Transcript Ch 7 - Marketing Cha..

Chapter 7
Selecting the Channel Members
Objective 1:
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Channel Member Selection
• While developing a channel’s structure is
quite complicated…
– It’s equally, if not more, important to select the
right channel members.
– Why?
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Channel Member Selection
• This is the last phase of channel design
• However,
– It’s most often not the result of channel design
• Instead,
– Occurs more often to
1. Account for additional growth needed
2. Replace members that have left (voluntarily or
involuntarily)
Objective 2:
Relationship with
Channel Design
• Firms with direct channels need not worry
(as much*)
• Regarding Intensity…
– The greater (lesser) the intensity of distribution,
the lesser (greater) the emphasis placed on
member selection
– Again, comes back to cost and control
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3 Step Selection Process
1. Finding prospective channel members
2. Applying selection criteria to determine
the suitability of prospective members
3. Securing the prospective channel members
as actual channel members
Objective 3:
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Finding Possible Members
• In order of likely importance to the channel
manager…
1.
2.
3.
4.
5.
6.
7.
Field sales organization
Trade sources
Reseller inquires
Customers
Advertising and promotion
Trade shows
Other sources
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Field Sales Organization
• Salespeople are the best positioned to:
– Pick up information about available or likely
intermediaries
– Know more management & salespeople of
major intermediaries in a territory who are not
currently members
– Have lined up prospective intermediaries
because of existing relationships (even if not
members)
Rewards are Critical for One’s
Field Sales Organization
• Possible problems include:
– Manufacturers may not adequately reward their
salespeople for their time and effort in
establishing these connections
• Rewards are often sales volume focused
– Rewards push salespeople to work outside their
existing, or formalized, roles
– Remember Bucklin’s Payoff & Tolerance Functions?
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Trade Sources
• Often the most specific information regarding
an industry come from these sources
– Include
•
•
•
•
•
•
Trade associations
Trade publications
Directories
Trade shows
Firms selling similar products
The “grapevine”
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Reseller Inquires
• Occurs when a channel manager learns about
possible future members through direct
inquires from those interested in handling their
products or selling through their firms (e.g.,
retailers & wholesalers)
• Often the main source of information about
possible future members
• However, firms receiving the highest number
of inquires are often the more prestigious &
thus less likely in need because of their success
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Customer Sources
• Customers are often willing to give frank
opinions about the intermediaries who source
them.
– Can be…
• Business customers, or
• End users
• One of the best ways to gain information about
potential members is through formal or
informal surveying
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Trade Publication Advertising
• Can generate a large number of inquires
(from both up & down the channel)
– Often leads to a large pool from which to select
– But,
– Has great potential to generate a large pool of
ill-fitted applicants too. Why?*
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Trade Shows & Conventions
• Attending annual conventions gives the
channel manager access to a wide variety of
potential channel members at one place an
time
• Extremely beneficial to small manufacturers &
retailers to meet with firms who might be
interested in their market strategy to provide a
unique advantage only available from a small
firm (e.g., less power, better info, etc.)
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Other Possible Sources
1. Chambers of commerce, banks, & local real estate
dealers
2. Classified telephone directories or the yellow
pages
3. Direct-mail solicitations
4. Contacts from previous applications
5. Independent consultations
6. List brokers that sell lists of names of businesses
7. Business databases
8. The Internet
Objective 4:
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Possible Selection Criteria
1. Credit & Financial Condition
2. Sales Strength
3. Product Lines
4. Reputation
5. Market Coverage
6. Sales Performance
7. Management Succession
8. Management Ability
9. Attitude
10. Size
Objective 5:
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Adapting Selection Criteria
• Just like no heuristic is always true because
of the interconnectedness of the 4Ps…
• No list of criteria is adequate for a firm in
all conditions
– Channel managers must be flexible when using
selection criteria and account for factors that
are likely to be firm- or industry-specific
Objective 6:
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Securing Channel Members
• Often a 2-way street
– Size & prestige will change extent of 2-way
• An effective selling job is necessary to
secure good intermediaries
– A function of:
• Channel positioning
• Inducements used
– Must highlight manager’s commitment to support channel
& be mutually beneficial to both parties
Objective 7:
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Offering Inducements
• Often the more explicit in spelling out kinds
of support, the better
– Members want to know “what’s in it for them”
• While many types of possible inducements
exist, most will fit into one of four areas
1.
2.
3.
4.
Product line
Advertising & promotion
Management assistance
Fair dealing & friendly relationships
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Product Line Inducements
• Product line inducements…
1. Include manufacturers offering good product
lines with strong sales figures and profit
potentials
2. Should stress value of a good product line
from the channel member’s perspective
Advertising & Promotion
Inducements
• Advertising and promotions inducements…
– In the consumer market
• Should gain immediate creditability by using a
strong program of national advertising
– In the industrial market
• Should gain recognition by using a strong program
of trade paper advertising
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Management Assistance
as an Inducement
• Management assistance inducements…
– Should highlight to prospective members where
the channel manager will help with the
following:
1.
2.
3.
4.
5.
Training
Financial analysis & planning
Market analysis
Inventory control
Effective promotion (both methods & support)
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Objective 8:
Fair Dealing &
Friendly Relationships
• It’s the channel manager’s responsibility
to…
1. Convey they s/he is genuinely interested in
establishing a good relationship based on trust
2. Demonstrate concern for the well-being of all
members both as business entities and as
people in general
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