1. Channel Relationships and Supply Chains
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2. Value Delivery Network
A value delivery network is made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system.

3. Marketing Channel
Marketing channel is a set of interdependent organizations that help make a product or service available for use by the business user.

4. Rationale for Channel Design
Channels Can Create Efficiency
Direct:
V x C transactions
Via Reseller:
V + C transactions V1 V2 V3 V4 C1 C2 C3 C4 V1 V2 V3 V4 C1 C2 C3 C4 RS
V = Vendors; C=Customers; RS=Reseller
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5. Benefits of Channel Members
Information
Promotion
Contact
Matching
Negotiation
Physical distribution
Financing
Risk taking

6. Marketing Channels & Economic Utility
Form
Time
Place
Possession
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7. Marketing Channels & Economic Utility: Form
The usable quantity or mode of the product most preferred by the customer
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8. Marketing Channels & Economic Utility: Time
The availability of the product when the customer needs it
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9. Marketing Channels & Economic Utility: Place
“Locational Convenience” — the availability of the product where the customer needs it
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10. Marketing Channels & Economic Utility: Possession
Methodology by which the customer obtains ownership or the right to use of the product or service
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11. B2B Channel Structures
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12. Distributors Serve Buyers and Sellers
Buyer Benefits
Seller Benefits
Buy and hold inventory
Provide fast delivery
Combine supplier outputs (reduce discrepancy of assortment)
Provide market segment-based product assortment
Share credit risk
Provide local credit
Share selling risk
Provide product information
Forecast market needs
Assist in buying decisions
Provide market information
Anticipate needs
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13. “Backward” Vertical Integration
Henry Ford developed his own iron ore mining operation, steel mills, glass factories, tire manufacturing, etc.
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14. “Forward” Vertical Integration
Apple owns its own retail channels
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15. Vertical Integration Advantages Economies of Scale Complete Control
Reliability and Availability
Disadvantages
Lack of Flexibility
Significant Investment
Slow to Innovate (Myopia)
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16. Supply Chain Management
Creation of value for customers through effective and efficient flow of materials, components, finished goods and services
Extends from raw materials to end use customers
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17. Channel Design Decisions
Marketing channel design includes designing
effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating them.

19. Channel Management Decisions
Marketing channel management involves selecting, managing, and motivating channel members and evaluating their performance over time.

20. Channel Design – Dual Distribution
Different market segments require different channel design
Example: Goodyear Tires
Manufacturer
Multi-brand Distributor
Logistics Provider
Large Customer – Direct Channel
Integrated Retailers
Independent Retailers
Goodyear may or may not use the same distributor/logistics provider as the independent stores.
Auto Manufacturers – GM, Ford, Honda, etc.
Goodyear Sponsored/ Franchised Dealers
Sears, Wheel Works, etc.
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21. Channel Design – Multi-Distribution
Customers within a segment with similar needs will expect locational convenience
Example: Honda Automobiles
Manufacturer
Dealer/Retailer
Dealer/Retailer
Dealer/Retailer
Dealer/Retailer
Number of dealers with same channel design relates to the desired intensity of distribution.
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22. Channel Design Reduce the Discrepancy of Assortment
Channels convert manufacturers’ product lines to product assortments desired by particular market segments
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23. When to Use Distributors
Favoring
Product requires local stock.
Product line is small, unable to support direct sales.
Product is somewhat generic.
Product has low unit value.
Product is near end of PLC.
Customers are widely dispersed.
Local repackaging, sizing, or fabrication is required.
Market has many small-volume buyers.
Product requires extensive sales effort directed at buying professionals.
Start-up venture or established company is entering a new market.
Competition uses distributors.
Customers prefer distributors.
Not Favoring
Product is highly customized.
Product is new or innovative.
Product is technically sophisticated.
Significant missionary selling is required.
Manufacturer requires control over product application.
Large buyers are geographically concentrated.
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24. Selecting and Caring for Distributors
Determine right distributor for your marketing plan
Ask customers who they recommend
Train and support them well, at both your facilities and theirs
Make calls on them
Make calls with them
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25. Web Opportunities for B2B Marketers
Better and faster channel flows—market data more readily available
Faster communications provide rapid ordering and order tracking
Reduced transaction costs through online processing and tracking
Product information available at the customers’ convenience
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26. Business Logistics
The management of movement, sorting, and storage of goods—an important tactical function
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27. Logistics Functions
System design aimed at minimizing costs while maintaining a given level of customer service through the simultaneous management of three elements
Inventory management
Transportation
Warehousing
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28. Inventory Management
Largest cost is often associated with logistics system
Inventory implies carrying/finance charges, costs of storage and creating assortment
Lower inventory quantities lead to lower costs but result in more costly transportation or stockouts
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29. Transportation Tradeoff of speed versus cost
Slower transportation implies larger safety stocks
If transportation costs are minimized without regarding
necessary inventory
levels, carrying costs
increase
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30. Warehousing Two primary functions of warehousing:
Product flow/movement- associated with the creation of assortment
(Distribution Centers)
Product storage (Warehouses)
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