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
Indirect
Channels

Direct Channels

Direct Sales

Online
Marketing

Agents

Telemarketing

Distributors

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, indepth 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

Specialists

Broad array of industrial products

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 noncompeting 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 endcustomer

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
Guarantee

Service

Installation

Assortment Size

Financing
Information

Channel Partner
Channel Partner
Manufacturer

Customisation

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 skills
Strategic thinking of senior management
Loyalty

Commitment & motivation towards supplier

Compliance

Acceptance of channel policies &

programmes

Adaptability

Innovation in handling supplier products

Customer
satisfaction

Level of services
Service quality

Support to Channel

Incentives

Territorial exclusivity
Providing resources

Financial commission, discounts

Bonuses

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

anothers 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

Intra-organisational

Suppliers
Inventory
Distribution
Channel
Payment

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 buyers needs

Wide range of referral sources

Always open

Effect of Internet on Marketing

Variables

Pricing

Buyers 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!!