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Part 2: Developing the Marketing Channel. Selecting the Channel Members. Channel member selection Selection and distribution intensity Finding members Selection criteria Adapting selection criteria Who selects Offering inducements Fair dealing and friendly relationships.

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Presentation Transcript
slide2

Channel member selection

  • Selection and distribution intensity
  • Finding members
  • Selection criteria
  • Adapting selection criteria
  • Who selects
  • Offering inducements
  • Fair dealing and friendly relationships
channel member selection
Channel Member Selection

1

Channel member selection – the 7th and final phase of channel design

Selection may of may not be the result of channel design

Channel member selection may be to replace channel

members that have left…

OR

…to obtain greater coverage.

selection distribution intensity
Selection & Distribution Intensity

2

The greater the intensity of distribution…

…the less the emphasis on selection

the selection process
The Selection Process

Finding prospective

channel members

2. Applying

selection criteria

to determine the

suitability of

prospective

channel members

3. Securing the

prospective

channel members

as actual

channel members

finding members
Finding Members

3

1. Field sales organization

7. Other sources

2. Trade sources

6. Trade shows

3. Reseller inquiries

5. Advertising

4. Customers

field sales organization
The manufacturer must adequately reward salespeople for their time & effort establishing connections.Field Sales Organization

Salespeople are the

best positioned to

know about potential

intermediaries

BUT:

  • They are often able to pick up information about likely intermediaries.
  • They may have lined up prospective intermediaries.
trade sources
For Example:

Industrial Distribution magazine

The Verified Directory of Manufacturers’ Representatives

The National Association of Wholesaler-Distributors

The National Retail Federation

The Encyclopedia of Associations

Trade Sources
  • Trade associations
  • Trade publications
  • Directories
  • Trade shows
  • Firms selling similar products
  • The “grapevine”
reseller inquiries
Reseller Inquiries

Many firms learn about direct

inquiries from intermediaries

interested in handling their product.

Reseller

Inquiries

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.

customers
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
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
Trade Shows

Wholesale and retail trade associations

hold annual conventions.

Attending manufacturers have access to a

wide variety of potential channel members.

Small manufacturers meet face-to-face with

wholesalers & retailers.

other sources
Other 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
selection criteria
Sales Performance

Management Succession

Management Ability

Attitude

Size

Selection Criteria

4

  • Credit & Financial Condition
  • Sales Strength
  • Product Lines
  • Reputation
  • Market Coverage
adapting selection criteria
Adapting Selection Criteria

5

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
Who Selects?

6

Who does the selecting?

  • Producers & Manufacturers
  • Wholesale Intermediaries
  • Retail Intermediaries
securing channel members
Securing Channel Members

. . . The supplier produces, the distributor

sells, and each is dependent upon the other.

Together they form a team, and teamwork

is essential if the association is to prove

mutually beneficial.

— Pegram

offering inducements
Offering Inducements

7

Advertising & promotional support

Management assistance

Fair dealing policies &

Friendly relationships

product line
Product Line

Product Line Inducements:

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

Advertising & Promotion Inducements

Consumer Market:

Gain immediate credibility by using a strong

program of national advertising.

Industrial Market:

Gain recognition by using a strong program of

trade paper advertising.

management assistance
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
Fair Dealing & Friendly Relationship

8

Manufacturer’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

discussion question 1
Discussion Question #1

Apple, with its almost 300 company-owned stores, uses independent intermediaries, which it refers to as “third-party resellers.” For its Mac computers, Apple is very careful about the intermediaries it selects to become members of its distribution channel. Once selected, Apple makes a substantial investment to enhance the capabilities of its chosen channel members to sell and service Apple products. Its “Apple Sales Consultant Program,” for example, places Apple employees at selected channel members’ stores to provide expertise on how to tell the Apple story and ensure a high-quality buying experience. The company also offers extensive training and support through what it refers to as its “Apple Premium Resellers Program” to selected channel members to help them develop high levels of customer service and product expertise. Apple strongly believes that providing high-quality sales and after-sales support is critical for attracting new customers and retaining existing ones.

Do you think Apple’s careful selection of channel members and its efforts to enable them to provide high-quality sales and service support are as important as Apple’s unique products in creating a differential advantage for Apple?

discussion question 3
Discussion Question #3

The Rust-Oleum Corporation is world-renowned for its anticorrosive coatings for virtually any application, for use on everything from heavy industrial equipment to consumer patio furniture. The company sells its industrial products through wholesalers (industrial distributors) and its consumer products through both wholesalers and retailers. Rust-Oleum has, for many years, talked about doing business with its channel members by the golden rule—“doing business together with sincerity, honesty and cooperation.” The company is also fairly selective in its choice of distributors, limiting the number selected to the fewest possible needed to provide effective coverage of each market. In addition, Rust-Oleum makes it a point to say that it sells through the distributor, not just to him.

Given this approach to dealing with channel members, what criteria do you believe would be especially important for Rust-Oleum Corporation to emphasize in selecting prospective channel members?

discussion question 6
Discussion Question #6

Master Lock is perhaps the nation’s best-known name in padlocks. Master Lock padlocks are sold intensively at the retail level through a wide range of stores, including hardware stores, home centers, automotive stores, bicycle shops (for bicycle padlocks), drugstores, supermarkets and many others. This wide retail network is supplied largely through wholesalers. Master Lock relies on wholesalers to provide the bulk of the sales and logistical support to the retail channel members. When retailers need help in ordering, stocking the right assortment, choosing point-of-purchase displays or advertising to consumers, Master Lock tells them to “ask your Master Lock distributor for all the advice and support you need.”

Given that Master Lock expects its wholesale distributors to provide virtually all the support needed by retailers, what kind of support do you think the wholesaler distributors should expect from Master Lock?