global channel management - channel design

c https://hbr.org/resources/images/article_assets/2015/09/SEPT15_07_990087-010.jpgGlobal Channel Management

c https://hbr.org/resources/images/article_assets/2015/09/SEPT15_07_990087-010.jpgManagement Internationaler Verkaufkanäle

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A distribution channels moves goods and services from producers to consumers

Channel Functions

A distribution channels moves goods and services from producers to consumers. Therefor they

1. Give information

Channel Functions


1. Give information2. Promote the offer Channel

Functions


1. Give information2. Promote the offer3. Have contact with customers

Channel Functions


1. Give information2. Promote the offer3. Have contact with customers4. Match the offer with the need

Channel Functions



Channel Functions

5. Negotiate with buyers about price and offer



Channel Functions

5. Negotiate with buyers about price and offer6. Do the physical distribution



Channel Functions

5. Negotiate with buyers about price and offer6. Do the physical distribution 7. May finance the channel cost (Risk taking)


1. Give information2. Promote the offer3. Have contact with customers4. Match the offer with the need5. Negotiate with buyers about price and offer6. Do the physical distribution 7. May finance the channel cost (Risk taking)

BUTwhen all are carried out by the manufacturer they increase the costs and prices!

Channel Functions

Channel Strategy

cFlow of demand stimulation

Channel Strategy

PUSH

Flow of demand stimulation

Flow of promotion

Channel Strategy

PUSH

1 popular product and does not involve deep customization

Channel Strategy

PUSH


2 new product

Channel Strategy

PUSH


2 new product

3 use the reputation of the intermediaries

Channel Strategy

PUSH


2 new product

3 use the reputation of the intermediaries

4 temporary release in the market

Channel Strategy

PUSH

1 the reseller can stop the contract

2 the reseller pursues his own interests

3 the reseller becomes to big for the ‘agent’

4 B2B sales strategy costs money

cFlow of demand stimulation

Channel Strategy

Flow of demand stimulation

Flow of promotion

PULL

Channel Strategy

PULL

1 release services and products under the same brand

Channel Strategy

PULL

1 release services and products under the same brand

2 exclusive or elite positioning

Channel Strategy

PULL

1 expensive strategy

2 high dependent on the brand’s reputation

Distribution Systems


conventional distribution

system

Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers.


conventional distribution

system

Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers.

1 Each seek to maximize its own profits 2 There is little control over the other members 3 No formal means of assigning roles and resolving conflicts.


Hybriddistribution

system

Multi-channel marketing systems are when a single firm sets up two or more marketing channels to reach one or more customers segments.


ChannelLevels

Number of intermediaries between the manufacturer and the end-user


ChannelLevels

DIRECTYou sell directly to the end-user.


ChannelLevels

INDIRECTYou sell through marketing intermediaries

to the end-user.


ChannelLevels

INDIRECTConsumer

market

ConsumerManufacturer

Manufacturer

Manufacturer

Manufacturer

Consumer

Consumer

Consumer

Retailer

Retailer

Retailer

Wholesaler

WholesalerAgent


ChannelLevels

INDIRECTBusiness

market

BusinessManufacturer

Manufacturer

Manufacturer

Manufacturer

Business

Business

Business

Wholesaler

WholesalerAgent

Agent


ChannelLevels

INDIRECTService market

Bus/ConService

Service Bus/ConAgent


ChannelLevels

INDIRECTIn reality


ChannelLevels

INDIRECTIntermediaries who bring buyers and sellers together and assist in negotiating an exchange BUT do not take title of the goods.

Agents & Brokers


ChannelLevels

INDIRECTAn intermediaries that sells products to other organizations such as retailers, manufacturers,…

Wholesaler


ChannelLevels

INDIRECTAn intermediaries that sells products to other organizations such as retailers, manufacturers,…

Wholesaler

Operate on high volumes and low margins.


ChannelLevels

INDIRECTAn independently owned organization that takes the title of the merchandise they handle for full

Wholesaler

Merchant Wholesaler


ChannelLevels

INDIRECTCarry stock, maintain a sales force, offer credit, make deliveries, provide business assistance, …

Wholesaler

Full Service Wholesaler


ChannelLevels

INDIRECTRange of services is limited. Mostly Cash & Carry

Wholesaler

Limited Service Wholesaler


ChannelLevels

INDIRECTAn organisation that sells the product to the final customer

Retailer


ChannelLevels

INDIRECTHave a narrow product or (single) brand line

Specialty Store

Retailer


ChannelLevels

INDIRECTHave a several product lines

Department Store

Retailer


ChannelLevels

INDIRECTLarge stores, with high volumes, low margins, low costs and self service.

Supermarket

Retailer


ChannelLevels

INDIRECTSmall store mostly in residential areas with higher margin

Convenience Stores

Retailer


ChannelLevels

INDIRECTMostly outlets (leftover sales, irregular product line)

Off-Price retail

Retailer


ChannelLevels

INDIRECTVery huge store with routine assortment of food products and non-food products. Mostly very deep assortment in one category.

Superstores

Retailer


ChannelLevels

INDIRECTBroad selection of high markup, fast moving brand name goods sold by catalogue (sometines with discount)

Catalogue

Retailer

WholesalerRetailer

operate in the main market no issues about location

deal with businessmen deal with specific group of products

large trading area high volume, low margin

operate in the local market location is important deal with consumer deal with more products small trading area low volume, how margin


ChannelLevels

INDIRECTInternational

market


Manufacturer

Manufacturer

Manufacturer

Consumer

Consumer

Consumer

Retailer

Retailer

Retailer

Wholesaler

WholesalerAgent

Border


ChannelLevels

INDIRECTInternational

market


Manufacturer

Manufacturer

Manufacturer

Consumer

Consumer

Consumer

Retailer

Retailer

Retailer

Wholesaler

WholesalerAgent

Border

ImporterExporter

Vertical Marketing

System

Producers, wholesalers and retailers acting as a unified system

Vertical Marketing

System

Vertical Marketing

System

The own the product

Vertical Marketing

System

The own/make the product

The own the retailer

Vertical Marketing

System

Vertical Marketing

System

c

Vertical Marketing

System

Corporate VMS integrates successive stages of production and distribution under single ownership.

Vertical Marketing

System

Contractual VMS consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies of sales impact the each could achieve alone.

Vertical Marketing

System


• Wholesalers sponsored voluntary chains

• Retailer cooperatives • Franchise organisations

Vertical Marketing

System


Franchise

Vertical Marketing

System

Business format franchise not only distributes the franchisor’s products and services under the franchisor’s trademark, but also implements the franchisor’s format and business procedure.

Franchise Contractual VMS

Vertical Marketing

System

In Product distribution franchise the franchisee merely sells the franchisor’s products or services.


Vertical Marketing

System

The management franchise provides the management expertise, format and/or procedure for conducting the business.


Vertical Marketing

System

Administratie VMS has a few dominant channel members without common ownership. Leadership comes from size and power.

©

Administratie VMS has a few dominant channel members without common ownership. Leadership comes from size and power.

Vertical Marketing

System

Horizontal Marketing

System

Horizontaal Marketing Systems are when two or more companies at one level join together to follow a new marketing opportunity. Companies combine financial, production, or marketing resources to accomplish more than any company could alone.

Horizontal Marketing

System

Vertical Marketing System

Channel Conflict

Occurs when one channel member believes another channel member is engaged in behavior that is preventing them from achieving their goals.

Channel Conflict


1 channel members bypass another to buy and sell direct

Channel Conflict



2 profit margins are uneven between channel members




3 manufacturers believes channel member is not providing attention to its products

Channel Conflict




3 manufacturers believes channel member is not providing attention to its products

Channel Conflict

4 manufacturer engage in dual distribution

Channel Conflict

Horizontal Conflict

Channel Conflict

Horizontal Conflict

Vertical Conflict

Channel Alternatives


Exclusive Distribution

Highly selective choice of retailers - one per marketProducers wants a close watch and control


Intensive Distribution

As much retailers as possiblePreferably for consumer (FMCG) and pharmaceutical productsand automotive spares.


Selective Distribution

Retailers will be selected in line with the company/brand imagePreferred for his value productsKeep distribution cost low(er)

Channel Decisions

Product Life

Cycle

Product Life

Cycle

Introduction Growth Maturity/Saturation Decline

Marginal Revenue Revenue

Cost

Profit

Product Life

Cycle



Cost

Profit

Limited Retailers Exclusive

distribution

Product Life

Cycle



Cost

Profit


distribution

More Retailers Multiple

distribution Representation

Product Life

Cycle



Cost

Profit


distribution



Max. RetailersKey Account Management Local sales

Product Life

Cycle



Cost

Profit


distribution




Fewer RetailersGlobal Acc. Man.

Full local org.

Product Life

Cycle



Cost

Profit


distribution





Full local org.

Set up direct sales channels

Product Life

Cycle



Cost

Profit


distribution





Full local org.

Set up direct sales channels

Set up E-commerce

Channel Design

designing international distribution channels

Channel Design

Channel design are all decisions involving the development of new marketing channels where none has existed before, or the modification of existing channels.

Channel Design

The channel design should contribute to the firm’s quest for differential advantage.

Channel Design

Differential advantage = Unique benefits or characteristics of a firm, product, or program that set it apart and above its competitors in the customers' viewpoint.

The channel design should contribute to the firm’s quest for differential advantage.

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel

alternativesEvaluation

Channel Design

Analyzing customer

needs

Channel Design

Analyzing customer

needs

Lot Size

Variety

Place Utility

Waiting Time

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Know your customer segments.

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Know your customer segments.What’s the targeted level of customer service.

After sales

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Know your customer segments.What’s the targeted level of customer service?What are the best channels to use?

After sales

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Know your customer segments.What’s the targeted level of customer service?What are the best channels to use?Cost-efficient way to meet customer requirements

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel

alternatives

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel

alternatives

Types of intermediaries.

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel

alternatives

Types of intermediaries.NNumber of intermediaries

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel

alternatives

Types of intermediaries.NNumber of intermediaries

Responsibility of each channel member

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel


Segmentation Putting customers in similar clusters based on their need

Channel Design

Segmentation

Positioning

Putting customers in similar clusters based on their need

Fix what level of service is required

Channel Design

Segmentation

Positioning

Focus



The sky is not the limit! Choose!

Channel Design

Segmentation

Positioning

Focus

Development



The sky is not the limit! Choose!

Channel Design

Channel DesignMOTIVATION

cCoercion - punishmentReward - incentivesCoercion - punishmentReferent - strong image

cCoercion - punishmentLegitimate - contractcCoercion - punishmentExpert - knowledgecCoercion - punishmentSupport - extra benefitscCoercion - punishmentCompetition

Channel DesignMOTIVATION

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel


Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel


Cost of operation

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel


Cost of operationNAbility to manage & control

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel



Adaptability

Channel Design

Analyzing customer

needs

Setting Channel

Objectives

Identifying channel



AdaptabilityRange & volume to be handled

selecting channel

members

managing channel

members

motivating channel

members

evaluating channel

members

Channel Design

Ignoring end us er buying patterns Assuming that your direct sales force will assist the indirect channels Expecting channels to change for you Sticking to traditional partners/channels Being casual about selecting & evaluating channel members Hoping that one channel can sell to every customer

FAIL

Avoiding a channel conflict instead of managing it

Let’s go to workSouth Africa

Malaysia

Australia

Argentina

South Korea

MexicoPeru

Let’s go to work

What is Vaude all about? (Mission/Vision/Strategy) What are they selling?Who is your customer in the target countries? Why are these targeted countries for Vaude?Develop a marketing channel strategy for Vaude to introduce Vaude in your target country.

Let’s go to work

Your end-productOne-Page Strategy (+ appendix)

5m presentation (Management Summary)

EvaluationNot the what, but the how is important

c https://hbr.org/resources/images/article_assets/2015/09/SEPT15_07_990087-010.jpgGlobal Channel Management

c https://hbr.org/resources/images/article_assets/2015/09/SEPT15_07_990087-010.jpgManagement Internationaler Verkaufkanäle



global channel management - channel design

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