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Marketing Channels and Supply Chain Management Click to edit Master subtitle style

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Industrial Vs Consumer Marketing

Areas of Difference Market Characteristics B2B Market
Geographically Concentrated Relatively Fewer Buyer

Consumer Market
Geographically Disbursed Mass Market

Product Characteristic

Technical Complex Customized

Standardize

Service Characteristic

Service , timely Availability extremely Somewhat Important Important

Buying Behavior

Involvement of Various functional area Involvement of family members from both the ends Purchase Decisions are performance based and rational Technical Expertise Stable Interpersonal relationship Purchase decisions are mostly based on Physiological /social/psychological needs Relatively less technical expertise is required Non- Personal relationship 10-2

Industrial Vs Consumer Marketing

Areas of Difference Channel Characteristic Industrial Market
More Direct Fewer Intermediaries

Consumer Market
Indirect Multiple layer of Intermediaries

Promotional Characteristic

Emphasis on Personal Selling

Emphasis on Mass Media (Advertising)

Price Characteristic

Competitive Bidding and Negotiated Prices List Price for Standard Products

List Price or MRP

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Figure 14-3: Consumer and Industrial Marketing Channels

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Understanding B2B Market & Environment with Buyers Perspective

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Marketing or Distribution Channel

A set of interdependent organizations
involved in the process of making a product or service available for use or consumption by the consumer or business user.

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Channel Functions
These functions should be assigned to the channel member who can add the most value for the cost
Inf or m ati on Pr o m oti on Co nt ac t M at chi ng N eg oti ati on Phy sica l Dist rib utio n Fi na nc in g Ri sk Ta ki ng
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Consumer and Business Channels

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Channel Behavior
The channel will be most effective when:

each member is assigned tasks it can do best. all members cooperate to attain overall channel goals.

If this does not happen, conflict occurs:

Horizontal Conflict occurs among firms at the same level of the channel (e.g., retailer to retailer). Vertical Conflict occurs between different levels of the same channel (e.g., wholesaler to retailer).

Some conflict can be healthy competition.

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Channel Conflict

When it decided to sell its familiar containers at retail through Target stores, Tupperware avoided conflicts with its army of in-home sales consultants by inviting them into the stores to demonstrate the products. 10-10

Conventional vs. Vertical Marketing System

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Types of Vertical Marketing Systems

Control

High

Corpor ate VMS Commo n Owners hip at Differe nt Levels of the Channe l (e.g., Sears) Contract ual VMS Contract ual Agreem ents Among Channel Member s (e.g., ACE Hardwa re)

Adminis tered VMS Leaders hip is Assume d by One or a Few Domina nt Member s (e.g., Kraft)

Low

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Innovations in Marketing Systems

Horizontal Marketing System
Two or more companies at one channel level join together to follow a new marketing opportunity. Example: Banks in grocery stores

Hybrid Marketing System

A single firm sets up two or more marketing channels to reach one or more customer segments. Example: Retailers and catalogs

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Number of Intermediaries
Intensive distribution Exclusive distribution Selective distribution

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