Business Mktg Channels

8/22/2019 Business Mktg Channels

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Manufacturers Reps Manufacturers Reps fill a different role than

Industrial Distributors.

They perform a much higher level of service. They:

1. Are more technically advanced

2. Know their territory better

3. Are able to sell professionally

4. Are experienced in the industry

5. Usually represent several companies

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Manufacturers Reps Used by small, medium and large firms.

Often, small and medium firms cannot support afull time salesperson.

Large firms use them to supplement their directforce for introducing new products to an area notcovered by their sales force.

The main reason for using Reps is because it iseconomically correct to do so. Little or no trainingcosts, no benefits, no outrageous risks, and Repsare highly motivated vs. employees.

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Product is not standardcloser to made-to-order

Reps do not take title nor hold inventory

Reps are normally paid commission, however deals

can be made to be paid a monthly minimum Commission rates can range from 3%, 20% or more

Gross margin is not large

Relatively few customers or concentratedgeographically or concentrated in few industries

Customers order relatively infrequently and allow

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anne m n s ra on

Addresses:

1. Selecting good channel participants andmaking sure that all tasks andobligations are assigned andunderstood.

2. Motivating members to perform tasksnecessary to achieve channelobjectives.

3. Controlling inter-channel conflict.

4. Controlling and evaluating performance. 6


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PARTNERSHIP The channel is motivated by the understanding

that the relationship is a partnership.

Relationship Marketing demands:

a. Trust

b. Working together

c. Open communicationd. Support during good and bad times

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Margins and commissions are the driving force tomotivate this element of marketing.

Margins and commissions must meet market norms. Companies and products that offer highercommissions and margins do get the attention overthose that dont meet norms. Many companies ask the distributor to do more andthose extra services need to be compensated for.Example: Market research.

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Trust The Ultimate Compliment

Another way for trust to occur is for eachmember to make the system work and toreduce channel conflict. Techniques

include:

a. Joint decision making

b. Joint goal settingc. Cooperative programs

d. Arbitration committees to settle problems


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Needs communication and trust. Tomanifest this:

1.Members offer benefits and resourcessuperior to what other partners could offer.2.Corporate values are similar throughout thechain.3.Members share information onexpectations, markets and performance.4.Members dont take advantage of eachother.

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Competitive Advantage

By working together, business

marketers and their channel memberscan enjoy sustainable competitiveadvantage over their rivals and theirnetworks.

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QUESTIONS

For many years, critics have charged that intermediaries contribute

strongly to the rising prices of goods in the economy. Would business

marketers improve the level of efficiency and effectiveness in the

channel by reducing as far as possible the number of intermediatelinks in the channel? Support your position.

Describe why it might be necessary for a business-to-

Business firm to serve some customers through reps, somethrough distributors, others exclusively online, and still

others through a direct sales force.


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Roughly 80 percent of Cisco Systems sales are generated onits Web site. Customers use a program that walks them

through the task of configuring a networking system to fit

their specific needs. Using the Web site, customers can also

access online product seminars or educational sessions.Given these self-service capabilities, does a firm like Cisco

need a sales force or dealers and distributors? Explain.

Describe specific product, market, and competitive

conditions that lend themselves to: (a) a direct channel ofdistribution and (b) an indirect channel of distribution.

Documents

Business Mktg Channels