Distribution  Direct and Indirect Selling Channels  Types of Intermediaries: Direct Channel  Types of Intermediaries: Indirect Channel  Channel Development  Channel Adaptation  Channel Decisions Marketing of Industrial Product also called:(B2B)  Definition Differences Between B2B and B2C • Products/Services being marketed • Nature of demand • How the customer buys • Communication process • Economic/Financial factors • Relationship Marketing Marketing of Services  What is a service?  Difference between goods and services Intangibility Inseparability, Heterogeneity and Perishability  Services - Business Services, Health Services, Professional Services and Hospitality Services • The role of marketing in a service firm Sales and Field Force Management • Sales Management defined • Task and goals of the sales • Sales Management Model • Sales Management Trends • Transaction Selling vs Relationship Selling • Recruiting and Managing the field team • Time and Territory Management Personal Selling  The most important promotional tool in B2B marketing  Transaction/relationship is often too complex to consummate without personal interaction between marketer and buyer.  Boundary Spanner  Customers are sophisticated and you need a long-term relationship to be successful.  B2B sales cost more than B2C selling

1. Introduction to Marketing
Week 4
NANDA KISHORE SETHURAMAN
ITM SEPTEMBER 2012

2. Agenda
 Distribution  Sales and Field Force
 Direct and Indirect Selling Management
Channels  Task and goals of the sales
 Types of Intermediaries:  Sales Management Models &
Direct Channel Trends
 Types of Intermediaries:  Transaction Selling vs
Indirect Channel Relationship Selling
 Channel Development  Time and Territory
 Channel Adaptation Management
 Channel Decisions  Personal Selling
 Marketing of Industrial  The most important
Product also called:(B2B) promotional tool in B2B
marketing
 Differences Between B2B and
B2C  Importance of interaction
 Marketing of Services  B2B sales cost more than B2C
selling?
 The role of marketing in a
service firm

3. Distribution

4. What is the need for a Marketing Channel?
Many producers lack the financial resources to carry
out direct marketing
In some cases direct marketing simply is not feasible
Producers who do establish their own channels can
often earn a greater return by increasing their
investment in their main business

5. Role of Intermediaries
Greater efficiency in making goods available to
target markets.
Intermediaries provide
 Contacts
 Experience
 Specialization
 Scale of operation
Match supply and demand

6. What does a channel do?
Key functions include:
 Gather information about potential and current customers,
competitors, and others
 Develop and disseminate persuasive communications to
stimulate purchasing
 Reach agreements on price and other terms so that transfer of
ownership or possession can be effected
 Place orders with manufacturers
 Acquire funds to finance inventories at different levels in the
marketing channel
 Assume risk connected with carrying out channel work
 Provide for the successive storage and movement of physical
products
 Oversee actual transfer of ownership from one organization or
person to another

7. What does a channel do?
Breaking bulk
Reduce number of transactions and create bulk for
transport
Accessibility to markets
Provide specialist support service
M C M C
M C C
M I
M C M C

8. Channel intermediaries - Wholesalers
Break down ‘bulk’
 buys from producers and sell small quantities to retailers
Provides storage facilities
 reduces contact cost between producer and consumer
Wholesaler takes some of the marketing
responsibility e.g sales force, promotions

9. Wholesaling
Selling and promoting
Buying and assortment building
Bulk breaking
Warehousing
Transportation
Financing
Risk bearing
Market information
Management services and counseling

10. Wholesaler Marketing Decisions
Target Market
Product Assortment and Services
Price Decision
Promotion Decision
Place Decision

11. Channel intermediaries - Agents
Mainly used in international markets
Commission agent - does not take title of the goods.
Secures orders.
Stockist agent - hold ‘consignment’ stock
Control is difficult due to cultural differences
Training, motivation, etc are expensive

12. Channel intermediaries - Retailer
Much stronger personal relationship with the
consumer
Hold a variety of products
Offer consumers credit
Promote and merchandise products
Price the final product
Build retailer ‘brand’ in the high street

13. Types of Retailers
 Specialty Store:
 Narrow product line with a deep assortment.
 Department Store
 Several product lines with each line operated as a separate department
 Supermarket
 Relatively large, low-cost, low-margin, high volume, selfservice operation
 Convenience Store
 Relatively small store located near residential area
 Nonstore retailing
 Categories of nonstore retailing
 Direct selling
 Direct marketing
 Telemarketing
 Television direct-response marketing
 Electronic shopping
 Automatic vending
 Buying service
 Corporate Retailing

14. Retailing
Marketing Decisions
Target Market
Product Assortment and Procurement
 Breadth
 Depth
Product-differentiation Strategy Possibilities
 Feature exclusive national brands that are not available at competing
retailers
 Feature mostly private branded merchandise
 Feature blockbuster distinctive merchandise events
 Feature surprise or ever-changing merchandise
 Feature the latest or newest merchandise first
 Offer merchandise customizing services
 Offer a highly targeted assortment

15. Channel intermediaries - Internet
Sell to a geographically disperse market
Able to target and focus on specific segments
Relatively low set-up costs
Use of e-commerce technology (for payment,
shopping software, etc)
Paradigm shift in commerce and consumption

16. Six basic channel decisions
Direct or indirect channels
Single or multiple channels
Length of channel
Types of intermediaries
Number of intermediaries at each level
Which intermediaries? Avoid intrachannel conflict

17. Marketing Flows in the Channel

18. Channel-Design Decisions
Analyzing Consumer Service Needs
Analyzing Consumer Service Needs
Setting Channel Objectives & Constraints
Setting Channel Objectives & Constraints
Identifying Major Alternatives
Identifying Major Alternatives
Intensive
Intensive Selective
Selective Exclusive
Exclusive
Distribution
Distribution Distribution
Distribution Distribution
Distribution
Evaluating the Major Alternatives
Evaluating the Major Alternatives

19. The Value-Adds versus Costs of Different Channels

20. Channel Strategy
•Market factors •Intensive distribution •Conventional channels
•Buyer behavior, •use of all available markets •Independence of channel
geographical concentration (e.g. cigarettes) members, little or no control
of customers •Selective distribution (e.g. pricing, brand image)
•Producer factors •use of a limited number of •Franchise operation
•Available resources outlets in a geographical •Legal contract in which
product mix offered area (e.g. computers) producer and channel
•Product factors •Exclusive distribution intermediaries agree each a
•Product size, bulky or •only one intermediary is member’s rights and
difficult to handle? used in a geographic area obligations
•Competitive factors (e.g. cars sold by only one •Channel ownership
•Competitor’s control over dealer in each town) •By purchasing retail outlets,
traditional distribution producers control their
channels) purchasing, production and
marketing activities

21. CHANNEL MANAGEMENT

22. Channel Behavior and Conflict
The channel will be most effective when:
 Each member is assigned tasks it can do best.
 All members cooperate to attain overall channel goals and
satisfy the target market.
Focus on individual goals leads to conflict
 Horizontal Conflict occurs among firms at the same level of the
channel.
 Vertical Conflict occurs between different levels of the same
channel.

23. Channel Management Decisions
Selecting
Selecting
FEEDBACK
Motivating
Motivating
Evaluating
Evaluating

24. Logistics
Involves entire supply chain
Increasing importance of logistics
 Effective logistics is becoming a key to winning and keeping
customers
 Logistics is a major cost element for most companies
 The explosion in product variety has created a need for
improved logistics management
 Information technology has created opportunities for major
gains in distribution efficiency

25. Goals of Logistics system
Provide a Targeted Level of Customer Service at
the Least Cost.
Maximize Profits, Not Sales.
Higher Distribution Costs/ Higher
Customer Service Levels
Lower Distribution Costs/ Lower
Customer Service Levels

26. Logistics Functions
Order Processing
Warehousing
Inventory Management
Transportation
Design system to minimize costs of attaining
objectives

27. Transportation Modes
Rail
Rail
Nation’s largest carrier, cost-effective
Nation’s largest carrier, cost-effective
for shipping bulk products, piggyback
for shipping bulk products, piggyback
Truck
Truck
Flexible in routing & time schedules, efficient
Flexible in routing & time schedules, efficient
for short-hauls of high value goods
for short-hauls of high value goods
Water
Water
Low cost for shipping bulky, low-value
Low cost for shipping bulky, low-value
goods, slowest form
goods, slowest form
Pipeline
Pipeline
Ship petroleum, natural gas, and chemicals
Ship petroleum, natural gas, and chemicals
from sources to markets
from sources to markets
Air
Air
High cost, ideal when speed is needed or to
High cost, ideal when speed is needed or to
ship high-value, low-bulk items
ship high-value, low-bulk items

28. Selection consideration
Market segment - must know the specific
segment and target customer
Changes during plc - different channels are
exploited at various stages of plc
Producer-distributor fit - their policies,
strategies and image
Qualification assessment - experience and
track record must be established
Distributor training and support

29. B2B Marketing – An
Introduction

30. What Is Marketing?
The process of planning and executing the
conception (product), pricing, promotion, and
distribution of ideas, goods, and services to create
relationships that satisfy individual and
organizational objectives.”

31. BUSINESS MARKETING
Marketing of Goods & Services to
 Companies
 Government Bodies
 Institutions (ex: hospitals)
 Non-Profit Organizations (ex”:CRY)
For use in producing their products and / or to
facilitate their operations

32. What Distinguishes B2B from B2C?
B2B: Goods or services are sold for any use other
than personal consumption
Note: It is not the nature of the product; it is the
reason for the transaction.

33. B2B versus B2C Marketing
B2C=Business-to-Consumer Market= businesses sell
products and services to consumers for household or
personal use
B2B=Business-to-Business Market= businesses sell
products and services to other businesses for use in
their daily operations or for making other products
and services

34. NATURE OF THE BUSINESS MARKET

35. B2B or B2C?
An individual buys MRF tyres for his 5 year old car
Maruti buys MRF tyres for their new model of car
being launched in 2 months.
Your office buys Kinley water from Coca-Cola for the
pantry
You start a playschool and buy travel cots for use in
the school premises.

36. B2B versus B2C Marketing
Characteristic B2B Market B2C Market
Sales volume Greater Smaller
Purchase volume Greater Smaller
Number of buyers Fewer Many
Size of individual buyers Larger Smaller
Location of buyers Concentrated Diffuse
Buyer-seller relationship Closer More Impersonal
Nature of channel More direct Less direct
Buying influences Multiple Single/Multiple
Type of negotiations More complex Simpler
Use of reciprocity Yes No
Use of leasing Greater Less
Key promotion method Personal Selling Advertising

37. B2B And Demand
DERIVED DEMAND
 The demand for a company’s products comes from (derived)
the demand for their customer’s products.
 Most demand comes from consumers.
JOINT DEMAND
 Two products are used together and demanded together –
Both products are consumed at the same time
Demand
Inelastic Volatile

38. Major Uses of B2B Products
For additional production (e.g., components are
combined into subassemblies and become part of the
finished product)
For use in operations, but not part of the finished
product
For resale

39. Classifying Business Goods & Services
3 Main Categories of Products
Entering Goods
 Become part of the finished product
 Cost assigned to the manufacturing process
Foundation Goods
 Capital Items
 Typically depreciated over time
Facilitating Products
 Support organizational operations
 Handled as overhead expenses

40. Classifying Business Goods & Services
Entering Goods
Raw Materials
 Farm products & natural products
 Only processed as necessary for handling & transport
 Require extensive processing
Manufactured Materials & Parts
 Any product that has undergone extensive processing prior to
purchase
 Component Materials require additional processing
 Component Parts generally do not require additional
processing

41. Classifying Business Goods & Services
Foundation Goods
Installations
 Major long-term investment items
 Buildings, land, fixed equipment, etc.
Accessory Equipment
 Less expensive & short-lived
 Not considered part of fixed plant
 Portable tools, PC’s, etc.

42. Classifying Business Goods & Services
Facilitating Products
Supplies
 Any supplies necessary to maintain the organization’s
operations
Services
 Maintenance & Repair support
 Advisory support
 Logistical support

43. Categories of B2B Customers
Commercial enterprises
 Indirect channel members and facilitators
 OEMs (original equipment manufacturers)
 Users = customers
Governmental organizations
Institutions

44. Characteristics of B2B customers
There are fewer customers and they require
dependable relationships and a high level of service.
Marketing tends to be done by personal selling ( one-
on-one) calls to the customer.
Specialized media such as trade journals, sales
brochures, web sites, trade shows are used rather
than traditional mass media.

45. Considerations of B2B Buyers
Buyers must purchase according to a set of
purchasing specifications
Focus on Quality (including certifications like ISO)
Total costs to purchase and use
Reliability
Value in use
Savings possible via e-commerce

46. Purchasing Climbing Gear

47. The “Buying Center”
Business purchases often involve multiple influence
"Buying center"—all people who participate in or
influence a particular purchase
Buying center varies from purchase to purchase
Does not appear on the "organizational chart"
Structure may be formal or informal

48. Multiple Roles in the Buying Center

49. Alcoa Aluminum—Three Products

50. Organisational Buying Process

51. Services Marketing

52. “There are no such thing as service
industry. There are only industries
whose service components are greater
or less than those of other industries.
Everybody is in service.”
-Theodore Levitt

53. What is a service?
It is intangible.
It does not result in ownership.
It may or may not be attached with a physical
product

54. Physical goods Vs services
Physical goods Services
Tangible intangible
Homogeneous heterogeneous
Production and distribution are separated Production, distribution and consumption
from consumption are simultaneous processes
A thing An activity or process
Core value processed in factory Core value produced in the buyer-seller
interaction
Customers do not participate in the Customers participate in production
production process
Can be kept in stock Cannot be kept in stock
Transfer of ownership No transfer of ownership

55. Products also have a service component
Equipment based
People based – varying skill levels

56. Most products have a service component
They could be
Equipment based
People based – varying skill levels

57. Services
Personal needs – haircuts, tuition, massage parlors
Business needs – courier services, office cleaning
services, delivering fresh flowers

58. The three additional ‘P’s of Service Marketing
People
Physical evidence
Process

59. Qualities & Differentiation
Qualities
 Search qualities
 Experience qualities
 Credence qualities
Differentiation
 Offering
 Faster and better delivery
 Image

60. Managing Service quality
Gap between
 management perceptions and consumer expectations
 management perceptions and service quality specifications
 service quality specifications and service delivery
 service delivery and external communication
 expected service and perceived service

61. Determinants of service quality
Reliability – delivering on promises
Responsiveness – willing to help
Assurance – inspiring trust and confidence
Empathy – individualising customers
Tangibles- physical representation

62. Moments of truth
It is the customer – service encounter
Every positive or negative experience of the
consumer would have fall-out on the overall service
experience
In services, the last experience remains
uppermost in the consumer’s mind.
Therefore, it is not enough to be good,
you have to be consistently good.

63. Importance-Performance Analysis
I Concentrate here Keep up the good
M
P
work
O
R
T
A Low priority Possible overkill
C
E
PERFORMANCE

64. Customer Satisfaction
Their satisfaction will be influenced by:
 Encounters with service personnel
 Appearance and features of service facilities – exterior and
interior
 Interactions with self service equipment
 Characteristics and behaviour of other customers
Expectations
 Desired Service – the ‘wished for’ service
 Adequate Service – the service that would be acceptable
 Zone of Tolerance - Difference between the desired
service and the adequate service

65. Service Encounter Themes
Recovery
Adaptability
Spontaneity
Coping

66. Recovery
Don’t Do
Ignore customer Acknowledge problem
Blame customer Explain causes
Leave customer to fend Apologise
for himself Compensate/upgrade
Downgrade Lay out options
Act as if nothing is Take responsibility
wrong
‘pass the buck’

67. Adaptability
Don’t Do
Promise and fail to Recognise the
keep them seriousness
Show unwillingness to Acknowledge
try Anticipate
Embarrass the Accommodate
customer Adjust
Laugh at the customer
Explain rules/policies
Avoid responsibility

68. Spontaneity
Don’t Do
Exhibit impatience Take time
Yell/laugh/swear Be attentive
Steal from customers Anticipate needs
Discriminate Listen
Ignore Provide information
Show empathy

69. Coping
Don’t Do
Take customer’s Listen
dissatisfaction Try to accommodate
personally Explain
Let customer’s
Let go of the customer
dissatisfaction affect
others

70. Types of complainers
Voicers Irates
Passives Activists

71. Customer complaints
It pays to resolve customer complaints
On an average only 5 % dissatisfied customers
complain. Others simply go over to the competitor
A satisfied consumer speaks to an average of 3
people on his her experience
A dissatisfied consumer gripes to on an average 11
persons about his/her unpleasant experience

72. Sales Force Management

73. Personal Selling?
Personal selling involves oral conversations, either
by telephone or face-to-face, between salespersons
and prospective customers.
Roles:
 Identifying decision makers, decision processes, and qualified
buyers
 Promoting to corporate, travel trade, and other groups
 Generating increased sales at the point of purchase
 Providing detailed and up-to-date information to the travel
trade
 Maintaining a personal relationship with key clients
 Gathering information on competitors’ promotions

74. The Sales Process

75. Steps in the Sales Process
 Prospecting and qualifying Handling objections and
prospective customers: questions:
 Blind prospecting
 Restate the objection
 Cold calling or canvassing
 Sales blitz
 “Agree and neutralize”
 Lead prospecting tactic
 Preplanning prior to sales Closing the sale.
calls:  Verbal closing clues
 Pre-approach
 Non-verbal closing clues
 The approach
 Presenting and Following up after
demonstrating services: closing the sale.
 Sales presentation
 Demonstration

76. Sales Process

77. Sales Management

78. Sales Management
Definition:
 Sales management is the management of the sales force and
personal selling efforts to achieve desired sales objectives.
Functions
 Sales-force staffing and operations
 Sales planning
 Sales performance evaluation

79. Sales Management…
Managing Sales Force
Offering Sales Training
Managing Channel partners
Managing Direct sales
Managing Sales Promotion
Managing Sales Territories
Managing Sales Targets

80. Process

81. The sales management process

82. Designing the Sales Force
Types of Sales Representatives
 Deliverer
 Order taker
 Missionary
 Technician
 Demand creator
 Solution vendor

83. Designing the Sales Force
Objectives
 Sales volume and
Steps in Process profitability
 Customer satisfaction
Strategy
Objectives and
 Account manager
strategy Type of sales force
Structure  Direct (company) or
contractual
Sales force size
Compensation

84. Designing the Sales Force
Types of sales force
Steps in Process structures:
 Territorial
Objectives and  Product
strategy  Market
Structure  Complex
Sales force size Key accounts
Compensation

85. Designing the Sales Force
Steps in Process Workload approach:
 Group customers by
volume
Objectives and  Establish call frequencies
strategy  Calculate total yearly sales
call workload
Structure  Calculate average number
Sales force size of calls/year
 Calculate number of sales
Compensation representatives

86. Designing the Sales Force
Steps in Process Four components of
compensation:
 Fixed amount
Objectives and  Variable amount
strategy  Expense allowances
Structure  Benefits
Compensation plans
Sales force size  Straight salary
Compensation  Straight commission
 Combination

87. Managing the Sales Force
Steps in Sales Force Management
 Recruitment and selection
 Training
 Supervising
 Motivating
 Evaluating

88. Managing the Sales Force - Recruiting
Recruiting begins with the development of selection
criteria
 Customer desired traits
 Traits common to successful sales representatives
Selection criteria are publicized
Various selection procedures are used to evaluate
candidates

89. Managing the Sales Force - Training
Training topics include:
 Company background, products
 Customer characteristics
 Competitors’ products
 Sales presentation techniques
 Procedures and responsibilities
Training time needed and training method used vary
with task complexity

90. Managing the Sales Force - Evaluating
Successful firms have procedures to aid in evaluating
the sales force:
 Norms for customer calls
 Norms for prospect calls
 Using sales time efficiently
 Tools include configurator software, time-and-duty analysis,
greater emphasis on phone and Internet usage, greater reliance on
inside sales force

91. Managing the Sales Force - Motivating
Motivating the Sales Force
 Most valued rewards
 Pay, promotion, personal growth, sense of accomplishment
 Least valued rewards
 Liking and respect, security, recognition
 Sales quotas as motivation tools
 Supplementary motivators

92. Managing the Sales Force - Evaluating
Evaluating the Sales Force
 Sources of information
 Sales or call reports, personal observation, customer letters and
complaints, customer surveys, other representatives
 Formal evaluation
 Performance comparisons
 Knowledge assessments

93. Personal Selling Principles
Sales-oriented approach
Major Aspects  Stresses high pressure
techniques
Sales Customer-oriented
approach
professionalism  Stresses customer
Negotiation problem solving
Steps in industrial selling
Relationship process
marketing

94. Personal Selling Principles
Reps need skills for
Major Aspects
effective negotiation
Negotiation is useful
Sales
when certain factors
professionalism characterize the sale
Negotiation Negotiation strategy
 Principled
Relationship  BATNA
marketing

95. Personal Selling Principles
Building long-term
Major Aspects suppler-customer
relationships has grown
Sales in importance
Companies are shifting
professionalism focus away from
Negotiation transaction marketing to
relationship marketing
Relationship
marketing

96. End of Day 4