Business Market Management 3 rd  edition Sustaining Reseller Partnerships Chapter 9
Section IV:  Delivering Value Business Market Management,  3 rd  edition Chapter 9-
Chapter 9:  Sustaining Reseller  Partnerships <ul><li>Overview </li></ul><ul><ul><li>Aligning Mutual Self-Interests and Co...
Overview <ul><li>Reseller   partnership:   mutual recognition and understanding that the success of each firm depends on t...
Business Market Management,  3 rd  edition Chapter 9- Delivering Superior Value to Targeted Market Segments   and Customer...
I. Aligning Mutual  Self-Interests and Complementary Resources Business Market Management,  3 rd  edition Chapter 9-
Mutual Self-Interests and Complementary Resources <ul><li>Business Marketing Channels </li></ul><ul><ul><li>Shared goals <...
Mutual Self-Interests and Complementary Resources <ul><li>Alignment:  </li></ul><ul><ul><li>Goal congruence exists among p...
Alignment Difficulties <ul><li>Law of Legitimate Cross-Purposes:  supplier firms and reseller firms rely upon different pr...
Threat of Opportunism <ul><li>Opportunism :  “self-interest seeking with guile” </li></ul><ul><ul><li>Careful selection of...
Ensuring Alignment <ul><li>Understanding channel partners’ business models </li></ul><ul><li>Joint annual planning and per...
Causes of Channel Conflict <ul><li>Differences in goals </li></ul><ul><li>Misunderstanding in relation to the allocation o...
Ensuring Alignment  <ul><li>Different scenarios: </li></ul><ul><ul><li>Strengthening partnerships in a stable marketplace ...
II. Strengthening Partnerships in a Stable Marketplace Business Market Management,  3 rd  edition Chapter 9-
Strengthening Partnerships  in a Stable Marketplace <ul><li>Commitment:  captures the perceived continuity or growth in th...
Fulfilling Supplier Commitments to Deliver Value <ul><li>Supplier Training: </li></ul><ul><ul><li>Product knowledge </li><...
Fulfilling Supplier Commitments to Deliver Value <ul><li>Train and Coach Partner firms </li></ul><ul><ul><li>Certification...
Provide Responsive Sales and Marketing Programs <ul><li>Product-Market Sales Analysis (PMSA) </li></ul><ul><ul><li>Analyze...
Back Up Resellers with  Pricing Support <ul><li>To keep reseller focused on delivering value, leading supplier firms promi...
Furnish Operational and  Technical Support <ul><li>Supplier firms can reduce the cost-to-serve customers by maintaining an...
Fulfilling Reseller Commitments to Deliver Value <ul><li>Reseller firms can boost their own reseller equity and enhance su...
Strengthening Interfirm Coordination <ul><li>Coordination:  Customer and supplier firms synchronize their activities, reso...
Participate in Periodic Joint  Annual Planning <ul><li>Supplier and Reseller firms participate in planning process </li></...
Written Agreements <ul><li>Equitable sales agreements </li></ul><ul><ul><li>Sharpen expectations and  direct the actions o...
Improve Communications  Through Bridging <ul><li>Communication:  formal and informal sharing of meaningful and timely info...
Synchronize Efforts with a Partner Relationship Management System <ul><li>Partner Relationship Management (PRM):  business...
Ensuring that Value is Delivered <ul><li>Conduct Market Research </li></ul><ul><ul><li>Was Total customer experience (TCE)...
Market Research <ul><li>How research findings are used: </li></ul><ul><ul><li>Reseller and suppliers reexamine what each c...
Equitable Return on Delivered Value <ul><li>Evaluate channel financial performance to determine: </li></ul><ul><ul><li>Hav...
Diagnostic Measure and Profitability Analyses <ul><li>Calculate specific profitability and other performance ratios for th...
Diagnostic Measures Business Market Management,  3 rd  edition Chapter 9- Annual  Inventory Turnover X Average Gross   Mar...
Strategic Cost Management (SCM):  4-Step Approach <ul><li>Divide organization’s cost into </li></ul><ul><ul><li>Activity c...
Profitable Analyses Business Market Management,  3 rd  edition Chapter 9- Contribution Margin _ Controllable Marketing  Fi...
III. Responding Adaptively to Incremental Marketplace Changes Business Market Management,  3 rd  edition Chapter 9-
Adjusting Commitments <ul><li>Establish a  Reseller Advisory Council </li></ul><ul><li>Reformulate channel partners’  “Giv...
Reseller Advisory Council <ul><li>Consultative forum composed of key managers from supplier and 10-15 reseller firms </li>...
Gives & Gets <ul><li>Gives :  specific investments and resources a firm contributes </li></ul><ul><ul><li>Knowledge </li><...
Traditional Reseller Discounts and Allowances Business Market Management,  3 rd  edition Chapter 9- Trade or Functional Di...
Eliminating Inequities <ul><li>Evaluate both partners’ “gives & gets” </li></ul><ul><li>Functional Allowance </li></ul><ul...
Responsive Adjustment to Joint Annual Plan <ul><li>Reseller market plans provide a coordinated course of action </li></ul>...
Seek Influence Among Channel Partner Firms <ul><li>Six influence strategies for gaining and using power: </li></ul><ul><ul...
Seek Influence among Channels Partner Firms <ul><li>How can the weaker firm ensure that its more powerful partner will tre...
Creating Adaptive Channels <ul><li>Adaptive Channels:  Flexible and responsive to changing marketplace requirements </li><...
Adaptive Channel Initiatives <ul><li>Design arrangements that ensure they are routinely able to  cope with unpredictable o...
Provide Support in Extraordinary Situations <ul><li>Auxiliary Support Systems </li></ul><ul><ul><li>Distribution channel m...
Resolving Reseller-Supplier Conflict Business Market Management,  3 rd  edition Chapter 9- Boundary-Spanning Personnel Ind...
Responsively Broaden the  Market Offering <ul><li>Companies outsource supply  management function </li></ul><ul><li>Resell...
Share Capabilities with Other Channel Members <ul><li>Companies tend to do an outstanding job with some services and a med...
IV. Transforming Channels in the Face of Disruptive Forces Business Market Management,  3 rd  edition Chapter 9-
Transforming Channels in the  Face of Disruptive Forces <ul><li>Major structural changes within the marketplace  </li></ul...
Creating Integrated Multi-Channels <ul><li>Customer firms routinely search and patronize multiple channels </li></ul><ul><...
Integrated Multi-Channels <ul><li>Routine arrangements that address all sales and fulfillment tasks  </li></ul><ul><li>Pro...
Handling Relationship Transfers <ul><li>Delineate Relationship Transfer Criteria </li></ul><ul><ul><li>Economies of scale ...
Terminating Partnerships <ul><li>Suppliers, reseller, and third-party service provider managers should enter into the rela...
V. Summary Business Market Management,  3 rd  edition Chapter 9-
Summary <ul><li>To sustain reseller partnerships, supplier and reseller managers must continuously align their mutual self...
Business Market Management,  3 rd  edition Chapter 9- All rights reserved. No part of this publication may be reproduced, ...
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Chapter09

  1. 1. Business Market Management 3 rd edition Sustaining Reseller Partnerships Chapter 9
  2. 2. Section IV: Delivering Value Business Market Management, 3 rd edition Chapter 9-
  3. 3. Chapter 9: Sustaining Reseller Partnerships <ul><li>Overview </li></ul><ul><ul><li>Aligning Mutual Self-Interests and Complementary Resources </li></ul></ul><ul><ul><li>Strengthening Partnerships in a Stable Marketplace </li></ul></ul><ul><ul><li>Responding Adaptively to Incremental Marketplace Changes </li></ul></ul><ul><ul><li>Transforming Channels in the Face of Disruptive Forces </li></ul></ul><ul><ul><li>Summary </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  4. 4. Overview <ul><li>Reseller partnership: mutual recognition and understanding that the success of each firm depends on the other firm </li></ul><ul><li>Sustaining reseller partnerships: continuing process of aligning mutual self-interests with complementary resources of partner firms in stable marketplaces </li></ul>Business Market Management, 3 rd edition Chapter 9-
  5. 5. Business Market Management, 3 rd edition Chapter 9- Delivering Superior Value to Targeted Market Segments and Customer Firms Sustaining Reseller Partnerships Strengthening Partnerships in Stable Marketplaces Ensuring that Value i s Delivered Enhancing Interfirm Coordination Fulfilling Supplier Commitments Fulfilling Reseller Commitments Responding Adaptively to Incremental Changes Creating Adaptive Channels Adjusting Commitments Transforming Channels in the Face of Disruptive Forces Establishing Integrated Multi-Channels Skillfully Handling Relationship Transfers Terminating Existing Partnerships
  6. 6. I. Aligning Mutual Self-Interests and Complementary Resources Business Market Management, 3 rd edition Chapter 9-
  7. 7. Mutual Self-Interests and Complementary Resources <ul><li>Business Marketing Channels </li></ul><ul><ul><li>Shared goals </li></ul></ul><ul><ul><li>Distinct individual goals </li></ul></ul><ul><li>Supplier firm and reseller firm </li></ul><ul><ul><li>Sharing complementary resources and capabilities increases likelihood that both achieve respective goals </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  8. 8. Mutual Self-Interests and Complementary Resources <ul><li>Alignment: </li></ul><ul><ul><li>Goal congruence exists among partner firms’ self-interests </li></ul></ul><ul><ul><ul><li>Degree to which complementary resources and capabilities enable partner firms to capitalize on marketplace opportunities </li></ul></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  9. 9. Alignment Difficulties <ul><li>Law of Legitimate Cross-Purposes: supplier firms and reseller firms rely upon different profit models that are sometimes at odds </li></ul><ul><ul><li>Supplier: economies of scale </li></ul></ul><ul><ul><li>Resellers: economies of scope </li></ul></ul><ul><li>Law of Perpetual Change: evolving marketplaces may dramatically and unexpectedly alter the goals and resources of channel partners </li></ul>Business Market Management, 3 rd edition Chapter 9-
  10. 10. Threat of Opportunism <ul><li>Opportunism : “self-interest seeking with guile” </li></ul><ul><ul><li>Careful selection of honest and trustworthy partner firms </li></ul></ul><ul><ul><li>Provision of incentives designed to thwart counterproductive behaviors </li></ul></ul><ul><ul><li>Diligent monitoring of partner firms’ activities </li></ul></ul><ul><ul><li>Socialization of partner firm managers to the norms and values associated with the pursuit of shared goals </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  11. 11. Ensuring Alignment <ul><li>Understanding channel partners’ business models </li></ul><ul><li>Joint annual planning and periodic surveys </li></ul><ul><li>Continuously monitor the amount of conflict within their marketing channels </li></ul><ul><li>Identify and pay attention to changes in the marketplace that stand to misalign the mutual self-interests of partner firms </li></ul>Business Market Management, 3 rd edition Chapter 9-
  12. 12. Causes of Channel Conflict <ul><li>Differences in goals </li></ul><ul><li>Misunderstanding in relation to the allocation of partnership responsibilities </li></ul><ul><li>Differences in perceptions of the marketplace </li></ul>Business Market Management, 3 rd edition Chapter 9- Conflict often masks misalignment and the tendency of both supplier and reseller to avoid or “ gloss over” conflicts. However, addressing disputes early and decisively is in the best interests of both parties.
  13. 13. Ensuring Alignment <ul><li>Different scenarios: </li></ul><ul><ul><li>Strengthening partnerships in a stable marketplace </li></ul></ul><ul><ul><li>Responding adaptively to incremental marketplace changes </li></ul></ul><ul><ul><li>Transforming channels in the face of disruptive forces </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  14. 14. II. Strengthening Partnerships in a Stable Marketplace Business Market Management, 3 rd edition Chapter 9-
  15. 15. Strengthening Partnerships in a Stable Marketplace <ul><li>Commitment: captures the perceived continuity or growth in the relationship between two firms </li></ul><ul><ul><li>Desire to develop stable relations </li></ul></ul><ul><ul><li>Willingness to make short-term sacrifices to maintain the relationship </li></ul></ul><ul><ul><li>Confidence in the stability of the relationship </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  16. 16. Fulfilling Supplier Commitments to Deliver Value <ul><li>Supplier Training: </li></ul><ul><ul><li>Product knowledge </li></ul></ul><ul><ul><li>Selling skills </li></ul></ul><ul><ul><li>Technical competence </li></ul></ul><ul><li>Reseller Courses: </li></ul><ul><ul><li>Customer applications </li></ul></ul><ul><ul><li>Changing customer needs </li></ul></ul><ul><ul><li>Operational procedures </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  17. 17. Fulfilling Supplier Commitments to Deliver Value <ul><li>Train and Coach Partner firms </li></ul><ul><ul><li>Certification programs </li></ul></ul><ul><ul><ul><li>Series of technical courses </li></ul></ul></ul><ul><ul><ul><li>Demonstrate competence (examinations) </li></ul></ul></ul><ul><ul><li>Skills training </li></ul></ul><ul><ul><ul><li>Courses on focused topics </li></ul></ul></ul><ul><ul><li>Coaching </li></ul></ul><ul><ul><ul><li>Improvement and reinforcement of desired skills, behaviors, and performance </li></ul></ul></ul><ul><ul><ul><li>Strategic coaching </li></ul></ul></ul><ul><ul><ul><li>Skills coaching </li></ul></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  18. 18. Provide Responsive Sales and Marketing Programs <ul><li>Product-Market Sales Analysis (PMSA) </li></ul><ul><ul><li>Analyzes the distributor’s product line by: </li></ul></ul><ul><ul><ul><li>Geographic region </li></ul></ul></ul><ul><ul><ul><li>Market segment </li></ul></ul></ul><ul><ul><ul><li>Customer firm </li></ul></ul></ul><ul><ul><li>Strategy includes: </li></ul></ul><ul><ul><ul><li>How to customize offerings for local customers </li></ul></ul></ul><ul><ul><ul><li>How to cross-sell the full line of products </li></ul></ul></ul><ul><ul><ul><li>Distributors given option for analyzing the data and generating marketing development strategies </li></ul></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  19. 19. Back Up Resellers with Pricing Support <ul><li>To keep reseller focused on delivering value, leading supplier firms promise pricing support </li></ul><ul><ul><li>Finding cost reduction in customer’s plants </li></ul></ul><ul><ul><li>Large-order price discounts </li></ul></ul><ul><ul><li>Initial-use discounts </li></ul></ul><ul><ul><li>Defeaturing pricing </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  20. 20. Furnish Operational and Technical Support <ul><li>Supplier firms can reduce the cost-to-serve customers by maintaining and providing operational and technical support in the form of: </li></ul><ul><ul><li>Inventory control </li></ul></ul><ul><ul><li>Logistics </li></ul></ul><ul><ul><li>Customer service systems </li></ul></ul><ul><li>Eliminating redundancies enables reseller partners to offering a broader array of services at far lower costs </li></ul>Business Market Management, 3 rd edition Chapter 9-
  21. 21. Fulfilling Reseller Commitments to Deliver Value <ul><li>Reseller firms can boost their own reseller equity and enhance supplier firm’s brand equity by: </li></ul><ul><ul><li>Providing consistently superior service to customer firms </li></ul></ul><ul><ul><li>Innovating in the local marketplace </li></ul></ul><ul><ul><li>Enhancing the supplier’s brand equity </li></ul></ul><ul><ul><ul><li>Offer new product ideas </li></ul></ul></ul><ul><ul><ul><li>Participate in quality improvement efforts </li></ul></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  22. 22. Strengthening Interfirm Coordination <ul><li>Coordination: Customer and supplier firms synchronize their activities, resources, and capabilities to accomplish a collective set of tasks </li></ul><ul><ul><li>Periodic joint annual planning </li></ul></ul><ul><ul><li>Clarifying roles and responsibilities through written agreements </li></ul></ul><ul><ul><li>Improving communication through bridging </li></ul></ul><ul><ul><li>Synchronizing effort with Partner relationship management (PRM) </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  23. 23. Participate in Periodic Joint Annual Planning <ul><li>Supplier and Reseller firms participate in planning process </li></ul><ul><ul><li>Both more likely to view plan as theirs and work hard to implement it </li></ul></ul><ul><ul><ul><li>What do we know? </li></ul></ul></ul><ul><ul><ul><li>What do we want to accomplish? </li></ul></ul></ul><ul><ul><ul><li>How will we do it? </li></ul></ul></ul><ul><ul><li>Reseller Marketing Plan </li></ul></ul><ul><ul><ul><li>Situational analysis (SWOT) </li></ul></ul></ul><ul><ul><ul><li>Mutual objectives </li></ul></ul></ul><ul><ul><ul><li>Basic requirements </li></ul></ul></ul><ul><ul><ul><li>Implementation and control </li></ul></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  24. 24. Written Agreements <ul><li>Equitable sales agreements </li></ul><ul><ul><li>Sharpen expectations and direct the actions of both firms </li></ul></ul><ul><li>Policy manuals </li></ul><ul><ul><li>Detailed descriptions of tasks each member should perform </li></ul></ul><ul><li>Policy statements </li></ul><ul><ul><li>Detailed statement of changes and modifications in a specific policy </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  25. 25. Improve Communications Through Bridging <ul><li>Communication: formal and informal sharing of meaningful and timely information between firms </li></ul><ul><li>Bridging: establishing and sustaining communication between partner firms across functions and management levels </li></ul><ul><ul><li>Occasional phone calls </li></ul></ul><ul><ul><li>Letters </li></ul></ul><ul><ul><li>Ocassionally holidaying together </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  26. 26. Synchronize Efforts with a Partner Relationship Management System <ul><li>Partner Relationship Management (PRM): business regimen that enhances the ability of the supplier firm, reseller, and third-party service provider to seamlessly integrate and synchronize their: </li></ul><ul><ul><li>Operations </li></ul></ul><ul><ul><li>Selling </li></ul></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Servicing efforts </li></ul></ul><ul><li>Internet or Extranet Based Software </li></ul>Business Market Management, 3 rd edition Chapter 9-
  27. 27. Ensuring that Value is Delivered <ul><li>Conduct Market Research </li></ul><ul><ul><li>Was Total customer experience (TCE) promised to customer firm provided? </li></ul></ul><ul><ul><li>Customer Satisfaction Studies </li></ul></ul><ul><ul><li>Customer Value Assessment Studies </li></ul></ul><ul><li>Get Equitable Return on Delivered Value </li></ul><ul><ul><li>Have they received an equitable return on the value they delivered? </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  28. 28. Market Research <ul><li>How research findings are used: </li></ul><ul><ul><li>Reseller and suppliers reexamine what each contributes to the delivery of TCE </li></ul></ul><ul><ul><li>Supplier adapts its channel offering to better motivate and enable resellers to service customers </li></ul></ul><ul><ul><li>Findings might point to needed improvement in supplier and reseller coordination </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  29. 29. Equitable Return on Delivered Value <ul><li>Evaluate channel financial performance to determine: </li></ul><ul><ul><li>Have supplier and its reseller firms realized the financial returns expected? </li></ul></ul><ul><ul><li>New ways to achieve their cost-to-serve goals </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  30. 30. Diagnostic Measure and Profitability Analyses <ul><li>Calculate specific profitability and other performance ratios for the firm’s channels </li></ul><ul><li>Compare each ratio to industry averages </li></ul><ul><li>Ratios are used to track performance over time, to compare relative performance of two firms, and to make cross-industry comparisons </li></ul>Business Market Management, 3 rd edition Chapter 9- Note: Suppliers and reseller rely on different sets of performance ratios
  31. 31. Diagnostic Measures Business Market Management, 3 rd edition Chapter 9- Annual Inventory Turnover X Average Gross Margin Average Gross Margin ÷ Average Inventory Average Gross Margin ÷ Average Accounts Receivables PARs Performance Activity Reports. Trade associations and consulting firms commonly compile and publish industry averages. If firm’s ratio is close to the industry average, then it is doing acceptably well on that dimension. E/R Ratios Expense-to-Revenue Ratios . Suppliers evaluate: 1) customer communication, 2) paperwork flows, 3) physical distribution, and 4) financial risk assumptions Turns X earns GMROI GMROR
  32. 32. Strategic Cost Management (SCM): 4-Step Approach <ul><li>Divide organization’s cost into </li></ul><ul><ul><li>Activity costs (order processing; selling costs) </li></ul></ul><ul><ul><li>Non-activity costs (advertising, trade shows) </li></ul></ul><ul><li>Subdivide and classify these costs as: </li></ul><ul><ul><li>Channel-related or </li></ul></ul><ul><ul><li>Specific reseller-related costs </li></ul></ul><ul><li>Trace each cost back to individual channels or resellers </li></ul><ul><li>Estimate revenues channels or resellers generate and then construct direct costing income statements </li></ul><ul><li>These analyses enable managers to examine the profitability of channels or resellers. </li></ul>Business Market Management, 3 rd edition Chapter 9-
  33. 33. Profitable Analyses Business Market Management, 3 rd edition Chapter 9- Contribution Margin _ Controllable Marketing Fixed Costs SCM Strategic Cost Management: Recasts the direct costing income statement around distribution-related activities Contribution Margin <ul><ul><li>Sales – Variables Costs </li></ul></ul>Net Marketing Contribution
  34. 34. III. Responding Adaptively to Incremental Marketplace Changes Business Market Management, 3 rd edition Chapter 9-
  35. 35. Adjusting Commitments <ul><li>Establish a Reseller Advisory Council </li></ul><ul><li>Reformulate channel partners’ “Gives & Gets” </li></ul><ul><li>Make responsive adjustments to the Joint Annual Plan </li></ul><ul><li>Seek influence among channel partner firms </li></ul><ul><li>Establish a process and procedures for conflict resolution </li></ul>Business Market Management, 3 rd edition Chapter 9-
  36. 36. Reseller Advisory Council <ul><li>Consultative forum composed of key managers from supplier and 10-15 reseller firms </li></ul><ul><li>Advisory group offers counsel to supplier </li></ul><ul><li>Functions as a means of incremental channel improvement </li></ul><ul><li>Council improves: </li></ul><ul><ul><li>Market response </li></ul></ul><ul><ul><li>New product and service marketing </li></ul></ul><ul><ul><li>Channel management (domestic & international) </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  37. 37. Gives & Gets <ul><li>Gives : specific investments and resources a firm contributes </li></ul><ul><ul><li>Knowledge </li></ul></ul><ul><ul><li>Personnel </li></ul></ul><ul><ul><li>Fixed assets </li></ul></ul><ul><ul><li>Cash </li></ul></ul><ul><li>Gets: specific gains a firm receives </li></ul><ul><ul><li>Greater expertise </li></ul></ul><ul><ul><li>Enhanced capabilities </li></ul></ul><ul><ul><li>Additional profits </li></ul></ul>Business Market Management, 3 rd edition Chapter 9- Disconnects between partner firms can occur here; what one channel member thinks it is giving can be significantly different from what the other partner perceives it is getting .
  38. 38. Traditional Reseller Discounts and Allowances Business Market Management, 3 rd edition Chapter 9- Trade or Functional Discount <ul><li>Percentage reduction from a suggested resale price </li></ul><ul><li>Historical industry discounts </li></ul><ul><li>Industry gross margin averages </li></ul><ul><li>Turns x earns ratios </li></ul>Quantity or Volume Discount <ul><li>Designed to motivate reseller to buy in large quantities and store local inventory (box loads, truckloads, and rail carloads) </li></ul>Payment Discount <ul><li>Encouragement to pay for goods immediately </li></ul><ul><li>2/10/net 30 (2% reduction of invoice price paid within 10 days) </li></ul>Allowance <ul><li>Extra payment designed to gain reseller participation in special programs (cooperative advertising, merchandising, etc.) </li></ul>
  39. 39. Eliminating Inequities <ul><li>Evaluate both partners’ “gives & gets” </li></ul><ul><li>Functional Allowance </li></ul><ul><ul><li>Supplier pays reseller set percent off the reseller buy price </li></ul></ul><ul><li>Fee-for-Service </li></ul><ul><ul><li>Supplier pays its reseller partners a prespecified amount </li></ul></ul><ul><li>On Retainer </li></ul><ul><ul><li>Amount of technical service days/hours expected from distributor partner for customer service (paid whether service is provided or not) </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  40. 40. Responsive Adjustment to Joint Annual Plan <ul><li>Reseller market plans provide a coordinated course of action </li></ul><ul><ul><li>Must respond to incremental market changes quickly </li></ul></ul><ul><ul><li>Market conditions change </li></ul></ul><ul><ul><li>Suppliers and resellers learn through implementing the initial plan </li></ul></ul><ul><ul><li>Progressive suppliers and resellers adjust existing plans when necessary </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  41. 41. Seek Influence Among Channel Partner Firms <ul><li>Six influence strategies for gaining and using power: </li></ul><ul><ul><li>Information exchange </li></ul></ul><ul><ul><li>Recommendations </li></ul></ul><ul><ul><li>Promises </li></ul></ul><ul><ul><li>Threats </li></ul></ul><ul><ul><li>Legalistic pleas </li></ul></ul><ul><ul><li>Requests </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  42. 42. Seek Influence among Channels Partner Firms <ul><li>How can the weaker firm ensure that its more powerful partner will treat it fairly? </li></ul><ul><li>Dependence-Balancing Operations: </li></ul><ul><ul><li>Courses of action weaker firms pursue to equalize the importance of the partnership </li></ul></ul><ul><ul><ul><li>Make greater investments in partnership until resources committed by both firms is roughly equal </li></ul></ul></ul><ul><ul><ul><li>Seek out other partners </li></ul></ul></ul><ul><ul><ul><li>Change non-redeployable assets into redeployable assets </li></ul></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  43. 43. Creating Adaptive Channels <ul><li>Adaptive Channels: Flexible and responsive to changing marketplace requirements </li></ul><ul><ul><li>Webs of capabilities embedded in an extended enterprise </li></ul></ul><ul><ul><li>Identify infrequent, yet critical customer requirements that they cannot routinely fulfill on their own </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  44. 44. Adaptive Channel Initiatives <ul><li>Design arrangements that ensure they are routinely able to cope with unpredictable or unusual demands for products or services. </li></ul><ul><li>Focus on meeting customers’ growing demands for broader market offerings. </li></ul><ul><li>Objective is to improve the quality of service throughout the distribution channel. </li></ul>Business Market Management, 3 rd edition Chapter 9-
  45. 45. Provide Support in Extraordinary Situations <ul><li>Auxiliary Support Systems </li></ul><ul><ul><li>Distribution channel members cope with </li></ul></ul><ul><ul><ul><li>Unexpected or unusual demands for products/services by sharing inventory and support services </li></ul></ul></ul><ul><ul><ul><li>Information technology monitors the availability of: </li></ul></ul></ul><ul><ul><ul><ul><li>offerings </li></ul></ul></ul></ul><ul><ul><ul><ul><li>processes </li></ul></ul></ul></ul><ul><ul><ul><ul><li>orders </li></ul></ul></ul></ul><ul><ul><ul><ul><li>integrated logistics systems </li></ul></ul></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  46. 46. Resolving Reseller-Supplier Conflict Business Market Management, 3 rd edition Chapter 9- Boundary-Spanning Personnel Individuals who are in contact with the partner firm regularly; sensitive to inherent trouble spots Employee Exchange Program Firms assign personnel for periods time to channel partner operations Trade Association Membership Both the supplier firm and channel partners can learn how the other operates and what problems they must routinely address Ombudsman Typically a retired reseller manager or principal employed by the supplier who has credibility with both parties Mediation A third party is brought in to help resolve a dispute by either refocusing discussion on key issues or suggesting viable solutions Arbitration Firms legally agree to have a third party settle the disagreement. Decision is final and binding.
  47. 47. Responsively Broaden the Market Offering <ul><li>Companies outsource supply management function </li></ul><ul><li>Reseller Alliances </li></ul><ul><ul><li>Members agree to pool resources and capabilities and broaden one another's market offering </li></ul></ul><ul><ul><li>Consortium: resellers of complementary lines contribute equity and create a separate corporation </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  48. 48. Share Capabilities with Other Channel Members <ul><li>Companies tend to do an outstanding job with some services and a mediocre job with others </li></ul><ul><li>To overcome discrepancies, suppliers and resellers adopt: </li></ul><ul><ul><li>Capabilities-Sharing Agreements </li></ul></ul><ul><ul><ul><li>Superior service of one channel member substitutes for the sub par service of another </li></ul></ul></ul><ul><ul><ul><li>Channel members receive appropriate compensation for sharing their superior service capabilities </li></ul></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  49. 49. IV. Transforming Channels in the Face of Disruptive Forces Business Market Management, 3 rd edition Chapter 9-
  50. 50. Transforming Channels in the Face of Disruptive Forces <ul><li>Major structural changes within the marketplace </li></ul><ul><ul><li>Growth of the internet and mobile telephones </li></ul></ul><ul><ul><li>Shift in power from supplier firm to customer and reseller firm </li></ul></ul><ul><ul><li>Commodization or technological obsolescence of many products </li></ul></ul><ul><ul><li>Growing importance of service as the primary source of customer value </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  51. 51. Creating Integrated Multi-Channels <ul><li>Customer firms routinely search and patronize multiple channels </li></ul><ul><ul><li>Whose customer is it? </li></ul></ul><ul><ul><ul><li>Both supplier and reseller managers should integrate and synchronize their efforts at serving their mutual customers </li></ul></ul></ul><ul><ul><ul><li>Channel Steward </li></ul></ul></ul><ul><ul><ul><ul><li>coordinates activities for mutual benefit </li></ul></ul></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  52. 52. Integrated Multi-Channels <ul><li>Routine arrangements that address all sales and fulfillment tasks </li></ul><ul><li>Provide business market managers with numerous alternative channel configurations </li></ul><ul><ul><li>Able to quickly respond to changing customer requirements </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  53. 53. Handling Relationship Transfers <ul><li>Delineate Relationship Transfer Criteria </li></ul><ul><ul><li>Economies of scale </li></ul></ul><ul><ul><li>Key for both channel partners is to identify the relevant sales breakpoint, at which relationship transfers from one to the other (to supplier if sales per time period is above the breakpoint and to reseller if below) </li></ul></ul><ul><ul><li>Changes in customer TCE requirements may also indicate the need to transfer relationships </li></ul></ul><ul><li>Establish Equitable Compensation for Relationship Transfers </li></ul>Business Market Management, 3 rd edition Chapter 9-
  54. 54. Terminating Partnerships <ul><li>Suppliers, reseller, and third-party service provider managers should enter into the relationship with the sober realization that arrangements are not likely to last forever </li></ul><ul><ul><li>Contract renewal clause </li></ul></ul><ul><ul><li>Conditions under which partnership termination are likely should be addressed in the agreement </li></ul></ul><ul><ul><li>Procedures for termination should be delineated </li></ul></ul><ul><ul><li>Termination should be civil and courteous </li></ul></ul>Business Market Management, 3 rd edition Chapter 9-
  55. 55. V. Summary Business Market Management, 3 rd edition Chapter 9-
  56. 56. Summary <ul><li>To sustain reseller partnerships, supplier and reseller managers must continuously align their mutual self-interests and complementary resources </li></ul><ul><ul><li>Strengthen partnerships in stable marketplaces </li></ul></ul><ul><ul><li>Respond adaptively to incremental marketplace changes </li></ul></ul><ul><ul><li>Transform channels in the face of disruptive forces </li></ul></ul><ul><li>The nature and extent of realignment efforts varies as a function of marketplace conditions </li></ul><ul><li>The principle managerial tasks are: </li></ul><ul><ul><li>Fulfilling commitment to one another </li></ul></ul><ul><ul><li>Ensuring customer value is delivered </li></ul></ul><ul><ul><li>Enhancing interfirm coordination </li></ul></ul><ul><li>When marketplace changes are disruptive, the channel steward must act to transform the channel network </li></ul>Business Market Management, 3 rd edition Chapter 9-
  57. 57. Business Market Management, 3 rd edition Chapter 9- All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc.   Publishing as Prentice Hall

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