Term Paper on "B2B Marketing"

Term Paper 3 pages (1378 words) Sources: 0

[EXCERPT] . . . .

B2B Marketing Questions

What model would you use to describe this type of distribution channel? Why does it work for this industry?

There are two dynamics occurring in the Canadian bicycle, parts and accessories distribution channels when Cycles Lambert and Norco are considered from the perspective of exclusive reseller agreements with manufacturers. In the case of the twenty seven manufacturers who have assigned Cycles Lambert as their exclusive distributor in Canada, the coverage of this specific distributor with bicycle shops and chain stores must be considered as the broadest in the Canadian market. The ability of Cycles Lambert to also serve the majority of bicycle dealers, multi-store chains and potentially even department stores through the use of insightful services programs is another major reason why these twenty seven manufacturers have enough confidence in Lambert to give them exclusivity for their products throughout all of Canada. Looking specifically at those programs that attract manufacturers to opt for exclusivity for a large geographic region include the following: first, there needs to be aggressive use of credit terms for both the manufacturers and retailers; second, there is the need for price protection and inventory stock balancing that on the one hand protect the retailers' inventory from being written down when new products are introduced while at the same time allowing manufacturers to provide advance enough warning of new products so that Lambert is not caught with a high level of obsolete inventory; third, there must be an excellent order management and fulfillment system in Lambert's warehouse and a tight consolidation with the major dealers and chain stores. The evidence of this being the case is that sheer number of exclusive relationships and the continued growth of Lambert in a competitive market.

Exclusivity in indirect channel structures only happens when the distributor has significant value to deliver, both in terms of service and the longevity of relationships with dealers, chains and resellers. While non-exclusivity is very common, in fact more common in many industry's indirect channel strategies, the non-exclusivity in the bike accessories and parts industry is more attributable to the highly fragmented nature of the products available, and less about the inherent structure of the industry itself as defined by buying patterns of customers. The fragmentation of the product strategies and the sheer number of parts and accessories producers, all aligned with a very niche-oriented market in cycling, is what fosters the growth of non-exclusive distribution arrangements. For Norco and their reselling of 101 brands (their site does not delineate exclusivity or not) the breadth of lines they are carrying is more of an indication of the company's focus on building a broader and more globally diverse supply chain. While exclusivity requires a much higher level of commitment from a distributor to make sure the manufacturer sees continued value, in non-exclusive distribution arrangements both manufacturer and distributor are evaluating each others' ability to deliver on the commitments that made the agreement happen in the first place. Exclusivity implies a distributor has a very strong ability to execute profitably across multiple dealer, chain, and reseller channels, while non-exclusivity is typically used by manufacturers to quickly grow the breadth of their channels without spending on a direct channel. In addition, indirect channels are often used to evaluate which distributors may be considered for exclusivity in subsequent distribution channel strategies.

Why are the companies distributed by Cycles Lambert opting to deal though an intermediary? Does this distribution model provide value for all parties? How?

First and foremost, manufacturers are looking to work with Cycles Lambert due to the breadth of channel relationships they have with dealers, multi-store chains and potentially department stores selling bikes, accessories and supplies. it's not just the sheer number of these relationships however, it is the trust that Cycles Lambert has been able to attain with these many dealers, chains and department stores. For any manufacturer to create this on their own, it would take years of concerted effort. Secondly, Cycles Lambert has proven over time to be highly effective at managing fulfillment and order management processes across many different manufacturers for many different dealers, chains and department stores. Manufacturers then… READ MORE

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