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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?

Chapter 7

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)

Chapter 7

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

Chapter 7

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

Chapter 7

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”

Chapter 7

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

Chapter 7

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

Chapter 7

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?*

Chapter 7

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

Chapter 7

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

Chapter 7

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

Chapter 7

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

Chapter 7

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

Chapter 7

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

Chapter 7

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)

Chapter 7

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