B2B Marketing
CHANNEL MANAGEMENT
Channel Management “Set of interdependent organisations involved in the process of
making a product or service available for use or consumption”
(Coughlin et al., 2006)
The central question
Which channel task will be performed by the firm, and which, if any,
will be performed by channel members?
Tasks
Reducing complexity
Increasing value
Transaction efficiency
Quality of service
Marketing Channels
Manufacturer
Direct ChannelsIndirect
Channels
Agents
Distributors
TelemarketingOnline
MarketingDirect Sales
Customer Segments
Direct Channels
Feasible when
Customers are large, well-defined
Customers insist on direct sales
Sales involve extensive negotiations with customer
senior management
Control on sales to ensure complete package is
properly implemented
Requirements
Highly customized solutions - complex
Selling skill, professional account management, in-
depth product knowledge
Indirect Channels
Used when
Markets fragmented and dispersed
Transaction amounts low
Buyers typically purchase number of items in one
transaction, often of various brands
Distributors
Key organisational customers of manufacturers –
purchase and hold stock
Absorb financial, credit, selling and logistic risks
Source of market information and demand
knowledge
Suitable for firms having multi-locational
manufacturing
Service focus
Automatic replenishment
Product assembly
In-plant stores
Help in designing and operating supply networks
Classification General line
Broad array of industrial products
Specialists
One product category or industry
Combination house
Operates in business and consumer markets
Agents Do not take title and/or inventory of goods
Work independently, represent several non-
competing companies
On commission basis
Augment / replace the field sales force
Expert product knowledge coupled with
understanding of market and customer needs
When to use:
Small firms, and large
Limited market potential
Servicing distributors
Offerings-based Channels
Bespoke/complex
Direct channel
Agents – for entering new unfamiliar geographies
Uniform
Lower inclination to control all exchanges with end-customer
More fragmented and geographically dispersed
customer base
Distributors – for products
Franchisees – for services
Channel Design Driven by customers
Dynamic process – depending on customer and
competitor behaviour changes
Customer
Service Financing
Guarantee
Size
Customisation
Information
AssortmentInstallation
Channel Partner
Channel Partner
Manufacturer
Structure Issues
Length
Optimum number of levels to serve the customer
Established vs. new
Breadth
Intensity – intensive / selective / exclusive
Multiple channels
Inter-firm conflict
Inter-channel conflict
Cannibalisation
Channel Administration
Recruitment
Motivation
Support to the channel
Conflict management
Recruitment Criteria
Financial & Company strengths
•Ability to fund
•sales start-up
•communications activities
•Maintain inventory
•Standing amongst customers
•Management team quality
Product
•Familiarity
•Product lines
•Complimentarity
•Sophistication
•Physical facilities
Marketing skills
• Market share
• Geographic coverage
• Experience with target customers
• Salesforce
• Delivery performance
• Customer service
• Trade-show participation
• Trade association membership
Commitment
•Product mix volatility
•% business with single supplier
•Commitment to targets
•Willingness to
•maintain stock
•invest in communication
•invest in sales training
•drop competing product lines
Facilitators
•Contacts with key industry players
•Experience and performance with other suppliers
Channel Performance
Delayed differentiation
VARs
Outsourcing of non-value adding activities
MRO
3PL
Evaluation of Performance
Criterion Factors to consider
Contribution Supplier profitability
Sales growth
Competence Experience
Product knowledge
Administrative and supervisory skillsStrategic thinking of senior management
Loyalty Commitment & motivation towards supplier
Compliance Acceptance of channel policies &
programmes
Adaptability Innovation in handling supplier products
Customer
satisfactionLevel of services
Service quality
Support to Channel
Incentives
Financial – commission, discounts
Bonuses
Territorial exclusivity
Providing resources
Involvement of sales team in dealing with clients
Sharing of MR information
Marketing communications
Training of staff
Working relationship approach in dealing
Joint strategic planning
Signalling of long-term commitment
Channel Conflicts
Conflict – one channel member perceives
another’s actions to be impeding the achievement
of its goals (Gaski, 1984)
Types
Goal
Means
Fear of being bypassed
Conflicting perceptions
Conflict Management
Informal mechanisms
Exit
Voice
Loyalty
Aggression
Neglect
Formal mechanisms
Distributor council
Third-party referee
Trade association interaction
Personnel exchange
E-commerce
Types Inter-organisational: management of
Suppliers
Inventory
Distribution
Channel
Payment
Intra-organisational
Workgroup communications
Electronic publishing
Sales force productivity
B2M: Companies linking to machines via
Internet
B2C
Channel Considerations
Channel efficiencies
Automation of back-office sales functions
Personnel and accuracy enhancements
Current marketing intermediaries
Disintermediation
Re-intermediation
Channel advantages for potential buyers
Customise contact as per buyer’s needs
Wide range of referral sources
Always open
Effect of Internet on Marketing
Variables Pricing
Buyer’s bargaining power
Geographical advantages
Commodification – service-enrichment / branding
Sales force
Complimentarity – focus on problem-solving &
relationship-building
Customise product presentations
Incentivise online initiatives
Promotion
Search-engine marketing
Thank You!!
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