Creating a customer-oriented distribution offer in the business-to-business market

Abstract: Problem description: Mature industrial enterprises stand before the challenge of developing strategies and competitive advantage through their logistics services. The business development within logistics and distribution services is fast and rapidly changing as the customer experience is becoming increasingly important and the additional services are becoming an integrated part of the product offering. The trends in business and technology are contributing to a structural change as well as a change in performance requirements of distribution channels in many sectors of business. Thus, many companies are faced with a complex challenge of reconfiguring its distribution chains. Especially in the business-to-business market as customer expectations rise and the business-to-business market’s demands and requirements follows similar trends as the business-to-consumer market. There is therefore a need for mature industrial enterprises to develop strategies to meet customer needs and restructure the distribution channel in accordance with the requirements of the future. Purpose: The purpose of the master thesis is to describe and analyze how a commercial enterprise in a mature industry can develop an attractive and customer-oriented distribution offer in order to gain market shares and optimize the delivery chain in accordance with future trends. Methodology: This study is based on a case study of Luna. To fulfill the purpose, a combination of surveys with the customer, interviews conducted with Luna’s employees and customers and secondary sources, such as previous studies, market trends and literature review, have been applied. Theory: To fulfill the purpose, relevant theoretical concepts have been used to form the theoretical framework, generated from the literature review. The framework begins with Kotler’s Business Buying Behavior in order to understand who the customer of Luna is, the needs and the market characteristics. Further, Porter’s model of the Value System was used to define the delivery chain and how the channel setup may affect a firm’s business. The last two sections concern services in the delivery chain and what customers consider to be essential for an attractive distribution offer by using the concept of customer service and delivery service elements. Empirics: In the empirics, the case company Luna and its organization and business is described. To understand the business-to-business customer, general trends and market characteristics of the different customer segments have been discovered. The conducted interviews and reports present the business buying behavior. Further, the requirements of delivery services and current service solutions in the delivery chain are conducted together with the findings related to the investigated customer segments. Conclusion: The study has concluded that services in the delivery chain are a source of potential added value for the customer and an opportunity for differentiation for business-to-business companies in a mature industry. Different customers have different needs, organizational structures and factors which influence their requirements, thus should the service offer be developed accordingly. A reconstruction of the distribution channel is thus of relevance and must be made in order to meet customer demands. As various customers, only within one customer segment, have showed to have different needs, the delivery options provided to the customers have to increase and include a flexibility of choice in terms of both delivery time - when - and delivery option - how. As speed is more important than price, the willingness to pay for added delivery services is found to be higher than anticipated. Noteworthy, collaborations have been rejected and ended due to the absence of choice. The study also concludes that mature industries are behind on many aspects regarding services in the delivery chain compared to the business-to-consumer market. E-commerce is one parameter and it can be concluded that the importance is increasing in the business-to-business market. However, future trends are not so trendy and the focus should lie on other aspects than future technology.