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Sales & Distribution

Management

Lecture-26 & 27

Pranab S DebFaculty IBS, Pune

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Schedule of Lecture

Managing marketing channels

Economic cost of retailing

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Establish new channels

1. Channel flow performance

2. Channel structure

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Refine existing channels

1. Gap analysis

2. Channel flow performance

3. Channel structure

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Channel Implementation

1. Identifying power sources

2. Identifying channel conflicts

3. The goal of channel coordination

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Service outputs

1. Bulk breaking

2. Spatial convenience

3. Waiting or delivery time

4. Product variety

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Trends in end-user

preferences

1. B2B buyer preferences

1. Outsourcing

2. Downsizing

3. Alphabet soup

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Trends in end-user

preferences

1. Trends in consumer preferences1. Poverty of time

2. Increased knowledge about products andavailability

3. Increased polarity in incomes

4. Increased number of self-employed workers

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Service output demand (SODs)

is always of prime importance

for marketing channels

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Marketing flows in channels

Marketing flow

1. Physical possession

2. Ownership

3. Promotion

Costs represented

1. Storage and delivery

costs

2. Inventory carrying costs

3. Personal selling,

advertising, sales

promotion, publicity,

public relations costs

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Marketing flows in channels

Marketing flow

4. Negotiation

5. Financing

6. Risking

Costs represented

4. Time and legal costs

5. Credit terms, terms and

conditions of sale

6. Price guarantees,

warranties, insurance,

repair, and after-sales

service costs

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Marketing flows in channels

Marketing flow

7. Ordering

8. Payment

Costs represented

7. Order-processing costs

8. Collections, bad debt

costs

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Zero-based channel

A zero-based channel design is one that:

Meets the target market segments demands forservice outputs

At minimum cost of performing the necessary

channel flows that produce these service outputs

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Equity principle

Compensation in the channel system should

be given on the basis of the degree of

participation in the marketing flows and thevalue created by this participation.That is,

compensation should mirror the normative

profit shares for each channel member

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Channel conflict is a situation

of discord or disagreementbetween channel members

from the same marketing

channel system

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Stages of conflict

Latent

Perceived

Felt

Manifest

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Reasons for channel conflict

Goal in-compatibility

Unclear role definition

New channel partner

Target fixing exercise

Extension of credit

Multiple distributors

Difference in perception

Lack of opportunity

Clash of interest

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Managing channel conflict

Understanding the nature and impact of

conflict

Tracing the source of conflict

Understand the impact of conflict

Strategy and plan of action for resolution

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Industrial marketing channels

are a good example ofbalanced power

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Consumer marketing channels

rely on manipulating thecustomer service variable to

greater or lesser degrees

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In multi-level marketing systems the salesagent sells the companys products and

also recruits other sales agents to keep the

chain getting stronger. His income is a

combination of what he sells and what theagents he has recruited sell. The best

example is that of Amway. Other

companies operating on this system are

Tupperware, Modicare, and Herbalife

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Q & A

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Thanks