B2B Channel Strategies: Control, Conflict, and Pricing

Posted on Feb 3, 2025 in Economy

B2B Channel Support

  • Financial incentives: attractive commission rates, margins, and bonuses.
  • Territorial exclusivity.
  • Supplier resources: sales team involvement, market research, communication support, and staff training.
  • Strong working relationships: joint planning, appreciation of intermediary efforts, regular communication, and long-term commitment.

B2B Channel Control

  • Natural/Market Power
  • Contractual control
  • Trust

B2B Channel Conflict

Sources of conflict are multiple:

  • Differences in objectives
  • Differences in desired product lines
  • Multiple routes to market
  • Inadequate performance

How Pricing is Defined for a B2B Offer

B2B Pricing

  • Pricing has a major impact on profitability.
  • The 3 C’s contributing to price setting:
    • Cost = Price floor
    • Customer = Price ceiling
    • Competition = feasible pricing (pricing territory)

Costs and Break-Even Analysis

Two key questions for managers:

  1. If we cut price, by how much must sales volume increase to increase profit?
  2. If we raise price, by how much can sales decline before we incur a loss?

Pricing Strategy

Pricing is a continuous process, constantly updated to account for internal and external factors, such as new product features and competitor pricing strategies.

Common price objectives include profits, survival, sales volume, sales revenue, market share, image creation, competitive parity or advantage, barriers to entry, and perceived fairness.

Price Positioning

Price-positioning strategy considers the price itself, customer benefits, and competitor positioning.

Pricing Decisions and Organizational Aspects

Different departments have different pricing priorities. For example, finance may insist on profit, while marketing may take a loss for strategic advantage.

Sales force pricing latitude is problematic. Salespeople should have considerable pricing authority in very difficult or very easy market segments, but limited authority in between.

Buyer-Seller Relationships and Impact on Pricing

Long-term relationships with customers lead to higher sales growth, lower inventory costs, and lower prices.

Ethical Concerns on Pricing

Pricing raises ethical concerns, such as anti-competitive pricing, price fixing, price collusion, price discrimination, predatory pricing (dumping), and price gouging. Companies should take extreme care in fixing prices.