Marketing channel reflection

CHAPTER

Selec-ng Channel Members

Lecture 7

Part 2 Developing the Marke-ng Channel

Learning Objectives

1.  Channel member selection 2.  Selection and distribution intensity 3.  Finding members 4.  Selection criteria 5.  Adapting selection criteria 6.  Who selects 7.  Offering Inducements 8.  Fair dealing and friendly relationships

2

Distributor Selection Process

3

Channel Member Selection

Channel member selection may be to replace channel

members that have left…

OR

…to obtain greater coverage.

1 Channel member selection – the 7th

and final phase of channel design

Selection may of may not be the result of channel design

Cisco

5

hDps://www.youtube.com/watch?v=X296ZokNXJE

Cisco Partner Summit

6

Selection & Distribution Intensity

The greater the intensity of distribution…

…the less the emphasis on selection

2

Importance of Selection

8

The Selection Process

3. Securing the prospective

channel members as actual

channel members

2. Applying selection criteria to determine the

suitability of prospective

channel members

1.  Finding prospective channel members

Finding Members 3

1. Field sales organization

2. Trade sources

3. Reseller inquiries

4. Customers 5. Advertising

6. Trade shows

7. Other sources

Field Sales Organization

•  They are often able to pick up information about likely intermediaries.

•  They may have lined up prospective intermediaries.

•  The manufacturer must adequately reward salespeople for their time & effort establishing connections.

Salespeople are the best positioned to

know about potential intermediaries

BUT:

Trade Sources

•  Trade associations •  Trade publications •  Directories •  Trade shows •  Firms selling similar

products •  The “grapevine”

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

Reseller Inquiries

Reseller Inquiries

Many firms learn about direct inquiries from intermediaries

interested in handling their product.

Firms receiving the highest number of inquiries are the more

prestigious in their industry.

This is the main source of information about potential new

channel members for some manufacturers.

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

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.

Online

16

Trade Magazines

17

Other Sources 1.  Chambers of commerce, banks, & local real

estate dealers

2.  Classified telephone directories or the yellow pages

3.  Direct-mail solicitations 4.  Contacts from previous applications 5.  Independent consultations 6.  List brokers that sell lists of names of businesses 7.  Business databases 8.  The Internet

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.

Selection Criteria

•  Credit & Financial Condition

•  Sales Strength •  Product Lines •  Reputation •  Market Coverage

•  Sales Performance •  Management

Succession •  Management

Ability •  Attitude •  Size

4

SAS Channel Selection

21

McDonalds Franchise Selection

22 hDps://www.youtube.com/watch?v=bdVCV6EULo0

Opening a McDonalds Franchise

23

CBA Commercial Finance Broker Selection

24

Adapting Selection Criteria

Because no list of criteria is adequate for a firm under all conditions…

…the channel manager should be flexible when

using selection criteria.

5

Who Selects?

Who does the selecting?

•  Producers & Manufacturers

•  Wholesale Intermediaries

•  Retail Intermediaries

6

Develop Partner Selection Screens

27

28

29

30

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

Advertising & promotional support

Management assistance

Fair dealing policies & Friendly relationships

7

Product Line

1.  Manufacturer offers good product line with strong sales & profit potential

Product Line Inducements:

2. Stress value of good product line from channel members’ perspective

Advertising & Promotion

Consumer Market:

Gain immediate credibility by using a strong

program of national advertising.

Advertising & Promotion Inducements

Industrial Market: Gain recognition by using a strong program of

trade paper advertising.

Management Assistance

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

Management Assistance Inducements:

Benefits of Partner Selection

36

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

Summary

•  Selection of channel members is the last (seventh) phase of channel design.

•  The more selective the distribution more emphasis in selection.

•  The selection process involves 1.  Finding prospective channel members 2.  Applying selection criteria 3.  Securing prospective members for the channel.

38