13/10/2012 1 Chapter 6 Business Marketing Channels & Market Logistics www.dinhtienminh.n et Dinh Tien Minh Th.S Đinh Tiên Minh Objectives 2 Know distinctive nature of business Marketing channels. Learn participants in business Marketing channels. Understand the channel design process and administering the channel members. Learn the role of supply chain management, logistics and market logistics. 13/10/2012 2 Th.S Đinh Tiên Minh Content 6.1 Distinctive Nature of BM Channels 6.2 Participants in BM Channels 6.3 Channel Design Process 3 6.4 Administering Channel Members 6.5 Supply chain and Logistics Management 6.6 Market Logistics/ Physical Distribution Th.S Đinh Tiên Minh4 6.1 Distinctive Nature of BM Channels Definition of Marketing channels:  Also called distribution channels. A set of interdependent of organizations that make product or service available to customer for use. Webster F.E., Jr., Industrial Marketing Strategy, John Wiley & Sons, 2 nd edition, p.213. 13/10/2012 3 Th.S Đinh Tiên Minh5 6.1 Distinctive Nature of BM Channels Definition of Marketing logistics:  Also called physical distribution. Consist of delivering the completed products to customers and intermediaries. To assist in performing the tasks of storing and moving their goods and services, the firms have to engage the services of warehouses and transportation companies. Webster F.E., Jr., Industrial Marketing Strategy, John Wiley & Sons, 2nd edition, p.213. Th.S Đinh Tiên Minh6 6.1 Distinctive Nature of BM Channels Channel Alternatives in BM: David Perry,, “How you’ll manage your 1990s distribution portfolio”, Business Marketing, 74 (June, 1989), p54. Manufacturers of Industrial Goods Direct Channels Direct Sales through Sales Force Direct Marketing Business Customers Indirect Channels Distributors Manuf’s Reps Brokers Commission Merchants Direct mail Internet Tele Marketing Jobber 13/10/2012 4 Th.S Đinh Tiên Minh10 6.1 Distinctive Nature of BM Channels What are the factors affecting the nature of Business Marketing Channels? Th.S Đinh Tiên Minh11 6.1 Distinctive Nature of BM Channels Factors affecting the Nature of BM Channels : 1. Geographical distribution: Industrial intermediaries are highly concentrated geographically, in large cities or towns. 13/10/2012 5 Th.S Đinh Tiên Minh12 6.1 Distinctive Nature of BM Channels Factors affecting the Nature of BM Channels (cont’): 2. Channel size: The channels are short and involve a type of intermediary for selling and handling the product. Sometimes, they are direct because the buyers expect product availability, technical expertise, and servicing capabilities. Th.S Đinh Tiên Minh13 6.1 Distinctive Nature of BM Channels Factors affecting the Nature of BM Channels (cont’): 3. Characteristics of Intermediaries: They are often technically qualified and have close relationship with the industrial buyers. 13/10/2012 6 Th.S Đinh Tiên Minh14 6.1 Distinctive Nature of BM Channels Factors affecting the Nature of BM Channels (cont’): 4. Mixed/ Hybrid system (direct and indirect): it’s used in order to meet the requirements of different market segments, or when the company has resources constraints (Own sales force for a large-volume customers and distributors for small-scale organizations). Th.S Đinh Tiên Minh15 6.1 Distinctive Nature of BM Channels Electronic Channels (E-Channels): 1. Providing information: through the supplier’s websites on product specifications, features, and application. Also provide links to supplier’s branch sales offices and distributors. 13/10/2012 7 Th.S Đinh Tiên Minh16 6.1 Distinctive Nature of BM Channels Electronic Channels (E-Channels) (cont’): 2. Online buying/selling: Prospective buyers not only use online information, but also do online quotations, order placements, and mode of payments (GE, Ford). Th.S Đinh Tiên Minh17 6.1 Distinctive Nature of BM Channels Electronic Channels (E-Channels) (cont’): 3. Improve supplier- customer relationships*: E-Channels creates good communications between them and help traditional channels. (*) Steven Wheeler and Evan Hirsh, Channel Champions: How Leading Companies Build New Strategies to serve Customers” (San Francisco: Jossey- Bass Publishers, 1999). P12. 13/10/2012 8 Th.S Đinh Tiên Minh18 6.1 Distinctive Nature of BM Channels Why Business Marketers use Intermediaries? Services performed by Middlemen:  Buying, Promotion, Selling and Quick delivery  Assorting (related items from various sources)  Financing  Warehousing  Transportation  Information  Risk-taking  Technical services What can the Middlemen support the manufacturers/ organisations? Th.S Đinh Tiên Minh19 6.1 Distinctive Nature of BM Channels Why Business Customers buy from Distributors? 1. Dependable delivery: Fast, economical and free delivery; Help industrial buyers to reduce inventory level, therefore inventory costs. 2. Information: Useful information about the products of many manufacturers. Why do the Business Customers would like to buy products from the Distributors? 13/10/2012 9 Th.S Đinh Tiên Minh21 6.2 Participants in BM Channels Intermediaries are classified on the basis of number of functions they perform: 1. Manufacturer’s Branch/ Regional Sales Offices. 2. Manufacturers Representatives (Agents). 3. Industrial Distributors (Dealers). 4. Brokers. 5. Commission Merchants. 6. Jobbers. Th.S Đinh Tiên Minh28 6.3 Channel Design Process  The Channel Design Framework: It deals with developing new marketing channels and modifying the existing ones. 13/10/2012 10 Th.S Đinh Tiên Minh29 6.3 Channel Design Process (cont’) The Channel Design Framework Th.S Đinh Tiên Minh30 6.3 Channel Design Process (cont’) The Channel Design Framework Webster F.E., Jr., Industrial Marketing Strategy, John Wiley & Sons, 2 nd edition, p.219. Channel Objectives Channel Alternatives Channel Constraints Evaluation of Alternatives Selection of Alternatives Channel Tasks [...]... Chain and Logistics Management  Supply Chain Management:  “The process of planning, implementing, and controlling the efficient, cost effective flow and storage of raw materials, finished goods, and related information from the point-of-origin to the point-of-consumption for the purpose of conforming to customer requirements” (Council of Logistics Management) Webster F.E., Jr., Industrial Marketing. .. at the right place at the right time and at the right costs  Logistics refers to the design and management of all activities (mainly transportation, warehousing, and inventory) necessary to make materials available for manufacturing and to make finished goods available to customers, as they are needed and in the condition required Webster F.E., Jr., Industrial Marketing Strategy, John Wiley & Sons,... Sons, 2nd edition, p.232 52 Th.S Đinh Tiên Minh 6.5 Supply Chain and Logistics Management  Logistics Management (cont’):  Scope of logistics can include: 1 2 3 4 5 6 7 8 9 53 Inventory management and control Customer service Transportation Warehousing Plant and warehouse locations Order processing Logistics communications Packaging Material handling Th.S Đinh Tiên Minh 14 13/10/2012 www.dinhtienminh.net... Strategy, John Wiley & Sons, 2nd edition, p.230 46 Th.S Đinh Tiên Minh 6.5 Supply Chain and Logistics Management Example of Supply Chain Management Nguồn: Kotabe & Hilsen (2008), Global Marketing Management, 4th Edition, John Wiley & Sons, Inc., trang 508 47 Th.S Đinh Tiên Minh 12 13/10/2012 6.5 Supply Chain and Logistics Management  Supply Chain Management (cont’):  SCM includes all the activities... Chain and Logistics Management  Supply Chain Management (cont’):  The major objectives of SCM are: • Reduce cost per unit for end users • Minimize order-to-delivery cycle time • Reduce waste and duplication • Ensure superior delivery service -> All are for customer satisfaction by delivering superior customer value 49 Th.S Đinh Tiên Minh 13 13/10/2012 6.5 Supply Chain and Logistics Management  Logistics . 13/10/2012 1 Chapter 6 Business Marketing Channels & Market Logistics www.dinhtienminh.n et Dinh Tien Minh Th.S Đinh Tiên Minh Objectives 2 Know distinctive nature of business Marketing channels. Learn. participants in business Marketing channels. Understand the channel design process and administering the channel members. Learn the role of supply chain management, logistics and market logistics. 13/10/2012 2 Th.S. portfolio”, Business Marketing, 74 (June, 1989), p54. Manufacturers of Industrial Goods Direct Channels Direct Sales through Sales Force Direct Marketing Business Customers Indirect Channels Distributors Manuf’s