Description
Business MarketManagement 3 rd edition Business Channel Management Chapter 7 Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-2 Section III: Creating Value Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-3 Chapter 7: Business Channel Management Overview I. Designing Superior Value-Adding Marketing Channels II. Creating Value Through Direct Channels III. Strengthening Reseller Performance IV. Summary Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-4 Overview Marketing channels are a source of competitive differentiation as products and services become commodity-like Channels augment market offerings by creating a highly valued total customer experience (TCE) Marketing Channel—a set of interdependent organizations involved in the process of making a product or service available for use or consumption. (Stern and El-Ansary) Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-5 Business Channel Management The process of designing a set of marketing and distribution arrangements that create superior customer value for targeted market segments and customers, and executing those arrangements directly through supplier firm sales forces and logistics systems or indirectly through resellers and 3 rd -party service providers Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-6 Create Value for Targeted Market Segments & Customer Firms Create Value for Targeted Market Segments & Customer Firms Create Value for Targeted Market Segments & Customer Firms Designing Superior Value-Adding Marketing Channels Hybrid Channel Arrangements Construct Channel Offering(s) Build Marketplace Equity Craft Reseller Value Proposition(s) Design Logistics Systems Create Value Merchants Deploy Value Merchants Creating Value Through Direct Channels Strengthening Reseller Performance Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-7 I. Designing Superior Value-Adding Marketing Channels Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-8 Designing Superior Value-Adding Marketing Channels Total Customer Experience (TCE) Entails all aspect of a customer firm’s encounter with a supplier firm • TCE Goals: – Positive experience – Seamless – Memorable interaction that matches customer firm’s purchasing requirements and preferences Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-9 Immediacy of fulfillment Breadth & depth of products & services Availability of products and services Timing and reliability of delivery Installation Payment terms and conditions Extent of augmenting value- added services Pre-sale Point-of-sale Post-sale services or “for-fee options” Research indicates that firms that focus on “fulfillment” are more profitable. (Grove) Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-10 Four TCE-Based Positions Efficient, low-cost transaction experience The high-touch, consultative experience Inexpensive, convenient, self-service Minimal value-added service Internet Web sites Direct marketing Extensive consultation and advice Customization of offerings Frequent face-to-face encounters Complete range of value-added services The flexible, multi- access-point experience The one-stop shopping experience Customer free to purchase supplier's offerings intact or piecemeal from several integrated or stand-alone channels on a transaction-by- transaction basis Customer can purchase a wide variety of complementary products and services from a single source Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-11 Designing a Superior Value-Adding Marketing Chanel 1. Specify goals and objectives of the marketing channel(s) 2. Assess customer value of TCE 3. Envision value proposition for each targeted market 4. Reformulate the TCE for each targeted market 5. Configure the channel network 6. Finalize marketing and distribution arrangements Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-12 Specify Goals and Objectives of Marketing Channels Three Predominant Goals Maximize Market Access • How business channels enable a supplier to reach, develop, and serve targeted segments and customer firms Optimize Value-Added • This entails the augmenting products and services that channel partners contribute to the supplier firm’s market offering Minimize Cost-to-Serve • The total expenditures required to deliver the intended TCE to targeted segments and customers Caution: Channel goals often work at odds with one another. Trade-offs & adjustment may be needed. Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-13 Assess Customer Value of Potential TCE Elements Business market managers should focus on value elements that contribute to the total customer experience Service Outputs & their Monetary Value • Integrated supply • Local customization • Emergency delivery • Technical support • Product standardization Assess Customer Preferences for • Learning • Shopping • Buying • Getting help These services strongly suggest the type of channel network the supplier should adopt These are critical as they shape the “soft” side of TCE Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-14 Envision a Value Proposition for Each Targeted Market Segment Customer Value Proposition serves as a beacon for all the supplier firm’s channel network design effort Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-15 Reformulate the Intended TCE for Each Targeted Market Segment Add, delete, or modify products and valued- added services as well as fulfillment and communication processes to more closely meet the critical TCE requirements and preferences of the targeted segment Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-16 Configure the Channel Network Managers simultaneously consult and consider the classic channel strategies related to exposure and coverage, postponement and speculation, and functional acquisition and functional spin-off Managers meld their strategic preferences into a channel network design that can profitably deliver the intended TCE to targeted segments Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-17 Finalize Marketing and Distribution Arrangements To gain market access, channels must provide sufficient exposure and coverage Exposure: degree targeted customer firms are reached and served by the appropriate kind and number of channels • Single-channel strategy • Multiple-channel strategy Coverage: number of resellers or direct sales persons assigned per geographic trade area • Distribution intensity strategy: exclusive, selective, or intensive Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-18 Distribution Intensity Strategies Exclusive Supplier authorizes one reseller per trade area Selective Supplier authorizes a limited number of resellers per trade area Intensive Supplier authorizes all resellers who want to carry its line The above three distribution intensity strategies can be differentiated in terms of the supplier’s share of the reseller’s business 1. The reseller sells only the supplier’s offering 2. The reseller sells one of the supplier’s line along with other firm’s lines 3. The reseller sells only one of the supplier’s products and an assortment of other firms’ products Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-19 Channel Exposure & Coverage Model for an Electronic Controls Supplier Firm Electronic Components Manufacturers No Coverage 3 electronic component distributors Direct Sales 20 field sales persons 10 service reps Scientific Testing Equipment Manufacturers Indirect Sales 8 scientific equipment distributors Process Control Manufacturers Direct Marketing Supplier Website 5 Inside Sales Reps 10 machine tool distributors Segment Offering Small Orders of Standard Items Medium-Sized Order of Specialty Items Large Orders of Customized Solutions Source: Adapted from Friedman & Furey 1999 Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-20 Optimize Value-Added Through Postponement or Speculation Strategies hinge on: Predictability of demand Quantity of production Inventory held in reserve Required proximity of customization activities & inventory to customer location Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-21 Postponement vs. Speculation Strategies Postponement Strategy Supplier firm undertakes product design, customization, and value-added service geographically close to customer firm Speculation Strategy Suppler firm manufactures standard products in large quantities well in advance of demand at a distance from the customer Direct sales Design-to-order offerings Technically competent and consultative sales team Just-in-time inventory High level end-to-end customer service Indirect sales Intensive distribution Reseller firm stocks inventories Takes orders Makes deliveries Provides minimum valued-added service Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-22 Postponement vs. Speculation Manufacturing & Logistics Manufacturing Postponement Manufacturing Speculation Indirect sales Local assembly, fabrication, compounding, or extrusion firms Customize supplier’s production to unique requirement for regional firms Direct marketing via telephone or Internet Build-to-order Mass customizing products Ships directly to customer via 3 rd party logistics Logistics Postponement Logistics Speculation Indirect sales 24-hour delivery Reserve stock in local warehouse Provide immediate emergency deliveries Leave item on consignment at customer’s plant Direct sales Reserved for largest, most profitable customers Vendor-managed inventory program Supplier firm takes responsibility for customer inventories Emergency delivery of bottleneck items Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-23 Minimize Cost-to-Serve via Functional Acquisition & Functional Spin-Off Lean enterprise: group of individuals, functions, and legally separate but operationally synchronized companies To improve business processes: Allocate functions to the most capable partner Bolster their partners’ ability to perform tasks Coordinate and integrate efforts of all firms in lean enterprise Eliminate redundancies in efforts Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-24 Lean Enterprise Approach to the Design of a Firm’sChannel Networks Conceptualized channel networks: Horizontally Within Each Channel Level: Functions or Tasks Performed by a Specific Channel Partner • Focus on functions when incremental channel improvement needed • Functional acquisition & functional spin-off helps to lower system costs Vertically across All Channel Levels: Business Processes • Appropriate for radical channel redesign • Eliminate resources & effort redundancies within entire channel network • Lowers total system costs • Maximizes the total value delivered Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-25 Functions Manufacturer Manufacturer’s Representatives Electrical Wholesalers Manufacturing Advertising Lead Generation Field Sales Calls Fulfillment Customer Credit Repair Work Functions Manufacturer Manufacturer’s Representatives Electrical Wholesalers Manufacturing Advertising Lead Generation Field Sales Calls Fulfillment Customer Credit Repair Work Firm Performs Function Channel Firms Channel Firms Marketing Channel Prior to Functional Acquisition and Spin-Off Marketing Channel After to Functional Acquisition and Spin-Off Functional Allocation Charts for Electrical Products Supplier Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-26 Firms or Groups Lead Generation Prospect Qualification Initial Sales Contact Negotiation & Close Order Processing Fulfillment Relationship Management After-the- Sale Customer Support & Service Resellers Supplier’s Operational Group Supplier’s Field Sales Force Supplier’s Inside Sales Force Supplier’s Direct Marketing Supplier’s Internet Web Site All Customers Supplier’s Strategic customers Resellers’ targeted customers Manufacturer’s Process Distributor’s Process Integrated Multi-Channel Process Model Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-27 Channel Network Model Maps out the business processes and functions required to provide the reformulated TCE to targeted customer firms Model specifies who will complete the required processes and functions Supplier firm Resellers Third-party service providers Customer firms Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-28 General Network Models Conventional Modular Products and services flow from supplier firm resellers market segment or customer firms Channel captain: a dominant firm emerges Manages and coordinates distribution Invests in and cultivates brand or reseller equity Emerging information and logistics technologies Complex networks of relationships among firms Direct or indirect channels Manager from one firm is system integrator Envision channel network Select participating firms Manage ongoing relationships Hybrid Integrated Multi-Channel Combination of conventional and modular Adaptive channels: special hybrid Suppliers, resellers, 3 rd -party service providers and customer firms agree to share complementary capabilities Internet customers Empower customers to select from different resellers or channels formats Rather than compete for customer loyalty, suppliers and reseller work together to serve mutual customer Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-29 Finalize Marketing & Distribution 1. Devise feasible profit model Cost-to-Serve (CTS) model Payments cover the actual wholesaler’s cost plus a prespecified profit 2. Carefully select channel partners Market research survey to assess customer preferences for and satisfaction with reseller firms Validate research with on-site visits Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-30 Finalize Marketing & Distribution 3. Consider e-business and wireless technology Infomediary: broker that finds, retrieves, sorts, processes & analyzes information from the web (comparison agent) Metamediaries: Web sites that furnish multivendor, multiproduce, multi-service market place Electronic transaction formats • Communities • Catalogs • Electronic auctions • B2B exchange Wireless technologies: • Remote, 24X7 order tracking, payment, and delivery • Contact Management Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-31 Finalize Marketing & Distribution 4. Build International Marketing Channels Requires longer business processes and additional functions in marketing channel Division of functions among channel members vary • From region to region • From country to country 5. Formalized Partnership Agreements Handshake agreements Written contract Licensing agreement Franchise agreement Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-32 II. Creating Value Through Direct Channels Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-33 Creating a Sales Force of Value Merchants Value merchant: Recognizes supplier’s own cost Recognizes the value to the customer in each market Works to obtain fair return for both supplier firm and customer firm Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-34 Creating a Sale Force of Value Merchants Internally promote a value-based marketing philosophy & culture Train value merchants Compensate value merchants based on profitability of accounts Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-35 Deploying Values Merchants Establish necessary sales units Determine number of merchants needed Designate areas of responsibility Assign value merchants to areas of responsibility Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-36 Designing a Logistics System that Creates Value Segment the market into logistically distinct businesses A set of customers with unique physical distribution requirements Establish differential service standards for each market segment Tailor unique logistics systems to deliver differential services Exploit economies of scale among the different logistics systems Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-37 III. Strengthening Reseller Performance Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-38 Strengthening Reseller Performance The best way to ensure resellers deliver superior value to customers is for the supplier to create superior value for resellers. Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-39 Channel Positioning Channel Positioning: the process of establishing and sustaining the supplier’s reputation among targeted resellers for providing superior value Suppliers need to recognize resellers as partners Supplier and reseller must build a working relationship founded on mutual self-respect Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-40 Channel Positioning Step 1 Determine reseller performance expectations Step 2 Assess the reseller value of channel offering elements Step 3 Craft a reseller value proposition and channel offering Step 4 Communicate the reseller value proposition Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-41 Decomposing Marketplace Equity Marketplace Equity Supplier Reseller Targeted Customer Segment Channel Equity Reseller Equity Brand Equity Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-42 Cultivate Brand and Reseller Equity Supplier Firms Develop and sustain strong brand equity among targeted customers Avoid the “final customer” syndrome where the supplier treats the reseller as the final customer Reseller Firms Strive to keep their equity strong • Customize market offerings • Continuous improvements in customer services Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-43 Channel Core Elements Financial Returns Quality Products Competitive Prices Reliable Delivery Brand Equity Technical Assistance Market Research Company Policies Promotional Support Responsiveness Systems Training Manufacturer Sales Force Incentives Distributor Firm Incentives Distributor Sales Force Incentives Capability-Building Program Incentive Programs The Channel Offering Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-44 Reseller Value Proposition and Channel Offering Bundle A collection of loosely connected products and services that a supplier firm consolidates in a transaction for a discounted price Solution A deliberately engineered and integrated group of products and services that the supplier firm markets for a premium price Reseller-Offering Platform A product or service upon which the bundle or solution is assembled (tends to be a high-turnover, lower-margin item) Reseller-Offering Peripheral A component, subassembly, or complementary item that functions in conjunction with the platform Reseller-Offering Accessory An extra, noncritical item that is often added onto a transaction without forethought. May or may not be complementary to the platform (tends to have slower turnover but high margins). Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-45 Channel Positioning Matrix (CPM) (Figure 7.10) CPM: a detailed comparative analysis of what a supplier: provides to its reseller what its competitors provide what are its resellers’ requirement Results of CPM: Changes for suppliers to pursue that will contribute most to a reseller value proposition Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-46 IV. Summary Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-47 Summary Business market channels augment customer value of supplier’s offering and create a competitive advantage through the delivery of TCE. A TCE entails all aspects of a customers firm’s encounter with a supplier. It should be positive, seamless and a memorable interactions that matches the customer firm’s purchasing requirements and preferences. Business channel management is the process of designing a set of marketing and distribution arrangements that create superior customer value via tailored TCE for targeted segments and customers and executing those arrangements. Suppliers turn to channel positioning to ensure that resellers will enthusiastically market their products and services as well as deliver the intended TCE. Copyright © 2009 Pearson Education Publishing as Prentice Hall Business Market Management, 3 rd edition Chapter 7-48 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
Copyright © 2024 DOKUMEN.SITE Inc.