channel management in industrial markets

7/30/2019 Channel Management in Industrial Markets

1/20

Channel Management inIndustrial Markets

Vinod Puri


2/20

Marketing Channels:

Interdependent OrganisationsOrchestrated Networks

Making Offerings for use

Primarily used to satisfy

and also to stimulate


3/20

Economic Utility

Form

Time

Place

Possession

The quantity/mode of the productmost preferred by the customer

The availability of the product whenthe customer needs it.

The availability of the product where

it is needed. In B2B, it involvesrapid/frequent product delivery.

The process by which the customer

obtains ownership or the right to use

a product/service.


4/20

Marketing Flows

Physical

Possessions

Ownership

Promotions

Negotiations

Financing

Risking

Ordering

Payment

Physical

Possessions

Ownership

Promotions

Negotiations

Financing

Risking

Ordering

Payment

Physical

Possessions

Ownership

Promotions

Negotiations

Financing

Risking

Ordering

Payment

Produc

er

Retaile

r

Wholesa

ler

Consum

er

Commercial Subsystem


5/20

Functions have to be performed

These can be interchanged or changed

among channel members, dependingupon the specialisation & division oflabour

Interdependence of the participants isthe core

Marketing Flows


6/20

Marketing Channel Flows from Customerto Supplier


7/20

Channel Roles

Improve Efficiency: Reducing Transactions

Sorting: Accumulation, Allocation, Break-bulk

Assorting

Routinisation: to reduce bargaining and speedingup

Facilitator Search


8/20

Why Do SomeEnd Users

PreferDistributors?

Distributors

Can

Provide fast delivery

Provide segment-base

product assortment

Provide local credit

Provide product information

Assist in buying decisions

Anticipate needs


9/20

Why Do SomeSuppliers

PreferDistributors?

Distributors

Can

Buy and hold inventory

Combine manufacturers outputs

Share credit risk

Share selling risk

Forecast market needs

Provide market information


10/20

Channel Participants Participants participate in the performance of

the flows

Assistance has to improve the performancefor the end user

Intermediaries include those who may not beobvious

End user can also be opted in as aparticipants

Channels in a state of constant flux

New members can always move in


11/20

Fluidity in the Channels Channels always evolving

Fluidity a function ofChanging demands of customers

Availability of TechnologyEntry of the new participants

Shifting power within the channels


12/20

Channel Design

What kind of services

Who is in the best positionWhat kind of Functions

To deliver superiorcustomer value

OperationalExcellence

CustomerIntimacy

Critical Issues in Channel Design


13/20

Channel Design Decisions

Throughmarketing

intermediaries

or a direct

channel?

Intensity of

distribution issues:

1) Kinds ofchannel partners

2) Structure of

channel flows

3) How competitive

advantage

can be built

One channel,

dual distribution

or

multidistribution?


14/20

Channel Control (contd)To Overcome Divergence

Communication

Cooperation across the channel

Inducements for suitable behaviour

Clearly defined authority system


15/20

Control in the Channel

segments Power: Rewards, coercion, expert,

identification, legitimate

Channel Power: Current sources ofleverage would combine various components

Channel Conflicts: Arising out of GoalDivergence

Domain Issues: which customerwhich areahow to satisfy


16/20

UnderstandingDependence

Dependence a function ofUtility

Value, benefit and satisfactionAlternatives available

Imbalance can lead to

Feeling of exploitation


17/20

1. The customers are large and well defined.

Direct Sales Approach is Viable When:

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.


18/20

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.

Three PrimaryDistributor Classifications


19/20

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 Strategies3. Geographic Dispersion of Customers


20/20

1. The number of levels to be included in thechannel.

2. The types of intermediaries to employ.

3. The number of channel intermediaries.4. The number of channels to employ.

Channel Alternatives Issues

channel management in industrial markets

Documents