2. LEARNING OBJECTIVESLEARNING OBJECTIVES
• The alternate paths to business market customers.The alternate paths to business market customers.
• The critical role that industrial distributors and manufactures’The critical role that industrial distributors and manufactures’
representatives assume in business market channels.representatives assume in business market channels.
• The central components of channel designThe central components of channel design
• Requirements for successful channel strategy.Requirements for successful channel strategy.
DHIRENDER SINGH
3. CHANNELCHANNEL
• The link between manufactures and customers .The link between manufactures and customers .
• Accomplishes all the tasks necessary to effect a sale andAccomplishes all the tasks necessary to effect a sale and
deliver products to the customer.deliver products to the customer.
• The tasks include making contact withThe tasks include making contact with
potentialbuyer.negotiating,contracting, transfering the title,potentialbuyer.negotiating,contracting, transfering the title,
storagestorage
DHIRENDER SINGH
4. FirstFirst, the channel structure must be designed to accomplish, the channel structure must be designed to accomplish
desired marketing objectives.desired marketing objectives.
Difficulty to selecting channelDifficulty to selecting channel
• the alternatives are numerousthe alternatives are numerous
• marketing goals differmarketing goals differ
• the variety of business market segments often requiresthe variety of business market segments often requires
that separate channels must be employed concurrently.that separate channels must be employed concurrently.
SecondSecond, once the channel structure has been specified, the, once the channel structure has been specified, the
business marketer must manage the channel to achievebusiness marketer must manage the channel to achieve
prescribed goals.prescribed goals.
DHIRENDER SINGH
Channel Component Dimensions
5. • 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
Alternative
s in the
Business
Market
DHIRENDER SINGH
6. 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.
DHIRENDER SINGH
7. INDIRECT DISTRIBUTIONINDIRECT DISTRIBUTION
IS GENERALLY FOUND WHEREIS GENERALLY FOUND WHERE
Markets are fragmented and widely dispersed.Markets are fragmented and widely dispersed.
Low transaction amounts prevail.Low transaction amounts prevail.
Buyers typically purchase a number of items.Buyers typically purchase a number of items.
DHIRENDER SINGH
8. E-Channel Use
Level 1:
Information Platform.
Level 2:
Transactional Platform.
Level 3:
Platform for Managing Customer Relations.
DHIRENDER SINGH
9. 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
DHIRENDER SINGH
10. • Channel design is the dynamic process of developing
new channels here none existed and modifying
existing channels.
• Channel design is an active rather than a passive task.
The Channel
Design Process
DHIRENDER SINGH
11. • 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
DHIRENDER SINGH
1.Availability of Good Intermediaries
2.Traditional Channel Patterns
3.Product Characteristics
4.Company Financial Resources
5.Competitive Strategies
6.Geographic Dispersion of Customers
12. CHANNEL ALTERNATIVES ISSUESCHANNEL ALTERNATIVES ISSUES
1.1. The number of levels to be included in theThe number of levels to be included in the
channel.channel.
2.2. The types of intermediaries to employ.The types of intermediaries to employ.
3.3. The number of channel intermediaries.The number of channel intermediaries.
4.4. The number of channels to employ.The number of channels to employ.
DHIRENDER SINGH
13. 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.
DHIRENDER SINGH
14. Evaluating Alternative ChannelsEvaluating Alternative Channels
• Takes into account all the elements of the channel design process as well as importantTakes into account all the elements of the channel design process as well as important
customer requirements.customer requirements.
• Approach is to create an “ideal” channel system that fully addresses customer needs.Approach is to create an “ideal” channel system that fully addresses customer needs.
DHIRENDER SINGH
15. CHANNEL ADMINISTRATIONCHANNEL ADMINISTRATION
• Channel participants must be selected, and arrangementsChannel participants must be selected, and arrangements
must be made to ensure that all obligations are assigned.must be made to ensure that all obligations are assigned.
• Members must be motivated to perform the tasks necessary toMembers must be motivated to perform the tasks necessary to
achieve channel objectives.achieve channel objectives.
• Conflict within the channel must be properly controlled.Conflict within the channel must be properly controlled.
• Performance must be controlled and evaluated.Performance must be controlled and evaluated.
DHIRENDER SINGH
