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Chapter 7

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

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  1. Chapter 7 Selecting the Channel Members

  2. 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?

  3. Channel Member Selection 7 • 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)

  4. Objective 2: Relationship with Channel Design 7 • 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

  5. 3 Step Selection Process 7 • Finding prospective channel members • Applying selection criteria to determine the suitability of prospective members • Securing the prospective channel members as actual channel members

  6. Objective 3: Finding Possible Members 7 • In order of likely importance to the channel manager… • Field sales organization • Trade sources • Reseller inquires • Customers • Advertising and promotion • Trade shows • Other sources

  7. Field Sales Organization 7 • 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)

  8. Rewards are Critical for One’sField Sales Organization 7 • 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?

  9. Trade Sources 7 • 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”

  10. Reseller Inquires 7 • 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

  11. Customer Sources 7 • 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

  12. Trade Publication Advertising 7 • 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?*

  13. Trade Shows & Conventions 7 • 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.)

  14. Other Possible Sources 7 • 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

  15. Possible Selection Criteria Objective 4: 7 • Credit & Financial Condition • Sales Strength • Product Lines • Reputation • Market Coverage • Sales Performance • Management Succession • Management Ability • Attitude • Size

  16. Objective 5: Adapting Selection Criteria 7 • 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

  17. Objective 6: Securing Channel Members 7 • 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

  18. Objective 7: Offering Inducements 7 • 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

  19. Product Line Inducements 7 • 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

  20. Advertising & Promotion Inducements 7 • 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

  21. Management Assistance as an Inducement 7 • 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)

  22. Objective 8: Fair Dealing & Friendly Relationships 7 • 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

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