American Chamber of Commerce Hungary

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American Chamber of Commerce Hungary

• SME Conference Multinational / Supplier
  Relationship building
• Dealing with FMCGs
• Dealing with B2B
• Overcoming Fears of dealing with MNCs.

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Presenter Laszlo Kanyik 3M Hungaria Kft.
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Dealing with B2B.

• Customer Trends
• Manufacturer Channel Strategies
• Market Forces Impacting Distribution Channels
• Wheres the Money ?
• Reaching Common Objectives

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Market Place Study
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End-users were asked to rate the importance of
the following when selecting a distributor
supplier.(1 Unimportant 5 Important)
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Distributors were asked to rate the importance of
receiving the following from a manufacturer
supplier.(1 Unimportant 5 Important)
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Manufacturers were asked how important it is for
distributors to provide the following services
today and in the future.(1 Unimportant 5
Important)
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End-Users were asked which of the following
changes they expect to make in the next 3-5 years
in the way they manage and procure MRO supplies.
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End-users were asked if they have reduced their
MRO supply base over the past five years.
NO
YES
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If end-users have reduced their MRO supplier base
within the past 5 years, by how many suppliers
did they reduce?
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If end-users have reduced their MRO supplier base
within the past 5 years, do they plan to continue
to reduce their MRO supplier base?
NO
YES
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Channel Strategy
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Manufacturers Distribution Strategy
Support our end user customers in the channels of
their choice by partnering with and incenting
those channel partners who add value to the end
user, and with whom we can achieve sustainable
profitable growth.
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(No Transcript)
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Market Focused/Customer Centric

• Align all functions with the strategic needs and
  priorities of our most important customers
• Develop solutions that have broad appeal to our
  targeted markets
• Offer all products, applications, etc. to
  targeted customers
• Gain share of customer purchasing power
• Understand and provide solutions for industry
  trends
• Rewards based on profitable growth at targeted
  customers

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Channel Options Traditional B2B
Classical Market Contracting
Quasi-vertical Integration
Function
Vertical Integration
1) Selling (only) Manufacturers Captive or
Exclusive Producer Sales Representatives Sale
s Agency Force (direct sales
force) 2) Wholesale Independent Distri
bution Distribution Distribution Wholesaler
Joint Venture Arm of Producer 3) Retail Indepe
ndent Franchise Company Distribution (3rd
party) Store Store
Operationally, a sales agency deriving more
than 50 of its revenues from one principal
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Market Forces
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DREF STUDY-2002Facing the Forces of Change

• Wholesaler Distributor ( N. America )

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Market-Driven, Customer Centric

• 2002 DREF classifies wholesalers-distributors
  into five groups based on the type of customer
  to which their products and services are sold
• Contractors
• Institutional supply
• Maintenance, repair, and operations (MRO) buyers
• Original equipment manufacturing (OEM) buyers.
• Retail supply.

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New Classifications

• Focuses on Buying Behavior and Values the End
  User Seeks from the Channel
• Distributors Tend to have similar
  organizational structures, branch operations,
  and selling philosophies, as the customers they
  serve.

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Wholesaler-distributors three most important
concerns

• Supply chain management
• increased focus on identifying customer
  definitions of value
• Partnering with Suppliers to deliver that value
  to end user
• Feel Internet and Globalization are over-hyped
• Thin margins
• Human resources (shortage of qualified
  personnel)

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5 Major Forces That Will Impact Wholesale
Distribution -2002

• Technology will change interactions with
  customers.
• Customers continue to rationalize their buying
  process.
• Information Technology will influence back-office
  operations ( reduce costs, manage internal
  operations)
• The power of the customer will continue to
  increase.
• The human resources challenge continues to
  intensify.

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Divergence of opinion

• Where will customers acquire information about
  products and sources of supply?
• Who will be competing to provide the physical
  distribution functions of wholesale distribution?
  
• Will manufacturers seek alternatives to the
  traditional wholesale distribution business
  model?
• Will distributors be required to charge for their
  services instead of bundling services into
  product prices?

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Future scenarios for wholesale distribution

• Bricks and clicks ?
• Coordinated channels ?
• Unbundled supply chain ?
• Common platform ?

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Wheres the Money ?
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MARKETING FLOWS IN CHANNELS  
 Physical Possession Ownership Promotion Nego
tiation Financing Risking Ordering Payment
 Physical Possession Ownership Promotion Nego
tiation Financing Risking Ordering Payment
 Physical Possession Ownership Promotion Nego
tiation Financing Risking Ordering Payment
Consumers Industrial and Household
Producers
Wholesalers
Retailers
Commercial Channel Subsystem
Source Marketing Channels, 6th Edition, L. Stern
et al
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MARKETING FLOWS IN CHANNELS (CONTINUED)
Source Marketing Channels, 6th Edition, L. Stern
et al
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Common Objectives
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Manufacturer / Channel Partner Objectives

• Focus on key markets, customers
• Become customer needs experts
• Improve responsiveness, efficiency
• Enhance value proposition
• New product generation capacity
• Drive accelerated Sales and Profit growth

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Market /Product Specific Programs
Driving Manufacturer Specific Initiatives

• Create / support programs that will enhance the
  products or services manufacturers provide

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e-Productivity
Improving informational flow, sales activity and
operational savings

• Information Centers
• Greater efficiency and productivity
• Order Status, pricing, product information
• Electronic Order Entry
• EDI, etc.
• Placing orders electronically

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Summary

• Customer Buying Behaviours are changing at an
  accelerating rate.
• Manufacturer and Channels must both Add
  Measurable Value to the end user customer.
• New Technology capabilities will be required by
  an increasing number of customers as a
  communication tool to provide faster access to
  information, improve service efficiencies and
  reduce operational costs.
• Manufacturer and Channel Partners must partner
  together to deliver value to customers and
  achieve profitable growth.