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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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…
…to obtain greater coverage.
The greater the intensity of distribution…
…the less the emphasis on selection
to determine the
3. Securing the
1. Field sales organization
7. Other sources
2. Trade sources
6. Trade shows
3. Reseller inquiries
Salespeople are the
best positioned to
know about potential
Industrial Distribution magazine
The Verified Directory of Manufacturers’ Representatives
The National Association of Wholesaler-Distributors
The National Retail Federation
The Encyclopedia of AssociationsTrade Sources
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.
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
Trade magazine advertising
can generate a large number
of inquiries from prospective
It therefore can provide a large
pool from which to make selections.
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.
Because no list of criteria is adequate
for a firm under all conditions…
…the channel manager should be flexible when
using selection criteria.
Who does the selecting?
. . . 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
Advertising & promotional support
Fair dealing policies &
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 Inducements
Gain immediate credibility by using a strong
program of national advertising.
Gain recognition by using a strong program of
trade paper advertising.
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
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
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?
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?
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?