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Chapter 7. Selecting the Channel Members. Channel Member Selection. Objective 1:. 7. While developing a channel’s structure is quite complicated… It’s equally, if not more , important to select the right channel members. Why?. Channel Member Selection. 7.

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chapter 7
Chapter 7

Selecting the Channel Members

channel member selection
Channel Member Selection

Objective 1:


  • While developing a channel’s structure is quite complicated…
    • It’s equally, if not more, important to select the right channel members.
    • Why?

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
      • Account for additional growth needed
      • 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

3 Step Selection Process


  • Finding prospective channel members
  • Applying selection criteria to determine the suitability of prospective members
  • Securing the prospective channel members as actual channel members

Objective 3:

Finding Possible Members


  • In order of likely importance to the channel manager…
      • Field sales organization
      • Trade sources
      • Reseller inquires
      • Customers
      • Advertising and promotion
      • Trade shows
      • Other sources
field sales organization
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
Rewards are Critical for One’sField 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?
trade sources
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”

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

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

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?*

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.)
other possible sources
Other Possible Sources


  • 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
possible selection criteria
Possible Selection Criteria

Objective 4:


  • Credit & Financial Condition
  • Sales Strength
  • Product Lines
  • Reputation
  • Market Coverage
  • Sales Performance
  • Management Succession
  • Management Ability
  • Attitude
  • Size

Objective 5:

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:

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:

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
      • Product line
      • Advertising & promotion
      • Management assistance
      • Fair dealing & friendly relationships

Product Line Inducements


  • Product line inducements…
    • Include manufacturers offering good product lines with strong sales figures and profit potentials
    • 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

Management Assistance

as an Inducement


  • Management assistance inducements…
    • Should highlight to prospective members where the channel manager will help with the following:
      • Training
      • Financial analysis & planning
      • Market analysis
      • Inventory control
      • Effective promotion (both methods & support)

Objective 8:

Fair Dealing &

Friendly Relationships


  • It’s the channel manager’s responsibility to…
    • Convey they s/he is genuinely interested in establishing a good relationship based on trust
    • Demonstrate concern for the well-being of all members both as business entities and as people in general