Transcript Selection Criteria

Chapter 7
Selecting the Channel Members
Channel Member Selection
The last phase of channel design
Selection may or may not be the result of channel design.
Firm may need additional
outlets to allow for growth
To replace channel
members that have left
Selection & Distribution Intensity
The greater the intensity of distribution
The less the emphasis on selection
The Selection Process
2. Applying
selection criteria
1. Finding prospective to determine the
channel members
suitability of
prospective
channel members
3. Securing the
prospective
channel members
as actual
channel members
Finding Members
1. Field sales
organization
7. Other sources
6. Trade shows
5. Advertising
2. Trade sources
3. Reseller inquiries
4. Customers
Field Sales Organization
Salespeople are the
best positioned to
know about potential
intermediaries
• They are often able to
pick up information
about likely
intermediaries.
• They may have lined up
prospective
intermediaries.
BUT:
• The manufacturer must
adequately reward
salespeople for their
time & effort
establishing connections.
Trade Sources
Trade associations
Trade publications
Directories
Trade shows
Firms selling similar
products
• The “grapevine”
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For Example:
Industrial Distribution
magazine
The Verified Directory
of Manufacturers’
Representatives
The National Association
of WholesalerDistributors
The National Retail
Federation
The Encyclopedia of
Associations
Reseller Inquiries
Many firms learn about direct
inquiries from intermediaries
interested in handling their product.
This is the main source of
information about potential new channel
members for some manufacturers.
Firms receiving the highest number
of inquiries are the more
prestigious in their industry.
Reseller
Inquiries
Customers
Customers are willing to give frank opinions
about the intermediaries who call on them.
Manufacturer conducts formal or informal surveys of
customers’ views of various distributors.
Manufacturer obtains information about
potential intermediaries.
Advertising
Trade magazine advertising
can generate a large number
of inquiries from prospective
Members.
It therefore can provide a large
pool from which to make selections.
Trade Shows
Wholesale and retail trade associations
hold annual conventions.
Attending manufacturers have access to a
wide variety of potential channel members.
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Small manufacturers meet face-to-face with
wholesalers & retailers.
Other Sources
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Chambers of commerce, banks, & local real
estate dealers
Classified telephone directories or the yellow
pages
Direct-mail solicitations
Contacts from previous applications
Independent consultations
List brokers that sell lists of names of
businesses
Business databases
The Internet
Selection Criteria
• Credit & Financial
Condition
• Sales Strength
• Product Lines
• Reputation
• Market Coverage
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Sales Performance
Management Succession
Management Ability
Attitude
Size
Adapting Selection Criteria
Because no list of criteria is adequate
for a firm under all conditions,
the channel manager should be flexible when
using selection criteria.
Who Selects New Members?
Producers & Manufacturers
Wholesale Intermediaries
Retail Intermediaries
Securing Channel Members
• Manufacturers ask:
– Why should this
company carry my
products?
• Intermediaries ask:
– Why should they
want to distribute
products through us?
Offering Inducements
Good, profitable product line
Advertising & promotional support
Management assistance
Fair dealing policies &
Friendly relationships
Product Line
Product line inducements:
1.
Manufacturer offers good product line with
strong sales & profit potential
2.
Stress value of good product line from
channel members’ perspective
Advertising & Promotion
Advertising & promotion inducements
Consumer Market:
Gain immediate credibility by using a strong program
of national advertising.
Business Market:
Gain recognition by using a strong program of
trade paper advertising.
Management Assistance
Management assistance inducements:
Prospective members want to know whether the
Manufacturer will help with the following:
• training programs
• financial analysis & planning
• market analysis
• inventory control procedures
• promotional methods
Fair Dealing &
Friendly Relationship
Channel Leader’s Responsibility:
To convey to prospective channel members that
he or she is genuinely interested in
establishing a good relationship based on trust
and concern for their welfare as both business
Entities and as people