Accessing Markets

Accessing markets

• The importance of distribution decisions

• Channel choices in a digital world

• Managing multiple channels

• Accessing B2B markets

• Accessing overseas markets

The importance of distribution
decisions

• Cost of distribution closely linked to price

High

Price

Low High
Cost of distribution/servicing
The importance of distribution
decisions

Access

Search

Possession

Transaction CONVENIENCE

West, Ford & Ibrahim (2010)

Direct distribution

• Retail outlets/branches

• Telephone/call centres

• Mail

• Internet
Salesforce

• Own
• Another firm’s
• Contract
Intermediary

• Wholesaler
• Distributor
• Franchise
• Agent
Channel choices in a digital world

• Traditional channels
– Branches, Shops
– Sales force
– Wholesalers, intermediaries
– Mail
• Newer channels
– Call centres
– Internet
Traditional model of customer interaction in a bank

Administration

IT/Systems

Finance Branch Customer

HR

Marketing
Multi-channel model of customer interaction in a
bank

Administration

Call centre
IT/Systems

Finance Branch Customer

HR
Internet

Marketing
Customer Relationship Management
(CRM)
•A purposeful and proactive approach to
managing customer relationships
“Aligns business processes with customer strategies to build
customer loyalty and increase profits over time”

“Recognising that customers are a key asset that need to be

managed in an integrated way to optimise long term
profitability”

Rigby et al. 2002

The man in the corner shop...

Managing customer relations

– talks to his customers
– sees patterns in what they buy, how often
they pop in
– matches his stock against his knowledge of
local customers
– caters for the needs of his “regulars”
Contrast with a large organisation

• Multiple contact points

• Many interactions for different purposes
• Customer knowledge spread widely
• Varying types of interaction (human &
technology)
• How to analyse and effectively utilise
customer knowledge?
CRM often implemented
ineffectively in the past

1. 72% of US firms surveyed expected to have CRM programmes

2. 55% of all CRM projects don’t produce results (Gartner
Group)
3. One in five users reported that CRM initiative also damaged
longstanding customer relationships (Bain 2001 survey of
management tools)
CRM - The practice

• No customer strategy
• Lack of building appropriate organisational
culture, structures & processes
• People – lack of training
• Too much focus on technology
• Too little understanding of customers and
what they want

Rigby et al. 2002

Bain & Co Management Tools & Trends
2013- Most used tools
1= Strategic Planning
1= CRM
1= Employment engagement surveys
4. Benchmarking
5. Balance Scorecard
Social media: New challenges for the
relationship approach

• New opportunities for interaction with

customers
• But less control of what is being said about
your organisation
• Ability to ‘listen’ to social media
• Ability to ‘manage’ brand image on social
media
Interview
Accessing B2B markets

• Distribution channel roles

– Reducing complexity
– Increasing value
– Transaction efficiency
– Quality of service
Supply chain
Suppliers of raw materials
B2B

Engine parts manufacturers

B2B

Engine manufacturers
B2B

Car manufacturers
B2B

Car dealerships
B2C

Car customers
 Value chain

Organisational processes:

Value
Inputs adding Outputs Customer
activities
Accessing B2B markets

• Supply Chain Management

– Role of Purchasing Departments
• Key Account Management
• Significance of inter organizational networks
– Supplier networks
– Distribution networks
– Product development networks
Accessing overseas markets

• External issues
– Market size and potential
– Risks
– Regulations
– Competitive environment
– Local infrastructure
Accessing overseas markets

• Internal issues
– Company objectives
– Need for control
– Resources, assets and capabilities
– Flexibility
Accessing overseas markets

• What is the best way to enter market?

– Export mode eg through an agent or importer,
licensing or franchising
– Intermediate mode eg joint venture
– Hierarchical mode eg foreign subsidiary
Accessing overseas markets
High
Hierarchical
Mode

Investment
Intermediate
Mode

Export
Mode
Low

Low Control High

Accessing overseas markets
• Distribution objectives
• Distribution functions
• Channel structure- length, types of
intermediary

• Selection criteria for intermediaries

Accessing overseas markets
• Motivating channel members
– Understanding needs/challenges
– Offering support
– Providing leadership
• Evaluating channel members