Channel Participants in B2B and Physical

distribution system

Group-9

Flow of the presentation…

I. Difference of b2b from b2c with ref. to

intermediaries and the role of internet in

b2b selling and distribution.

II. Channel conflicts and its management.

III. The role of physical distribution and its

efficient use to better channel

management

The general intermediaries

Wholesellers Brokers Retailers Agents

Buy products from the manufacturer andresell them to retailers

Buy productsfrom wholesalers and sell them to consumers.

Facilitate transactions between buyers andsellers without representing either party

Represent the buyer/seller and facilitatetransactions between buyers and sellers but do nottake title to the goods.

The current b2b scenario

Diminishing role of the intermediaries and evolution of 4

different types of exchanges between buyers and

sellers(Kaplan & Sawhney).

• MRO hubs-links buyers & sellers electronically(low value

high transaction cost, operating inputs)

• Yield managers- exchanges allowing comps. To add

capacity and rapidly meet demand application in

industries with fluctuating demand.(spot peocurement

of operating inputs)

• Online exchanges-smooth supply and demand curve

and proper buyer seller relationship.

• Catalog hubs-similar to MROs but are industry specific.

Source-The effect of the Internet in industrial channels: an industry example. Authors, William Lightfoot, James R. Harris

Diagrammatic representation

B2B E commerce hubs: Towards a taxonomic model by Steven Kaplan and Mohanbir Sawhney

The alternative effect of internet on the b2b exchange

Barriers to entry-

Buyer power-

• eliminates powerful channels, improves bargaining power of traditional channels.

• shifts bargaining power to end users. • reduces switching costs.

Supplier power-

• Internet provides channel for suppliers to reach end users; • Internet provides equal access to all companies.

Threat of substitutes-

• Internet approaches create new substitution threats.

Competitive rivalry:

• migrates competition to price;

• widens geographic market

Conflicts in the channel and its management in the

age of e-commerce

Causes for channel conflict-

• Goal incompatibility.

• Domain dessensus.

• Differing perceptions of reality.

Source- maintaining channel of distribution in the age of E-commerce by Kelvin L Webb

Conflict management strategies

with reference to pricing

Proposition1- Supplier firms will experience lowerlevels of channel conflict by not pricing products on their website below the resale price of their channel partners.

with reference to distribution

Proposition 2- Supplier firms will experience lowerlevels of channel conflict by diverting fulfilment oforders placed on their website to their channel partners.

with reference to promotion

• Proposition 3- Supplier firms will experience lower levels of channel conflict by providing product information on their website without taking orders.

• Proposition 4- Supplier firms will experience lower levels of channel conflict by promoting their channel partners on their website.

• Proposition 5- Supplier firms will experience lower levels of channel conflict by encouraging their channel partners to advertise on their website.

with reference to product-

Proposition 6-Supplier firms will experience lower levels of channel conflict by limiting the offering on their website to a subset of their products.

Proposition 7-Supplier firms will experience lowerlevels of channel conflict by using a unique brand namefor products offered on their website.

Proposition 8- Supplier firms will experience lowerlevels of channel conflict the earlier the products offeredon their website are in the demand lifecycle.

with reference to communication and coordinating-

Proposition 9- Supplier firms will experience lowerlevels of internal (external) channel conflict the moreeffectively they communicate their overall distributionstrategy internally (externally).

Proposition 10- Supplier firms will experience lowerlevels of internal (external) channel conflict the moreeffectively they coordinate their overall distributionstrategy internally (externally).

Proposition 11- Supplier firms will experience greaterchannel coordination internally (externally) the moreeffectively they communicate their overall distributionstrategy internally (externally).

Proposition12-Supplier firms will experience lowerlevels of internal (external) channel conflict the more theymake use of super ordinate goals internally (externally).

Multiple channel distribution andVMS( vertical

marketing system)

Multiple channel distribution-

• Includes usage of several channels.

• Reach out to larger no of buyers.

• New market segments.

• Can cause friction in the distribution channel.

VMS-coordinated and integrated channel.

Types- Corporate.

Administered.

Contractual.

Partnering-Some manufacturers are linking their computers with their retailers (e.g., Procter and Gamble is doing this with Wal Mart and K-Mart). The manufacturer then has the ability to observe when inventories are low for a particular product and make recommendations that the retailer restock.

Film distribution-

• Large no of films are produced.• Direct and immediate distribution of the films to the viewers.

Physical distribution- the only variable cannot be

accomplished by the internet.

Interfaces

between physical

distribution

strategy and

channel

management in

sequence.

Source- using physical distribution strategy for better channel management- Bert rosenbloomDrexel university

Defining the PD standard-

Heskett et al lists 9 important service standards-

To accomplish the Hesket et al standards it is

necessary to-

• Investigate the views of channel members to identify the actual need.

• Conduct a survey research(Hutchinson and Stolle) regarding various services the channel member want- useful for competitive advantage.

• Perreult and Russ- provide alternative programs and then sketch out the feasible options and trade offs.

Evaluation of the PD system-

The PD must meet the requirement(wants) of

the channel members within tolerable cost

constraints.

If a PD fails then an alternative must be

employed focusing on customer and/or

channel partner needs.

Selling the PD system-

Minimizing out of stock occurrences-• Will help the channel member not to lose sales.

• Non genuine promises may lead to conflicts.

Reduction of inventory-• Short inventory cycle

• Lower holding cost

Strengthening the relationship-• Can serve as a tangible sign of the manufacturers concern

toward partners.

• Should be presented taking the interest of the partners.

moniMonitoring the PD system-

• The system must be continually monitored to

evaluate the members responses.

• To find out the need of modifications.

• Can be done with as a part of marketing

channel audit.

THANKS FOR YOUR ATTENTION

ARUP DEY KHUSBOO AGRAWAL DIPIKA KHANDELWAL