global channel management - channel design
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c https://hbr.org/resources/images/article_assets/2015/09/SEPT15_07_990087-010.jpgGlobal Channel Management
c https://hbr.org/resources/images/article_assets/2015/09/SEPT15_07_990087-010.jpgManagement Internationaler Verkaufkanäle
A distribution channels moves goods and services from producers to consumers
Channel Functions
A distribution channels moves goods and services from producers to consumers. Therefor they
1. Give information
Channel Functions
A distribution channels moves goods and services from producers to consumers. Therefor they
1. Give information2. Promote the offer Channel
Functions
A distribution channels moves goods and services from producers to consumers. Therefor they
1. Give information2. Promote the offer3. Have contact with customers
Channel Functions
A distribution channels moves goods and services from producers to consumers. Therefor they
1. Give information2. Promote the offer3. Have contact with customers4. Match the offer with the need
Channel Functions
A distribution channels moves goods and services from producers to consumers. Therefor they
1. Give information2. Promote the offer3. Have contact with customers4. Match the offer with the need
Channel Functions
5. Negotiate with buyers about price and offer
A distribution channels moves goods and services from producers to consumers. Therefor they
1. Give information2. Promote the offer3. Have contact with customers4. Match the offer with the need
Channel Functions
5. Negotiate with buyers about price and offer6. Do the physical distribution
A distribution channels moves goods and services from producers to consumers. Therefor they
1. Give information2. Promote the offer3. Have contact with customers4. Match the offer with the need
Channel Functions
5. Negotiate with buyers about price and offer6. Do the physical distribution 7. May finance the channel cost (Risk taking)
A distribution channels moves goods and services from producers to consumers. Therefor they
1. Give information2. Promote the offer3. Have contact with customers4. Match the offer with the need5. Negotiate with buyers about price and offer6. Do the physical distribution 7. May finance the channel cost (Risk taking)
BUTwhen all are carried out by the manufacturer they increase the costs and prices!
Channel Functions
Channel Strategy
cFlow of demand stimulation
Channel Strategy
PUSH
Flow of demand stimulation
Flow of promotion
Channel Strategy
PUSH
1 popular product and does not involve deep customization
Channel Strategy
PUSH
1 popular product and does not involve deep customization
2 new product
Channel Strategy
PUSH
1 popular product and does not involve deep customization
2 new product
3 use the reputation of the intermediaries
Channel Strategy
PUSH
1 popular product and does not involve deep customization
2 new product
3 use the reputation of the intermediaries
4 temporary release in the market
Channel Strategy
PUSH
1 the reseller can stop the contract
2 the reseller pursues his own interests
3 the reseller becomes to big for the ‘agent’
4 B2B sales strategy costs money
cFlow of demand stimulation
Channel Strategy
Flow of demand stimulation
Flow of promotion
PULL
Channel Strategy
PULL
1 release services and products under the same brand
Channel Strategy
PULL
1 release services and products under the same brand
2 exclusive or elite positioning
Channel Strategy
PULL
1 expensive strategy
2 high dependent on the brand’s reputation
Distribution Systems
Distribution Systems
conventional distribution
system
Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers.
Distribution Systems
conventional distribution
system
Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers.
1 Each seek to maximize its own profits 2 There is little control over the other members 3 No formal means of assigning roles and resolving conflicts.
Distribution Systems
Hybriddistribution
system
Multi-channel marketing systems are when a single firm sets up two or more marketing channels to reach one or more customers segments.
Distribution Systems
Hybriddistribution
system
Multi-channel marketing systems are when a single firm sets up two or more marketing channels to reach one or more customers segments.
Distribution Systems
ChannelLevels
Number of intermediaries between the manufacturer and the end-user
Distribution Systems
ChannelLevels
DIRECTYou sell directly to the end-user.
Distribution Systems
ChannelLevels
INDIRECTYou sell through marketing intermediaries
to the end-user.
Distribution Systems
ChannelLevels
INDIRECTConsumer
market
ConsumerManufacturer
Manufacturer
Manufacturer
Manufacturer
Consumer
Consumer
Consumer
Retailer
Retailer
Retailer
Wholesaler
WholesalerAgent
Distribution Systems
ChannelLevels
INDIRECTBusiness
market
BusinessManufacturer
Manufacturer
Manufacturer
Manufacturer
Business
Business
Business
Wholesaler
WholesalerAgent
Agent
Distribution Systems
ChannelLevels
INDIRECTService market
Bus/ConService
Service Bus/ConAgent
Distribution Systems
ChannelLevels
INDIRECTIn reality
Distribution Systems
ChannelLevels
INDIRECTIntermediaries who bring buyers and sellers together and assist in negotiating an exchange BUT do not take title of the goods.
Agents & Brokers
Distribution Systems
ChannelLevels
INDIRECTAn intermediaries that sells products to other organizations such as retailers, manufacturers,…
Wholesaler
Distribution Systems
ChannelLevels
INDIRECTAn intermediaries that sells products to other organizations such as retailers, manufacturers,…
Wholesaler
Operate on high volumes and low margins.
Distribution Systems
ChannelLevels
INDIRECTAn independently owned organization that takes the title of the merchandise they handle for full
Wholesaler
Merchant Wholesaler
Distribution Systems
ChannelLevels
INDIRECTCarry stock, maintain a sales force, offer credit, make deliveries, provide business assistance, …
Wholesaler
Full Service Wholesaler
Distribution Systems
ChannelLevels
INDIRECTRange of services is limited. Mostly Cash & Carry
Wholesaler
Limited Service Wholesaler
Distribution Systems
ChannelLevels
INDIRECTAn organisation that sells the product to the final customer
Retailer
Distribution Systems
ChannelLevels
INDIRECTHave a narrow product or (single) brand line
Specialty Store
Retailer
Distribution Systems
ChannelLevels
INDIRECTHave a several product lines
Department Store
Retailer
Distribution Systems
ChannelLevels
INDIRECTLarge stores, with high volumes, low margins, low costs and self service.
Supermarket
Retailer
Distribution Systems
ChannelLevels
INDIRECTSmall store mostly in residential areas with higher margin
Convenience Stores
Retailer
Distribution Systems
ChannelLevels
INDIRECTMostly outlets (leftover sales, irregular product line)
Off-Price retail
Retailer
Distribution Systems
ChannelLevels
INDIRECTVery huge store with routine assortment of food products and non-food products. Mostly very deep assortment in one category.
Superstores
Retailer
Distribution Systems
ChannelLevels
INDIRECTBroad selection of high markup, fast moving brand name goods sold by catalogue (sometines with discount)
Catalogue
Retailer
WholesalerRetailer
operate in the main market no issues about location
deal with businessmen deal with specific group of products
large trading area high volume, low margin
operate in the local market location is important deal with consumer deal with more products small trading area low volume, how margin
Distribution Systems
ChannelLevels
INDIRECTInternational
market
ConsumerManufacturer
Manufacturer
Manufacturer
Manufacturer
Consumer
Consumer
Consumer
Retailer
Retailer
Retailer
Wholesaler
WholesalerAgent
Border
Distribution Systems
ChannelLevels
INDIRECTInternational
market
ConsumerManufacturer
Manufacturer
Manufacturer
Manufacturer
Consumer
Consumer
Consumer
Retailer
Retailer
Retailer
Wholesaler
WholesalerAgent
Border
ImporterExporter
Vertical Marketing
System
Producers, wholesalers and retailers acting as a unified system
Vertical Marketing
System
Vertical Marketing
System
Vertical Marketing
System
Vertical Marketing
System
The own the product
Vertical Marketing
System
The own/make the product
The own the retailer
Vertical Marketing
System
Vertical Marketing
System
c
Vertical Marketing
System
c
Vertical Marketing
System
Corporate VMS integrates successive stages of production and distribution under single ownership.
Vertical Marketing
System
Contractual VMS consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies of sales impact the each could achieve alone.
Vertical Marketing
System
Contractual VMS consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies of sales impact the each could achieve alone.
Vertical Marketing
System
Contractual VMS consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies of sales impact the each could achieve alone.
• Wholesalers sponsored voluntary chains
• Retailer cooperatives • Franchise organisations
Vertical Marketing
System
Contractual VMS consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies of sales impact the each could achieve alone.
Franchise
Vertical Marketing
System
Business format franchise not only distributes the franchisor’s products and services under the franchisor’s trademark, but also implements the franchisor’s format and business procedure.
Franchise Contractual VMS
Vertical Marketing
System
In Product distribution franchise the franchisee merely sells the franchisor’s products or services.
Franchise Contractual VMS
Vertical Marketing
System
The management franchise provides the management expertise, format and/or procedure for conducting the business.
Franchise Contractual VMS
Vertical Marketing
System
Administratie VMS has a few dominant channel members without common ownership. Leadership comes from size and power.
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Administratie VMS has a few dominant channel members without common ownership. Leadership comes from size and power.
Vertical Marketing
System
Horizontal Marketing
System
Horizontaal Marketing Systems are when two or more companies at one level join together to follow a new marketing opportunity. Companies combine financial, production, or marketing resources to accomplish more than any company could alone.
Horizontal Marketing
System
Horizontaal Marketing Systems are when two or more companies at one level join together to follow a new marketing opportunity. Companies combine financial, production, or marketing resources to accomplish more than any company could alone.
Horizontal Marketing
System
Horizontaal Marketing Systems are when two or more companies at one level join together to follow a new marketing opportunity. Companies combine financial, production, or marketing resources to accomplish more than any company could alone.
Horizontal Marketing
System
Vertical Marketing System
Channel Conflict
Occurs when one channel member believes another channel member is engaged in behavior that is preventing them from achieving their goals.
Channel Conflict
Occurs when one channel member believes another channel member is engaged in behavior that is preventing them from achieving their goals.
1 channel members bypass another to buy and sell direct
Channel Conflict
Occurs when one channel member believes another channel member is engaged in behavior that is preventing them from achieving their goals.
1 channel members bypass another to buy and sell direct
2 profit margins are uneven between channel members
Occurs when one channel member believes another channel member is engaged in behavior that is preventing them from achieving their goals.
1 channel members bypass another to buy and sell direct
2 profit margins are uneven between channel members
3 manufacturers believes channel member is not providing attention to its products
Channel Conflict
Occurs when one channel member believes another channel member is engaged in behavior that is preventing them from achieving their goals.
1 channel members bypass another to buy and sell direct
2 profit margins are uneven between channel members
3 manufacturers believes channel member is not providing attention to its products
Channel Conflict
4 manufacturer engage in dual distribution
Channel Conflict
Horizontal Conflict
Channel Conflict
Horizontal Conflict
Vertical Conflict
Channel Alternatives
Channel Alternatives
Exclusive Distribution
Highly selective choice of retailers - one per marketProducers wants a close watch and control
Channel Alternatives
Intensive Distribution
As much retailers as possiblePreferably for consumer (FMCG) and pharmaceutical productsand automotive spares.
Channel Alternatives
Selective Distribution
Retailers will be selected in line with the company/brand imagePreferred for his value productsKeep distribution cost low(er)
Channel Decisions
Product Life
Cycle
Product Life
Cycle
Introduction Growth Maturity/Saturation Decline
Marginal Revenue Revenue
Cost
Profit
Product Life
Cycle
Introduction Growth Maturity/Saturation Decline
Marginal Revenue Revenue
Cost
Profit
Limited Retailers Exclusive
distribution
Product Life
Cycle
Introduction Growth Maturity/Saturation Decline
Marginal Revenue Revenue
Cost
Profit
Limited Retailers Exclusive
distribution
More Retailers Multiple
distribution Representation
Product Life
Cycle
Introduction Growth Maturity/Saturation Decline
Marginal Revenue Revenue
Cost
Profit
Limited Retailers Exclusive
distribution
More Retailers Multiple
distribution Representation
Max. RetailersKey Account Management Local sales
Product Life
Cycle
Introduction Growth Maturity/Saturation Decline
Marginal Revenue Revenue
Cost
Profit
Limited Retailers Exclusive
distribution
More Retailers Multiple
distribution Representation
Max. RetailersKey Account Management Local sales
Fewer RetailersGlobal Acc. Man.
Full local org.
Product Life
Cycle
Introduction Growth Maturity/Saturation Decline
Marginal Revenue Revenue
Cost
Profit
Limited Retailers Exclusive
distribution
More Retailers Multiple
distribution Representation
Max. RetailersKey Account Management Local sales
Fewer RetailersGlobal Acc. Man.
Full local org.
Set up direct sales channels
Product Life
Cycle
Introduction Growth Maturity/Saturation Decline
Marginal Revenue Revenue
Cost
Profit
Limited Retailers Exclusive
distribution
More Retailers Multiple
distribution Representation
Max. RetailersKey Account Management Local sales
Fewer RetailersGlobal Acc. Man.
Full local org.
Set up direct sales channels
Set up E-commerce
Channel Design
designing international distribution channels
Channel Design
Channel design are all decisions involving the development of new marketing channels where none has existed before, or the modification of existing channels.
Channel Design
The channel design should contribute to the firm’s quest for differential advantage.
Channel Design
Differential advantage = Unique benefits or characteristics of a firm, product, or program that set it apart and above its competitors in the customers' viewpoint.
The channel design should contribute to the firm’s quest for differential advantage.
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternativesEvaluation
Channel Design
Analyzing customer
needs
Channel Design
Analyzing customer
needs
Lot Size
Variety
Place Utility
Waiting Time
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Know your customer segments.
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Know your customer segments.What’s the targeted level of customer service.
After sales
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Know your customer segments.What’s the targeted level of customer service?What are the best channels to use?
After sales
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Know your customer segments.What’s the targeted level of customer service?What are the best channels to use?Cost-efficient way to meet customer requirements
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternatives
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternatives
Types of intermediaries.
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternatives
Types of intermediaries.NNumber of intermediaries
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternatives
Types of intermediaries.NNumber of intermediaries
Responsibility of each channel member
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternativesEvaluation
Segmentation Putting customers in similar clusters based on their need
Channel Design
Segmentation
Positioning
Putting customers in similar clusters based on their need
Fix what level of service is required
Channel Design
Segmentation
Positioning
Focus
Putting customers in similar clusters based on their need
Fix what level of service is required
The sky is not the limit! Choose!
Channel Design
Segmentation
Positioning
Focus
Development
Putting customers in similar clusters based on their need
Fix what level of service is required
The sky is not the limit! Choose!
Channel Design
Channel DesignMOTIVATION
cCoercion - punishmentReward - incentivesCoercion - punishmentReferent - strong image
cCoercion - punishmentLegitimate - contractcCoercion - punishmentExpert - knowledgecCoercion - punishmentSupport - extra benefitscCoercion - punishmentCompetition
Channel DesignMOTIVATION
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternativesEvaluation
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternativesEvaluation
Cost of operation
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternativesEvaluation
Cost of operationNAbility to manage & control
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternativesEvaluation
Cost of operationNAbility to manage & control
Adaptability
Channel Design
Analyzing customer
needs
Setting Channel
Objectives
Identifying channel
alternativesEvaluation
Cost of operationNAbility to manage & control
AdaptabilityRange & volume to be handled
selecting channel
members
managing channel
members
motivating channel
members
evaluating channel
members
Channel Design
FAIL
Ignoring end us er buying patterns Assuming that your direct sales force will assist the indirect channels Expecting channels to change for you Sticking to traditional partners/channels Being casual about selecting & evaluating channel members Hoping that one channel can sell to every customer
FAIL
Avoiding a channel conflict instead of managing it
Let’s go to workSouth Africa
Malaysia
Australia
Argentina
South Korea
MexicoPeru
Let’s go to work
What is Vaude all about? (Mission/Vision/Strategy) What are they selling?Who is your customer in the target countries? Why are these targeted countries for Vaude?Develop a marketing channel strategy for Vaude to introduce Vaude in your target country.
Let’s go to work
Your end-productOne-Page Strategy (+ appendix)
5m presentation (Management Summary)
EvaluationNot the what, but the how is important
c https://hbr.org/resources/images/article_assets/2015/09/SEPT15_07_990087-010.jpgGlobal Channel Management
c https://hbr.org/resources/images/article_assets/2015/09/SEPT15_07_990087-010.jpgManagement Internationaler Verkaufkanäle
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