1. By Prof. Raghavendran V

2. Formulating Channel
Strategy
A marketing channel is defined as a set of
interdependent organizations that make a
product or service available to customers
for use.
The market logistics consist of delivering the
completed products to customers and
channel intermediaries. To assist in
performing the tasks of storing and moving
their goods and services, the industrial
firms have to engage the services of WH &
Transport companies.
By Prof. Raghavendran V 2

3. Distinctive nature of business
marketing channels
Factors affecting the nature of business
marketing channels:
 Geographical Distribution:
Industrial Intermediaries are highly
concentrated geographically. They are
found where industrial market exist, i.e.
in large cities or towns with industrial
estate.
By Prof. Raghavendran V 3

5.  Channel Size:
Industrial Channels are short and involve a
type of intermediary for selling and
handling the products. Sometimes the
channels are direct from the manufacturers
to the customers, without intermediaries.
The reason for the shorter channels in
industrial markets is that the Org buyers
expect product availability, technical
expertise and service capabilities.
By Prof. Raghavendran V 5

6.  Characteristics of intermediaries:
Industrial intermediaries are often technically
qualified and close relationship with the
industrial organizations.
 Mixed System:
IM use a mixture of direct & indirect channels
in order to meet the requirements of
different market segment or when the
company has resource constraints.
By Prof. Raghavendran V 6

7. Distinctive nature of business
electronic channels
Factors affecting the nature of business
electronic channels:
 Providing Information
 Online buying/ Selling
 Improved supplier-customer relationship
By Prof. Raghavendran V 7

8. Alternative Structure of
Business Channels
B
 Direct Channel u
s
 Indirect Channel i
n
Direct Sales Direct Mail e
Direct s
Channels s
Manufacturer
Direct
of Industrial Internet
Marketing C
Goods Indirect u
Channels
s
Tele Marketing t
o
m
e
r
s
By Prof. Raghavendran V 8

9. B
Distributors u
s
i
Manufacturer
Rep n
Direct e
Manufacturer
Channels s
of Industrial Brokers s
Goods
Indirect
Channels C
Commission u
Merchants s
t
o
Jobbers m
e
r
VARs s
By Prof. Raghavendran V 9

10. Why Business Marketers Use
Intermediaries
Services performed by Middlemen:
 Buying
 Promotion & Selling
 Assorting
 Financing
 Warehousing
 Grading
 Transportation
 Information
 Risk Taking
 Technical Service
By Prof. Raghavendran V 10

11. Why Business Customers Buy
from Distributors?
 Dependable Delivery
 Information
 Variety
 Liberal Credit
By Prof. Raghavendran V 11

12. Participants (intermediaries) in
BM channels
Intermediaries are classified on the basis of
the number of functions they perform.
Some of the common types of industrial
middlemen are
 Manufacturers representative (agents)
 Industrial Distributors(dealers)
○ Brokers
○ Commission merchants
○ Value Added Resellers
 Jobbers
 Manufacturer / Regional office
By Prof. Raghavendran V 12

13. Channel Design
 It is a dynamic process. It deals with
developing new marketing channels and
modifying the existing ones.
For designing a channel, the industrial
marketer must go through certain steps:
A. Developing the channel objectives
B. Analyzing channel constraints
C. Analyzing channel tasks
D. Identifying the feasible channel
alternatives
E. Evaluation of alternatives
F. Selecting the marketing channel
By Prof. Raghavendran V 13

14. Channel Objectives
Channel Task
Channel
Constraints
Channel Alternatives
Evaluation of alternatives
Selection of channel structure
By Prof. Raghavendran V 14

15. Developing Channel Objectives
Channel Objectives is derived from the
firm’s marketing objectives. The channel
objectives should focus on customer’s
need in terms of service levels required
by the target market segments. The
channel objectives vary from product
characteristics & they are developed
1. Marketing objectives
2. Product characteristics
3. Customer needs
By Prof. Raghavendran V 15

16. Analyzing the channel
constraints
 IM have to consider some constraining
factors
a. External Environment
b. Competition
c. Company
d. Product characteristics
e. Customer
By Prof. Raghavendran V 16

17. Analyzing the channel Tasks
 The critical task must be
identified. It should realistic
decisions on which tasks can be
performed effectively and
efficiently
By Prof. Raghavendran V 17

18. Identifying the channel
alternatives
Identifying the channel alternatives
involves four major issues.
A. The types of intermediaries
B. The number of intermediaries
C. The number of channels
D. The terms and responsibilities of
channel members
By Prof. Raghavendran V 18

19. Types of Intermediaries:
 VAR’s
 Industrial Distributors' dealers
 Manufacturer's representatives or
agents
 Brokers
 Commission merchants
 Jobbers
By Prof. Raghavendran V 19

20. The number of intermediaries:
1. Selective distribution
2. Intensive Distribution
3. Exclusive Distribution
By Prof. Raghavendran V 20

21. Number of Channels: The IM use of more
than one marketing channels.
The benefits of multichannel marketing
are:
○ Increased marketing coverage
○ Lower channel costs
○ more customized selling
By Prof. Raghavendran V 21

22. Evaluating the Channel
Alternatives
The factors that are used for evaluating
each of the channel alternatives are:
I. Economic Performance
II. Degree of control
III. Adoptability to changing market
situations
IV. Superior Value.
By Prof. Raghavendran V 22

23. Managing or Administering
Channel Members
After particular channel is selected, the
industrial marketer must manage or
administer the channel members,
Managing channel members include:
 Selecting Intermediaries
 Motivating channel members
 Controlling or managing channel conflicts
 Evaluating performance of channel
members
By Prof. Raghavendran V 23

24. Selecting intermediaries
General applicable criteria for selecting
intermediaries are:
 Location
 Relevant experience
 Financial Standing
 Infrastructure
By Prof. Raghavendran V 24

25. Motivating Intermediaries
Imr’s must have motivate intermediaries to
achieve long term success. The quality
of support from middlemen will depend
on motivation techniques deployed.
 Partnership Concept
 Vendor Managed Inventory System
 Reasonable Discounts and Commission
 Distributor councils
By Prof. Raghavendran V 25

26. Motivating Intermediaries
 Training and Coaching
 Channel Positioning
 Other motivational Practices
By Prof. Raghavendran V 26

27. Controlling Channel
Conflicts
Source of conflict:
 Difference in objectives
 Dealings with customers
 Difference in interests
 Difference in perception
 Compensation
 Unclear territory boundaries
By Prof. Raghavendran V 27

28. Evaluating performance of
channel members
The factors or criteria to be used for an
evaluation of middlemen’s performance
can include
± Sales achieved Vs Sales Quota
± Average inventory levels
± Customer delivery performance
± Customer Complaints
± Cooperation in market feedback
± Support for new products
± New customers generated
By Prof. Raghavendran V 28

30. Supply Chain Management
The council of logistics management
defined SCM as : the process of
planning, implementing and controlling
the efficient, cost effective flow and
storage of raw materials, finished goods
and related information from point-of-
origin to point-of-consumption for the
purpose of conforming to customers
requirement
By Prof. Raghavendran V 30

31. Framework of SCM
Supply of raw
Planning &
materials & Purchase
Forecasting
Components
Productions or Customer Performance
Operations Service Evaluation
Business
Customer/End
Users
By Prof. Raghavendran V 31

32. In order to achieve the objectives of SCM,
a firm must coordinate and integrate
various functions or objectives that are
carried out across different
organizations. The functions performed
in SCM are
Purchase Inventory control
Product design Warehousing
Production Planning Material Handling
Production Customer Service
Processing customer order
By Prof. Raghavendran V 32

33. Need for a Supply Chain review
 There are some visible symtoms in
business that indicate the need for review
and redesign of the SCF and they are:-
○ Slow response to changes in the market place
○ Rejection & return of large quantity of materials by
customers
○ Building up large inventories at the WH iin order to
meet customer’s demand delivery
○ The company is not confident of committing
delivery dates
○ Improper planning, including forecasting, resulting
in either excess or no stock when required
○ Internal department blame games for not
satisfying customers need.
By Prof. Raghavendran V 33

34. Supply Chain Integration
 Benefits under the SC integration are:
 Reliable demand management
 Achievement of high levels of customer
service
 Reduced lead time
 Reduction in supply chain and working capital
costs.
 Improved customer satisfaction.
By Prof. Raghavendran V 34

35. LOGISTICS
MANAGEMENT
It is defined as having the right thing at the
right place at the right time and at the
right cost.
Scope of Logistics:
Inventory management & Control Logistics
Customer Service Communication
Transportation Packaging
Warehousing Material Handling
Plant & WH locations
Order processing
By Prof. Raghavendran V 35

36. Market Logistics/Physical
Distribution
In business, logistics system has two
major product movement
 Physical supply(Raw material,
Components & supplies to the
manufacturing process)
 Physical Distribution( delivering finished
goods to Distributors or Customers).
By Prof. Raghavendran V 36

37. Business Logistics System
Physical Supply Industrial Manufacturer Physical Distribution
Raw material
Components Material Storage
Supplies
Manufacturing
Finished Goods &
Industrial customer
Storage
Industrial Distribution/Dealers
By Prof. Raghavendran V 37

38. Task of Physical distribution
The task / activities which make up physical
distribution are many. Each task affects
customer value in terms availability of the
product and they are:
•Transportation •Order processing
•Warehousing •Communication
•Inventory Control •Factory & WH locations
•Packaging •Customer Service
•Material Handling
By Prof. Raghavendran V 38

39. Customer Service
Customer Service
Post Sale Service
Pre Sale Service During Sale service
Product warranty
Advising Service Keeping adequate stocks
Maintenance Contract
Technical Service Speed and accuracy of
Repair service
Ordering ease delivery
Installation Service
Patronage awards Product substitution
Customer Training
By Prof. Raghavendran V 39

40. Major Cost Centers of Market
logistics
 Transportation
 Warehousing
 Inventory
 Order Processing
 Material Handling
By Prof. Raghavendran V 40

41. Assignment Time: to be
submitted on or before 30th Oct’
1. Explain why business channels are usually
shorter than channels used in consumer
goods marketing?
2. Explain the role of SCM, logistics.
3. Explains different types of intermediaries.
4. Explain channel design
5. Explain the role of market logistics?
6. Explain the Total cost Approach in Logistics
Management?
By Prof. Raghavendran V 41

42. By Prof. Raghavendran V
By Prof. Raghavendran V 42