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Channel Participants in B2B and Physical

distribution system

Group-9
Flow of the presentation…

I. Difference of b2b from b2c with ref. to


intermediaries and the role of internet in
b2b selling and distribution.

II. Channel conflicts and its management.

III. The role of physical distribution and its


efficient use to better channel
management
The general intermediaries

Wholesellers Brokers Retailers Agents

Facilitate Represent the


Buy products Buy products buyer/seller and
from the transactions from wholesalers facilitate
manufacturer and between buyers and sell them to transactions
and between buyers
resell them to sellers without consumers. and sellers but do
retailers representing not
either party take title to the
goods.
The current b2b scenario

Diminishing role of the intermediaries and evolution of 4


different types of exchanges between buyers and
sellers(Kaplan & Sawhney).
• MRO hubs-links buyers & sellers electronically(low value
high transaction cost, operating inputs)
• Yield managers- exchanges allowing comps. To add
capacity and rapidly meet demand application in
industries with fluctuating demand.(spot peocurement
of operating inputs)
• Online exchanges-smooth supply and demand curve
and proper buyer seller relationship.
• Catalog hubs-similar to MROs but are industry specific.
Source-
The effect of the Internet in industrial channels: an industry example.
Authors, William Lightfoot, James R. Harris
Diagrammatic representation

B2B E commerce hubs: Towards a taxonomic model by Steven Kaplan and Mohanbir
Sawhney
The alternative effect of internet on the b2b
exchange
Barriers to entry-

Buyer power-

• eliminates powerful channels, improves bargaining power of


traditional channels.
• shifts bargaining power to end users.
• reduces switching costs.

Supplier power-
• Internet provides channel for suppliers to reach end users;
• Internet provides equal access to all companies.
Threat of substitutes-
• Internet approaches create new substitution threats.

Competitive rivalry:

• migrates competition to price;


• widens geographic market
Conflicts in the channel and its management in the
age of e-commerce

Causes for channel conflict-


• Goal incompatibility.
• Domain dessensus.
• Differing perceptions of reality.

Source- maintaining channel of distribution in the age of E-commerce by


Kelvin L Webb
Conflict management strategies

with reference to pricing

Proposition1- Supplier firms will experience lower


levels of channel conflict by not pricing products on their
website below the resale price of their channel partners.

with reference to distribution

Proposition 2- Supplier firms will experience lower


levels of channel conflict by diverting fulfilment of
orders placed on their website to their channel partners.
with reference to promotion

• Proposition 3- Supplier firms will experience lower


levels of channel conflict by providing product
information on their website without taking orders.

• Proposition 4- Supplier firms will experience lower


levels of channel conflict by promoting their channel
partners on their website.

• Proposition 5- Supplier firms will experience lower


levels of channel conflict by encouraging their
channel partners to advertise on their website.
with reference to product-

Proposition 6-Supplier firms will experience lower levels


of channel conflict by limiting the offering on their website
to a subset of their products.

Proposition 7-Supplier firms will experience lower


levels of channel conflict by using a unique brand name
for products offered on their website.

Proposition 8- Supplier firms will experience lower


levels of channel conflict the earlier the products offered
on their website are in the demand lifecycle.
with reference to communication and coordinating-
Proposition 9- Supplier firms will experience lower
levels of internal (external) channel conflict the more
effectively they communicate their overall distribution
strategy internally (externally).
Proposition 10- Supplier firms will experience lower
levels of internal (external) channel conflict the more
effectively they coordinate their overall distribution
strategy internally (externally).
Proposition 11- Supplier firms will experience greater
channel coordination internally (externally) the more
effectively they communicate their overall distribution
strategy internally (externally).
Proposition12-Supplier firms will experience lower
levels of internal (external) channel conflict the more they
make use of super ordinate goals internally (externally).
Multiple channel distribution andVMS( vertical
marketing system)

Multiple channel distribution-


• Includes usage of several channels.
• Reach out to larger no of buyers.
• New market segments.
• Can cause friction in the distribution
channel.
VMS-coordinated and integrated channel.
Types- Corporate.
Administered.
Contractual.
Partnering-
Some manufacturers are linking their computers with their
retailers (e.g., Procter and Gamble is doing this with Wal Mart
and K-Mart). The manufacturer then has the ability to observe
when inventories are low for a particular product and make
recommendations that the retailer restock.

Film distribution-

• Large no of films are produced.


• Direct and immediate distribution of the films to the viewers.
Physical distribution- the only variable cannot be
accomplished by the internet.

Interfaces
between physical
distribution
strategy and
channel
management in
sequence.

Source- using physical distribution strategy for


better channel management- Bert rosenbloom
Drexel university
Defining the PD standard-

Heskett et al lists 9 important service standards-


To accomplish the Hesket et al standards it is
necessary to-

• Investigate the views of channel members to


identify the actual need.

• Conduct a survey research(Hutchinson and


Stolle) regarding various services the channel
member want- useful for competitive
advantage.

• Perreult and Russ- provide alternative programs


and then sketch out the feasible options and
trade offs.
Evaluation of the PD system-

The PD must meet the requirement(wants) of


the channel members within tolerable cost
constraints.
If a PD fails then an alternative must be
employed focusing on customer and/or
channel partner needs.
Selling the PD system-

Minimizing out of stock occurrences-


• Will help the channel member not to lose sales.
• Non genuine promises may lead to conflicts.

Reduction of inventory-
• Short inventory cycle
• Lower holding cost

Strengthening the relationship-


• Can serve as a tangible sign of the manufacturers concern
toward partners.
• Should be presented taking the interest of the partners.
Monitoring the PD system-
moni

• The system must be continually monitored to


evaluate the members responses.
• To find out the need of modifications.
• Can be done with as a part of marketing
channel audit.
THANKS FOR YOUR ATTENTION

ARUP DEY KHUSBOO AGRAWAL DIPIKA KHANDELWAL