business marketing channels and market logistics

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Chapter 6
Business Marketing Channels &
Market Logistics
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Dinh Tien Minh
Th.S Đinh Tiên Minh
Objectives
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Know distinctive nature of business
Marketing channels.
Learn participants in business Marketing
channels.
Understand the channel design process and
administering the channel members.
Learn the role of supply chain management,
logistics and market logistics.
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Content
6.1 Distinctive Nature of BM Channels
6.2 Participants in BM Channels
6.3 Channel Design Process
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6.4 Administering Channel Members
6.5 Supply chain and Logistics Management
6.6 Market Logistics/ Physical Distribution
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6.1 Distinctive Nature of BM Channels

Definition of Marketing channels:
 Also called distribution channels. A set of
interdependent of organizations that make
product or service available to customer for use.
Webster F.E., Jr., Industrial Marketing Strategy, John Wiley & Sons, 2
nd
edition, p.213.
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6.1 Distinctive Nature of BM Channels
Definition of Marketing logistics:
 Also called physical distribution. Consist of
delivering the completed products to customers
and intermediaries. To assist in performing the
tasks of storing and moving their goods and
services, the firms have to engage the services of
warehouses and transportation companies.
Webster F.E., Jr., Industrial Marketing Strategy, John Wiley & Sons, 2nd
edition, p.213.
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6.1 Distinctive Nature of BM Channels
Channel Alternatives in BM:
David Perry,, “How you’ll manage your 1990s distribution portfolio”,
Business Marketing, 74 (June, 1989), p54.
Manufacturers of
Industrial Goods
Direct Channels
Direct Sales
through

Sales Force
Direct
Marketing
Business Customers
Indirect Channels
Distributors
Manuf’s
Reps
Brokers
Commission
Merchants
Direct
mail
Internet Tele
Marketing
Jobber
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6.1 Distinctive Nature of BM Channels
What are the factors
affecting the nature of
Business Marketing
Channels?
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6.1 Distinctive Nature of BM Channels
Factors affecting the Nature of BM
Channels :
1. Geographical distribution: Industrial
intermediaries are highly concentrated

geographically, in large cities or towns.
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6.1 Distinctive Nature of BM Channels
Factors affecting the Nature of BM
Channels (cont’):
2. Channel size: The channels are short and
involve a type of intermediary for selling and
handling the product. Sometimes, they are direct
because the buyers expect product availability,
technical expertise, and servicing capabilities.
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6.1 Distinctive Nature of BM Channels
Factors affecting the Nature of BM
Channels (cont’):
3. Characteristics of Intermediaries: They are
often technically qualified and have close
relationship with the industrial buyers.
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6.1 Distinctive Nature of BM Channels
Factors affecting the Nature of BM
Channels (cont’):
4. Mixed/ Hybrid system (direct and indirect):
it’s used in order to meet the requirements of
different market segments, or when the company
has resources constraints (Own sales force for a
large-volume customers and distributors for

small-scale organizations).
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6.1 Distinctive Nature of BM Channels
Electronic Channels (E-Channels):
1. Providing information: through the supplier’s
websites on product specifications, features, and
application. Also provide links to supplier’s
branch sales offices and distributors.
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6.1 Distinctive Nature of BM Channels
Electronic Channels (E-Channels) (cont’):
2. Online buying/selling: Prospective buyers not
only use online information, but also do online
quotations, order placements, and mode of
payments (GE, Ford).
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6.1 Distinctive Nature of BM Channels
Electronic Channels (E-Channels) (cont’):
3. Improve supplier- customer relationships*:
E-Channels creates good communications
between them and help traditional channels.
(*) Steven Wheeler and Evan Hirsh, Channel Champions: How Leading
Companies Build New Strategies to serve Customers” (San Francisco: Jossey-
Bass Publishers, 1999). P12.
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6.1 Distinctive Nature of BM Channels

Why Business Marketers use Intermediaries?
Services performed by Middlemen:
 Buying, Promotion, Selling and Quick delivery
 Assorting (related items from various sources)
 Financing
 Warehousing
 Transportation
 Information
 Risk-taking
 Technical services
What can the Middlemen support the
manufacturers/ organisations?
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6.1 Distinctive Nature of BM Channels
Why Business Customers buy from
Distributors?
1. Dependable delivery: Fast, economical and
free delivery; Help industrial buyers to reduce
inventory level, therefore inventory costs.
2. Information: Useful information about the
products of many manufacturers.
Why do the Business Customers would like
to buy products from the Distributors?
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6.2 Participants in BM Channels
Intermediaries are classified on the basis of
number of functions they perform:
1. Manufacturer’s Branch/ Regional Sales Offices.

2. Manufacturers Representatives (Agents).
3. Industrial Distributors (Dealers).
4. Brokers.
5. Commission Merchants.
6. Jobbers.
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6.3 Channel Design Process
 The Channel Design Framework: It deals
with developing new marketing channels and
modifying the existing ones.
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6.3 Channel Design Process (cont’)
The Channel Design Framework
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6.3 Channel Design Process (cont’)
The Channel Design Framework
Webster F.E., Jr., Industrial Marketing Strategy, John Wiley &
Sons, 2
nd
edition, p.219.
Channel
Objectives
Channel Alternatives
Channel
Constraints
Evaluation of Alternatives
Selection of Alternatives
Channel Tasks

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6.4 Administering Channel Members
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6.4 Administering Channel Members
 Managing or administering the channel
members includes:
1. Selecting intermediaries
2. Motivating channel members
3. Controlling channel conflicts
4. Evaluating performance of channel members
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6.5 Supply Chain and Logistics Management
 Supply Chain Management:
 “The process of planning, implementing, and
controlling the efficient, cost effective flow and
storage of raw materials, finished goods, and
related information from the point-of-origin to
the point-of-consumption for the purpose of
conforming to customer requirements”. (Council
of Logistics Management)
Webster F.E., Jr., Industrial Marketing Strategy, John Wiley &
Sons, 2
nd
edition, p.230.
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6.5 Supply Chain and Logistics Management

Example of Supply Chain Management
Nguồn: Kotabe & Hilsen (2008), Global Marketing Management, 4th
Edition, John Wiley & Sons, Inc., trang 508.
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6.5 Supply Chain and Logistics Management
 Supply Chain Management (cont’):
 SCM includes all the activities that are connected
with moving goods from raw material stage
through various operations to the ultimate
customers or end-users.
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6.5 Supply Chain and Logistics Management
 Supply Chain Management (cont’):
 The major objectives of SCM are:
• Reduce cost per unit for end users.
• Minimize order-to-delivery cycle time.
• Reduce waste and duplication.
• Ensure superior delivery service.
-> All are for customer satisfaction by delivering superior
customer value.
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6.5 Supply Chain and Logistics Management
 Logistics Management:
 Having the right thing at the right place at the
right time and at the right costs.
 Logistics refers to the design and management of

all activities (mainly transportation, warehousing,
and inventory) necessary to make materials
available for manufacturing and to make finished
goods available to customers, as they are needed
and in the condition required.
Webster F.E., Jr., Industrial Marketing Strategy, John Wiley &
Sons, 2
nd
edition, p.232.
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6.5 Supply Chain and Logistics Management
 Logistics Management (cont’):
 Scope of logistics can include:
1. Inventory management and control.
2. Customer service.
3. Transportation.
4. Warehousing.
5. Plant and warehouse locations.
6. Order processing.
7. Logistics communications.
8. Packaging.
9. Material handling.
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