics of Industrial Demand

Classifications of Products and


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Industrial marketing involves the marketing of

products, services and solutions. The method ofclassification is based on how products and servicesenter the production process. Hence the classificationis as follows :

- Materials and Parts

- Capital Items

- Supplies and services

Classifications of Products andServices


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Goods that enter the final product directly consist of rawmaterials , manufactured materials and component parts.The cost of these items are treated by the purchasingcompany as part of the manf. Cost

- Raw Materials : This is the basic product that enters theproduction process with little or no alterations. API in makingdrugs i.e. dyclofenac sodium (API) in making dycloflame (Medicine for pain relieve)

- Manufactured Materials and components : Manufacturedmaterials include those raw materials that are subject tosome amount of processing before entering themanufacturing process. Example : Industrial salt undergoessome level of purification before being used for making sodaash. Example for components is tyres in Cars. Apollo Tyres(OEM) sells tyres to MUL and to dealers and distributors also

Materials and Parts

l


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Capital Items : are those which are used in the productionprocesses and they wear out over a certain period of time.

Capital Items are usually classified as :- Heavy equipment : Major and Long term investments

example is a turbine machine in a power plant.

- Accessories : Light equipment which have lower purchaseprice and not considered pert of heavy equipment. Example :

Computer terminals- Plants and buildings : These are the real estate property of a

company. Example ; MUL has plants in Gujarat , Gurgaon.

Capital Items

l d


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Supplies : Cartridges and other stationary items

Services : Building Maintenance services, auditingservices, legal services etc.

Supplies and Services

l h i


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Supply chain management is a set of activities and

techniques , a firm employs to efficiently andeffectively manage the flow of merchandise from thevendorsto the retailerscustomers

Supply Chain

l h i


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Supply Chain

B i N k i B B


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Manufacturer

Company sales force

Distributor / Dealer

Customer

Business Networks in B2B

Representative

agent


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UNDERSTANDING BUSINESSMARKETS AND ENVIRONMENT

T f B i O i ti


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Industrial customers are normally classified into four

groups :- Commercial enterprise

- Government customers

- Institutional customers

- Cooperative societies

Types of Buying Organizations

C i l E t i


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Commercial enterprises are private sector, profit

seeking organizations consisting of :- Industrial distributors

- OEMs

- Users

Commercial Enterprise

G t C t


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The largest purchases in India are done by various

Government bodies Example : Health Ministry , DMRC ( Delhi Metro Rail

Corporation ) etc.

Government Customers

I tit ti


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Public and Private institutions such as hospitals,

schools, universities etc. are the institutions These institutions have a very structured purchase

mechanism

Example : Relevant Examples

Institutions

C ti S i ti


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Cooperative banks, cooperative housing etc. are

examples of cooperative societies GCMMF ( Gujarat Cooperative Milk Marketing

Federation ) is one well known name across India

Example : Amuls Media Purchase mechanism

Cooperative Societies

Business Customers Purchasing


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Business buyers choose one of the three purchasing

orientations :- Buying Orientation

- Procurement Orientation

gOrientation

B i g O i t ti


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The purchasing firm with a buying orientation has a

narrow and short term focus. The buyers in thesefirms follow the practices as under :

- Lowest Price

- Gain Power ( Commodification / multisourcing)

- Risk ( risk reducing standard buying from regularsuppliers)

Buying Orientation

P t O i t ti


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Collaborative relationship with major suppliers

Working closely with other functional areas

Procurement Orientation

Purchasing Practices of Business


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gCustomers

Purchasing by Commercial enterprises.


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Purchasing by Govt depts


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The first step is to get the name of the company and theproduct registered with the concerned department

This procedure involves the submission of duly filled forms,product details, company details properly filled by a CA

Post this some Govt officials visit the companysmanufacturing facilities and based on the favorable

response from the inspector , the company is registered asapproved supplier to these products




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Competitive Bidding : Govt organizations are required topurchase goods and services through the bidding or

tender system There are 2 types of bidding system viz. closed and open For standard products and services , tender notices are

advertised in leading newspapers post which the suppliersprocure tender docs by paying a certain amount of tenderfees

Sealed tenders are received in a tender box and opened ona specific date and time in presence of the representativesof the suppliers and

Purchasing by Govt depts.



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Open Bidding : When Govt. organizations require nonstandard or complex technical products and services ,they use open bidding method. The buying firm mayinvite offers from limited suppliers who are capable ofsupplying complex or non standard products andservices

Reverse Bidding : Here buyers set a maximum priceand the suppliers are motivated to bid below this

Govt.Contract : 1) Fixed Price 2) Cost reimbursement

Purchasing by Govt depts.

Institutional Purchasing


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Institutional Purchasing : These are either the

government or the private buyers. If they aregovernment , then the procedure followed is asdiscussed. If they are institutions like education ,charity then the procedure is similar to commercialbuying.

Institutional Purchasing

Purchasing in Replacement Market


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Replacement market consists of industrial dealers or

distributors whose main goal are profit and salesvolume

Hence the intermediaries select the supplier on thebasis of product quality and also suppliers Sellingpolicy as they have to abide by it

Example : Car Tyres Market

Purchasing in Replacement Market

Environmental Analysis


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Micro and Macro Environment

Environmental Analysis

Strategies for Managing external


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Collect information about competitors and customers

Analyzing trade and Govt publications Carrying out marketing research and economic

forecasting

Forward / Backward and Horizontal Integration

g g genvironment


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ORGANIZATIONAL BUYINGPROCESS

ORGANIZATIONAL BUYING PROCESS


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Robinson and Faris developed an eight phase buying decisionprocess in industrial market in 1967 and called the process buy

phases. These stages are as follows :- Recognition of a problem or need- Determination of the application and quantity of the needed

product also developing specifications- Search for qualified suppliers- Obtaining suppliers proposals

- Selection of suppliers- Order routine specification- Performance feedback and post purchase evaluation

ORGANIZATIONAL BUYING PROCESS

Recognition of a Problem


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Rolls-Royce ,a truly global business, offers a range of

firstclass world leading products. It has facilities over14 different countries and also offers first rate aftersales services, covering mechanical overhauls andspare part distribution.

Rolls-Royce used over 1500 systems before the ERPproject was started, many of which were developedinternally by Rolls-Royce over the last two decades.

Recognition of a Problem

Recognition of the Problem


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Some of the legacy systems were so old that they hadyear 2000 compliance problems. Work within Rolls-Royce was functionally orientated and variousdepartments worked in isolation.

The legacy systems did not allow Rolls-Royce to

establish direct, on-line communication withcustomers, partners and suppliers.

Recognition of the Problem

IT deal goes to EDS corp


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In 1996 Rolls-Royce formed a partnership with

electronic data services (EDS). The Rolls-Royce ITdepartment was outsourced to EDS,which meant thatEDS were responsible for the development of thecompanysIT systems

IT deal goes to EDS corp

Determination of the Characteristics


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Implementing of ERP was a must to bring all

functions on a uniform platform. SAP R/3 was identified for this. SAP R/3 was arranged

into distinct functional modules, covering the typicalfunctions in place in an organization. The most widely

used modules were Financial s and Controlling (FICO),Human Resources (HR), Materials Management(MM), Sales & Distribution (SD), and ProductionPlanning (PP)

of the product

Selection of the Supplier


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SAP was selected as :

- Its software can be customized- It had more than a decade experience in ERP

implementations

Selection of the Supplier

Obtaining Suppliers Proposals and


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A suppliers proposal can be in the form of a formalquotation, a formal bid and should include :

- Product Specification- Price

- Delivery Period

- Payment Terms

- Taxes and Duties as applicable- Transport cost ( If applicable )

- Any other free service if provided

selecting the best suitable

Evaluation Of Proposals and


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The buying organization evaluates the proposals ofcompeting suppliers and selects one or moresuppliers. Further negotiations can continue onprices, payment terms, deliveries and so on

Suppliers are evaluated on the weighted average andbalance score card method

Largely all organizations have individual methods forthis process

Selection of Suppliers

Order Routine Specification


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Here the buyer sends a purchase order confirming thesame specifics as mentioned in the final proposal bythe supplier

This binds the supplier to confirm to his proposalduring the product delivery

Order Routine Specification

Performance Feed Back


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In this final phase , a formal or informal reviewregarding the performance of each supplier or vendortakes place. The user department gives the feedbackif the purchased item solved the problem of not

Performance Feed Back

Types of Buying situations


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Buy classes are bifurcated as :

- New Task- Modified rebuy

- Straight rebuy

Sales strategies for each differ and will be discussed

in class

Types of Buying situations

Buygrid framework


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Buy Phases New task Modifiedrebuy

Straightrebuy

Problem Recognition y uc n

Product characteristics y uc n

Search qualified suppliers y uc n

Obtaining proposals y y n

Evaluating proposals y y nOrder routine specification y y uc

Performance feedback y y y

Buygrid framework

Buying Roles


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Buying Centre

Buying center roles :Users

Buyers

Influential

DecidersGate keepers

Buying Roles

The Webster and Wind Model Of


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The Webster and Wind Model Of

BuyingEnvironmental Variables

organisational Variables:Technology (for purchasing),

Buying Centre structure, buying goals and tasks, buying

centre members.

Buying centre variables: Interpersonal interactions,

Group functioning : Buying and non-buying tasks,

external influences.

Individual variables

Buying Decision Process :

PESTEL

Business Marketing Channels and Logistics PDF

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