EFFECTIVE WORKING WITH CHANNEL MEMBERS

By- Group-5

OBJECTIVESWhat is channel and who are the channel

members?Why companies use distribution channels

and understand the functions that these channels perform.

How Channels can be used effectively.Learn how channel members interact and

how they organize to perform the work of the channel.

How companies select, motivate, and evaluate channel members.

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WHAT CHANNEL IS ? Distribution (or place) is one of the four elements of marketing mix

. An organization or set of organizations (go-betweens) involved in the process of making a product or service available for use or consumption by a consumer or business user.

The other three parts of the marketing mix are product, pricing, and promotion.

Chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

CHANNEL

The network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system.

Different members of Channels :1.Wholseller2.Distributor3.Retailer4.Consumer

DISTRIBUTION CHANNEL

A number of alternate 'channels' of distribution may be available:

Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc.

CHANNEL STRUCTURE

NATURE & IMPORTANCE OF MARKETING CHANNELS

Number of Channel Levels

The number of intermediary levels indicates the length of a marketing channel. Direct Channels Indirect Channels

Producers lose more control and face greater channel complexity as additional channel levels are added. G-5

NATURE & IMPORTANCE OF MARKETING CHANNELS

Information Promotion Contact Matching Negotiation

Physical Distribution Financing Risk taking

Key Functions Performed by Channel Members

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CHANNEL MANAGEMENT DECISIONS

Selecting Channel Members Identify characteristics that distinguish the best

channel members Managing and Motivating Channel Members

Partner relationship management (PRM) is key Evaluating Channel Members

Performance should be checked against standardsChannel members should be rewarded or replaced as

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MANAGERIAL CONCERNS:EFFECTIVE USE OF CHANNEL MEMBERS

Channel membership.

Channel motivation.

Channel design.

Monitoring and Managing channels.

CHANNEL MEMBERSHIP

Intensive distribution - Where the majority of resellers stock the 'product' (with convenience products, for example, and particularly the brand leaders in consumer goods markets) price competition may be evident.

Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product.

Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'.

CHANNEL MOTIVATION.

There are many devices for achieving such motivation. Perhaps the most usual is `incentive':

The supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a competition is offered to the distributors' sales personnel, so that they are tempted to push the product

Different Forms of Incentive/Reward 1.Margin 2.Gifts 3.Tour Packages 4.Certificates

CHANNEL DESIGN DECISIONS

Step 1: Analyzing Consumer NeedsCost and feasibility of meeting needs must be

considered Step 2: Setting Channel Objectives

Set channel objectives in terms of targeted level of customer service

Many factors influence channel objectives

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CHANNEL DESIGN DECISIONS

Step 3: Identifying Major AlternativesTypes of intermediaries

Company sales force, manufacturer’s agency, industrial distributors

Number of marketing intermediaries Intensive, selective, and exclusive distribution

Responsibilities of channel members

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CHANNEL DESIGN DECISIONS

Step 4: Evaluating Major AlternativesEconomic criteriaControl issuesAdaptive criteria

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CHANNEL DESIGN DECISIONS

Designing International Distribution ChannelsGlobal marketers usually adapt their channel

strategies to structures that exist within foreign countries

Key challenges: May be complex or hard to penetrate May be scattered, inefficient, or totally lacking

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MONITORING AND MANAGING CHANNELS.

Organization's own sales and distribution activities need to be monitored and managed, so will those of the distribution chain.

In practice, many organizations use a mix of different channels; in particular, they may complement

1. Direct sales force, calling on the larger accounts.2. Agents, covering the smaller customers and prospects.

MONITORING CHANNELS/CHANNEL MEMBERS

Once the Channel is in its place and started working, it needs to be monitored for effective working/ Optimum utilization.

Channel Monitoring Devices/Techniques. 1. Recording Sales Data from all channel members. 2. Analyzing Performance of channel members.