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    Business Marketing Channels and Market Logistics

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    oureducation.in
    Business Marketing Channels and Market Logistics Broad classification : Direct and Indirect Direct channels consist of : Direct sales or personal selling Direct marketing : Direct mail, Internet, and telemarketing. Indirect channels include: Distributors, manufacturer’s reps., brokers, commission merchants, jobbers, value added resellers (VARs).

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    Attribution Non-Commercial (BY-NC)

    Business Marketing Channels and Market Logistics

    Uploaded by

    oureducation.in
    246 views26 pages
    Business Marketing Channels and Market Logistics Broad classification : Direct and Indirect Direct channels consist of : Direct sales or personal selling Direct marketing : Direct mail, Internet, and telemarketing. Indirect channels include: Distributors, manufacturer’s reps., brokers, commission merchants, jobbers, value added resellers (VARs).

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    © Attribution Non-Commercial (BY-NC)

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    Business Marketing Channels and Market Logistics Broad classification : Direct and Indirect Direct channels consist of : Direct sales or personal selling Direct marketing : Direct mail, Internet, and telemarketing. Indirect channels include: Distributors, manufacturer’s reps., brokers, commission merchants, jobbers, value added resellers (VARs).

    Copyright:

    Attribution Non-Commercial (BY-NC)
    246 views26 pages

    Business Marketing Channels and Market Logistics

    Uploaded by

    oureducation.in
    Business Marketing Channels and Market Logistics Broad classification : Direct and Indirect Direct channels consist of : Direct sales or personal selling Direct marketing : Direct mail, Internet, and telemarketing. Indirect channels include: Distributors, manufacturer’s reps., brokers, commission merchants, jobbers, value added resellers (VARs).

    Copyright:

    Attribution Non-Commercial (BY-NC)
    of 26

    Business Marketing Channels and Market Logistics

    Chapter Questions
    What factors make Business Marketing Channels Different? Which channels are used in Business Marketing(BM)? Who are the participants in BM Channels? What is the process of channel design in BM? How channel members are managed or administered? What are the concepts of supply chain management, logistics and market logistics?

    Factors Making BM Channel Different?


    (from those of consumer marketing)
    Geographical concentration of intermediaries

    Short channels.
    Different characteristics and types of intermediaries. Multi-channel or mixed system used often.

    Channels Used in BM
    Broad classification : Direct and Indirect Direct channels consist of :
    Direct sales or personal selling Direct marketing : Direct mail, Internet, and telemarketing.

    Indirect channels include:


    Distributors, manufacturers reps., brokers, commission merchants, jobbers, value added resellers (VARs).

    Participants in BM Channels
    Manufacturers branch sales offices Distributors or dealers Manufacturers representatives or agents Brokers Commission merchants Value added resellers (VARs) Jobbers

    Channel Design
    Includes the following framework:
    Channel Objectives Channel Constraints Channel Tasks

    Channel Alternatives
    Evaluation of Alternatives Selection of Channel Structure

    Developing Channel Objectives


    Based on following factors: Marketing objectives

    Customer needs
    Product characteristics

    Analysing Channel Constraints


    Factors constraining selection of ideal channel structure External environment (legal issues) Competitive tactics Companys constraints Product characteristics Customers geographic locations

    Analysing Channel Tasks


    Which tasks the company can perform effectively and efficiently, and which by intermediaries.

    Identifying Channel Alternatives


    Involves four major issues:

    (1) Types of Intermediaries


    Distributors or dealers Manufacturers representatives (reps) or agents Brokers Commission merchants jobbers

    (2) Number of Intermediaries


    Three alternative strategies available: Intensive distribution Selective distribution Exclusive distribution Judgment to be used for exact number of intermediaries

    (3) Number of Channels


    Depending on needs of market segments Multi-channel system is used often.

    (4) Terms and Responsibilities of Channel Members


    Agreements between marketer and channel
    member to include:

    Responsibilities / tasks of both parties


    Sales policy Territory or market segment to be covered

    Evaluation of Channel Alternatives


    Criteria used: Economic performance Degree of control Adaptability to changing market situations Superior value to target customer

    Selection of Channel Structure


    Based on satisfying needs of target segments

    Managing or Administering Channel Members


    It includes:
    Selecting intermediaries / channel members

    Motivating channel members


    Controlling or managing channel conflicts

    Evaluating performance of channel members

    Selecting Channel Members


    Selection process consists of :
    1) Generating a list of intermediaries through ads., database firms, trade associations. 2) Visiting prospective channel members 3) Negotiating with short-listed intermediaries 4) Finalising agreements Selection criteria generally used: Location Relevant experience Financial standing Infrastructure Specific criteria may differ for different types of intermediaries and product market situations of companies.

    Motivating Intermediaries
    First understand intermediaries needs. Then use appropriate techniques:
    Partner relationship management (PRM) system Vendor managed inventory (VMI) system Reasonable discount / margins Distributor council meetings Training and coaching Developing channel positioning Quick response system Computer aided management techniques

    Controlling Channel Conflicts


    Undertake surveys of intermediaries to assess sources of conflicts, such as: Differences in objectives, interests, perceptions Dealings with customers Compensation Unclear territory boundaries

    Methods of managing / controlling conflicts


    1)Effective communication network 2)Joint goal setting 3)Diplomacy, mediation, or arbitration 4)Vertical marketing system (VMS)

    Evaluating Channel Members Performance


    Purpose
    Know good / bad performing channel members Reward / counsel, retrain, remotivate, or terminate

    Evaluation Criteria / factors


    Sales achieved vs quota Customer service / satisfaction New customers generated Market feedback Assign weights to above factors. Use weighted factor method for evaluation

    Supply Chain Management (SCM)


    Definition
    The process of planning, implementing, and controlling flow and storage of raw materials, finished goods, and related information from the supplier to the customers for the purpose of conforming to customer requirements.

    SCM Framework

    Information Flow Cash Flow Product and Service Flow

    R.M. and Component Suppliers

    Planning and forecasting

    Purchase

    Production

    Distribut- Customer Service ion

    Performance Evaluation

    Business Customers

    SCM Objectives
    Customer satisfaction by superior value Reduce cost, waste, duplication Minimise order-to-delivery time Superior delivery service

    Functions Integrated in SCM


    Purchase, design, planning, production, order processing, inventory control, warehousing, material handling, customer service.

    Logistics Management
    Definition
    Design and management of all activities (mainly transportation, warehousing, inventory) necessary to make materials available for manufacturing and finished goods available to customers as needed.

    Scope of logistics
    To manufacturing and service companies interested in maximising customer service. Includes inventory control, customer service, transportation, warehousing, order processing, communication, packaging, material handling.

    Trend in Logistics
    Outsourcing to a third party logistics (3PL) service provider.

    Tasks of Market Logistics (ML)


    Major tasks of ML /PD:
    Transportation, warehousing, Inventory control, customer service

    Other tasks:
    Packaging, Order processing, material handling. Communication, locating factory and warehouses. Complex / conflicting relationship between tasks.

    Approaches for managing conflicts:


    Minimising total distribution cost ROI / Total systems / Channel integration

    Decisions in Major Cost Centres of Logistics


    Major Cost Centres of Logistics and Marketing Logistics
    Transportation
    Warehousing Inventory Order Processing

    Transportation Decisions
    Affect customer satisfaction Objectives: (1) Superior delivery service,(2) Lowest cost Decisions include selection of (1)Transportation modes, and (2) Individual carriers. Transportation modes: rail, air, truck, waterway, pipeline. Combination / Intermodel transportation : rail truck, waterway-truck, waterway rail, air-truck. Selection criteria : (1) speed, (2) availability, (3) cost, (4) dependability, (5) capability, (6) frequency Individual carriers: (a) common, (b) contract, (c) private

    Warehousing Decisions
    Objectives to achieved Improve customer delivery service Increase sales Channel structure influences warehousing decisions Factors considered to decide if a company should use (1)Private or (2) public warehousing facility: Customer service level required Investment to be made Operating cost Private warehousing by owning warehouse space Public warehousing by renting warehousing space

    Inventory Decisions
    Objectives
    (1) Minimise harmful effects due to deficiencies in the logistical system; (2) Meet customer service needs; (3) Minimise costs

    Inventory cost includes


    Storage space charges Cost of capital Taxes and insurance Inventory risk cost

    Inventory decisions include: (1) when to order, (2) how much to order when to order? Based on recorder point = delivery lead time X average daily
    sales / production requirement. How much to order? (1) use inventory software, (2) use formula; ,where P= Cost of ordering, D=Annual Demand, C=Annual inventory cost (% of product cost), V=Average inventory cost.

    Order Processing (OP) Decisions


    OP Starts with order receipt from a customer and ends when the customer receives the product as per delivery schedule and quantity in the order.

    Functions involved in OP:


    Sales, marketing, finance, marketing logistics, production planning and control, production

    Effective coordination and communication ensured by


    Training relevant people Rewarding OP group Appointing a head of OP Customer satisfaction depends on success of OP, which is possible with effective coordination and communication.

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