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Part 3: Managing the Marketing Channel. Motivating the Channel Members. Channel management Channel management versus channel design Motivating channel members Channel member needs and problems Supporting channel members Relationship differences The selective use of power

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Channel management

  • Channel management versus channel design
  • Motivating channel members
  • Channel member needs and problems
  • Supporting channel members
  • Relationship differences
  • The selective use of power
  • Limited control
channel management
Channel Management


The administration of existing channels to secure the cooperation of channel members in achieving the firm’s distribution objectives.

motivation management
Motivation Management

The actions taken by the manufacturers to

foster channel member cooperation in

implementing the manufacturer’s

distribution objectives.

channel management versus channel design
Channel Management versusChannel Design


Channel Design

Channel Management

“Setting up”

the channel


the channel

motivating channel members
Motivating Channel Members


Basic Framework:

1. Find out the needs and problems of channel members.

2. Offer support to the channel members that is consistent with their needs and problems.

3. Provide leadership through the effective use of power.

channel member needs problems
Channel Member Needs & Problems


Approaches for learning about member

needs & problems:

  • Research studies of channel members
  • Research studies by outside parties
  • Marketing channel audits
  • Distributor advisory councils
research studies of channel members
Research Studies of Channel Members

Less than 1 percent of manufacturers’

research budgets is spent on channel

member research!


…manufacturer-initiated research can be useful

because certain types of needs or problems may not be at all obvious.

research studies by outside parties
Research Studies by Outside Parties

Why use outside parties to conduct research?

They provide a higher

assurance of objectivity.

They provide a level

of expertise that the

manufacturer may not


marketing channel audits
Marketing Channel Audits

Focus of Channel Manager’s Approach:

• Gather data on how channel members

perceive the manufacturer’s marketing

program and its component parts.

• Locate the strengths and weaknesses

in the relationships.

• Learn what is expected of manufacturers

to make the channel relationship viable

and optimal.

marketing channel audits1
Marketing Channel Audits

What makes marketing channel audits most effective?

Issues chosen for

the audit should be cross-referenced to any relevant variables.

It must be conducted

periodically so

as to capture

trends &


It should identify and define

in detail the issues

relevant to the





distributor advisory councils
Distributor Advisory Councils

Who is involved?

Top management representatives from the

manufacturer and from the channel members

What are the benefits?

• Provides recognition for the channel members

• Provides a vehicle for identifying and discussing

mutual needs and problems

• Results in an overall improvement of channel


supporting channel members
Supporting Channel Members


3 Types



1. Cooperative

Partnership or

Strategic alliance



cooperative arrangements
Cooperative Arrangements

Focuses on channel member needs & problems

Simple and straightforward

Conveys a clear sense of mutual benefit

cooperative arrangements1
Cooperative Arrangements

Typical types of cooperative programs

provided by manufacturers to channel members

  • Cooperative advertising allowances
  • Payments for interior displays
  • Contests for buyers, salespeople, etc.
  • Allowances for warehousing functions
  • Payments for window display space
  • Detail men who check inventory
  • Demonstrators
  • Coupon-handling allowance
  • Free goods
partnerships strategic alliances
Partnerships & Strategic Alliances

Focus on a continuing and mutually

supportive relationship between the

manufacturer and its channel members

in an effort to provide a more highly

motivated team, network, or alliance of

channel members

partnerships strategic alliances1
Partnerships & Strategic Alliances

Manufacturer should make explicit statement of

policies in areas such as product availability,

technical support, pricing, etc.

Manufacturer should assess all existing distributors

as to their capabilities for fulfilling their roles

3. Manufacturer should continually appraise the

appropriateness of the policies guiding his

or her relationship with the channel members

distribution programming
Distribution Programming

A comprehensive set of policies for the

promotion of a product through the


Developed as a joint effort between the

manufacturer and the channel members

to incorporate the needs of both

distribution programming1
Distribution Programming

Steps for developing a program:

Manufacturer develops analysis of marketing

objectives & the kinds of levels of support needed

from channel members

• Ascertains channel members’ needs &

problem areas

Formulate specific channel policies that offer:

• Price concessions to channel members

• Financial advice

• Some kind of protection for channel members

relationship differences
Relationship Differences


Cooperative Arrangements:

Intermittent interactions between manufacturer

& channel members

Partnerships & Strategic Alliances:

Continuing & mutually supportive relationship

Distribution Programming:

Deals with virtually all aspects of the

channel relationship

the selective use of power
The Selective Use of Power


The channel manager

must exercise effective leadership on a

continuing basis to attain a well-motivated

team of members.

limited control
Limited Control


Loosely arranged firms = few

advantages from central direction

Reward & penalty system not precise

Interorganizational System

Overall planning uncoordinated

Diffused perspective necessary to maximize

total system effort

discussion question 2
Discussion Question #2

The ubiquitous Bic razors, cigarette lighters, and, of course, ballpoint pens are sold by more than 100,000 supermarkets, drugstores, and other mass merchandisers in the United States. Bic Corporation has traditionally relied on large numbers of mass marketers to sell these products.

Can Bic Corporation be “partners” with each of the 100,000 retailers selling these products? Explain why or why not?

discussion question 7
Discussion Question #7

FilmDistrict, a newly-formed film studio and distributor worked out a deal with Netflix, Inc. to stream new movies over the Internet just a few months after they are released on DVDs. Under the terms of the agreement, new movies from FilmDistrict will be licensed exclusively to Netflix instead of appearing on premium cable channels. Industry observers believe this deal reflects the new realities of changing channels for movies from theaters, home videos, and cable pay TV to online streaming. Netflix also has a similar deal with Relativity Media, the movie company that financed the highly-acclaimed boxing movie, The Fighter.

Given the rapid and dramatic changes occurring in film distribution channels, how might partnerships or alliances such as that between Netflix and FilmDistrict be helpful to either firm in managing their distribution channels?