marketing channels

Managing Business Marketing channels

Learning objectives• The alternate paths to business market

customers.

• The critical role that industrial distributors and manufactures’ representatives assume in business market channels.

• The central components of channel design

• Requirements for successful channel strategy.

2Marketing channels

CHANNEL

• The link between manufactures and customers .

• Accomplishes all the tasks necessary to effect a sale and deliver products to the customer.

• The tasks include making contact with potentialbuyer.negotiating,contracting, transfering the title, storage

3Marketing channels

First, the channel structure must be designed to accomplish desired marketing objectives.

Difficulty to selecting channel– the alternatives are numerous– marketing goals differ– the variety of business market segments often

requires that separate channels must be employed concurrently.

Second, once the channel structure has been specified, the business marketer must manage the channel to achieve prescribed goals.

Channel Component Dimensions

4Marketing channels

• The link between manufacturers and customers is the channel of distribution.

• Channel management centers on these questions: which channel tasks will be performed by the firm and which tasks, if any, will be performed by channel members?

Channel Alternatives in the Business Market

5Marketing channels

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.

6Marketing channels

Indirect Distributionis Generally Found Where

Markets are fragmented and widely dispersed.Low transaction amounts prevail.Buyers typically purchase a number of items.

7Marketing channels

E-Channel Use

Level 1:

Information Platform.

Level 2:

Transactional Platform.

Level 3:

Platform for Managing Customer Relations.

8Marketing channels

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 Primary Distributor Classifications

9Marketing channels

• Channel design is the dynamic process of developing new channels where none existed and modifying existing channels.

• Channel design is an active rather than a passive task.

The Channel Design Process

10Marketing channels

• 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 Intermediaries2 Traditional Channel Patterns3. Product Characteristics4.Company Financial Resources5.Competitive Strategies6.Geographic Dispersion of Customers


Channel Alternatives Issues

1. The number of levels to be included in the channel.

2. The types of intermediaries to employ.

3. The number of channel intermediaries.

4. The number of channels to employ.


Manufacturer-Rep Channel Used When:

• The product is not standard but is closer to made-to-order.• The product tends toward technical complexity.• The gross margin is not large.• A relatively few number of customers, concentrated

geographically and concentrated in a few industries.• Customers order relatively infrequently and allow fairly

long lead times.


Evaluating Alternative Channels

• Takes into account all the elements of the channel design process as well as important customer requirements.

• Approach is to create an “ideal” channel system that fully addresses customer needs.


Channel Administration

• Channel participants must be selected, and arrangements must be made to ensure that all obligations are assigned.

• Members must be motivated to perform the tasks necessary to achieve channel objectives.

• Conflict within the channel must be properly controlled.

• Performance must be controlled and evaluated.


Motivating Channel Members

A Partnership

Dealer Advisory

Councils

Margins and Commission


International MarketThree Distinct Channels

• American-based export intermediaries.• Foreign-based intermediaries.• Company-managed and company-

organized sales force.


•Thank you
